UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ~~QUARTERLY~~ANNUAL REPORT ~~UNDER~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2024~~2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________to ___________

Commission File Number: 000-27055

CANNAPHARMARX, INC.

(Exact name of small business issuer as specified in its charter)

Delaware		27-4635140
(State of other jurisdiction of incorporation)		(IRS Employer ID No.)

~~302,~~4439 ~~3204—Rideau~~Township ~~Place~~Rd SW304,

~~Calgary~~Mountain View County, Alberta, Canada ~~T2S~~T0M ~~1Z2~~0R0

(Address of principal executive offices)

403-637-0420

(Issuer’s Telephone Number)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered Common ~~Stock~~Shares CPMD OTC Pink Sheets

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act: Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. ☐ Yes ☒ No

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter on June 30, ~~2024~~2025 was $92,~~275~~583,~~020~~755.

The number of shares of the registrant’s common ~~stock~~shares issued and outstanding as of ~~April~~March 831, ~~2025~~2026, was ~~662~~678,501,405 shares.

CANNAPHARMARX, INC. DECEMBER 31, 2025 TABLE OF CONTENTS

DECEMBER 31, 2023

		Page
	PART I

Item 1	Business	4
Item 1A	Risk factors	10
Item 1B	Unresolved Staff Comments	20
Item 1C	Cybersecurity	20
Item 2	Properties	21
Item 3	Legal Proceedings	21
Item 4	Mine Safety disclosures	22
	PART II

Item 5	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.	22
Item 6	[Reserved]	23
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	32
Item 8	Financial Statements and Supplementary Data	32
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	32
Item 9A	Controls and Procedures	32
Item 9B	Other Information	33
Item 9C	Disclosures Regarding Foreign Jurisdictions that Prevent Inspections	33

	PART III
Item 10	Directors, Executive Officers and Corporate Governance	34
Item 11	Executive Compensation	37
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	39
Item 13	Certain Relationships and Related Transactions and Director Independence	40
Item 14	Principal Accountant Fees and Services	47

	PART IV
Item 15	Exhibit and Financial Statement Schedules	48
Item 16	Form 10-K Summary	48
	Signature

TABLE OF CONTENTS

		Page
	PART I
Item 1	Business	4
Item 1A	Risk factors	10
Item 1B	Unresolved Staff Comments	21
Item 1C	Cybersecurity	21
Item 2	Properties	22
Item 3	Legal Proceedings	22
Item 4	Mine Safety disclosures	23
	PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	24
Item 6	[Reserved]	25
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	29
Item 8	Financial Statements and Supplementary Data	29
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	29
Item 9A	Controls and Procedures	30
Item 9B	Other Information	31
Item 9C	Disclosures Regarding Foreign Jurisdictions that Prevent Inspections	31
	PART III
Item 10	Directors, Executive Officers and Corporate Governance	32
Item 11	Executive Compensation	36
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	37
Item 13	Certain Relationships and Related Transactions and Director Independence	38
Item 14	Principal Accountant Fees and Services	39
	PART IV
Item 15	Exhibit and Financial Statement Schedules	40
Item 16	Form 10-K Summary	40
	Signature	41

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 concerning our anticipated results and developments of our operations in future periods, plans related to our business, and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "anticipates", "plans", "estimates" or "intends", the negatives thereof, variations thereon and similar expressions, or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

	·	risks associated with the Company's history of losses and need for additional financing,
	·	risks associated with increased costs affecting its financial condition,
	·	risks associated with uninsured risks,
	·	risks associated with governmental and environmental regulations,
	·	risks associated with future legislation regarding the cannabis industry and climate change,
	·	risks associated with cybersecurity and cyber-attacks,
	·	risks related to economic conditions,
	·	risks related to our ability to manage growth,
	·	risks related to our dependence on key personnel,
	·	risks related to our SEC filing history, and
	·	risks related to our securities.

This list is not exhaustive of the factors that may affect the Company's forward-looking statements. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as required by law, the Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

AVAILABLE INFORMATION

Our principal executive office is located at 302, 3204—Rideau Place SW., Calgary, Alberta, Canada T2S 1Z2. Our telephone number is 403-637-0420 and our Internet website address is www.cannapharmarx.com. The information on our website is not incorporated by reference into this annual report. We make available, free of charge on our website, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports, filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as practicable after electronically filing these documents with, or furnish them to, the U.S. Securities and Exchange Commission (the “SEC”). The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), are filed with the U.S. Securities and Exchange Commission (the “SEC”). Our filings with the SEC are available to you for free on the SEC’s internet website at www.sec.gov.

Table of Contents

PART I

ITEM 1 - BUSINESS

Description of current business

CannaPharmaRx, Inc. (“CPMD”, “we”, “our”, or the “Company”) specializes in the acquisition, development, and operation of cannabis cultivation facilities in Canada. Originally incorporated in the state of Colorado in August 1998 as Network Acquisitions, Inc., we evolved to focus on producing high-quality medical cannabis and craft products. Our principal executive office is located at ~~302,~~4439 ~~3204—Rideau~~Township ~~Place~~Rd ~~SW.~~304, ~~Calgary~~Mountain View County, Alberta, Canada ~~T2S~~T0M ~~1Z2~~0R0 and our Internet website address is www.cannapharmarx.com. The information on our website is not incorporated by reference into this annual report.

On January 6, 2022, we entered into a 20-year operating lease for the use of a 55,000 square foot facility located in Cremona, Alberta, Canada (the “Facility”). During 2022, we recommissioned the Facility into aan ~~new~~ indoor cannabis farm with 1110 growing rooms and one ~~(1)~~ drying and packing room. The Facility currently operates ~~five~~six ~~(5)~~ of these growing rooms and ~~the~~one drying and packing room and plans to increase capacity over the next one to two years to open a second drying and packing room and to operate all 1110 growing rooms. We received an operating license from Health Canada on December 9, 2022, and a cannabis license from the Canada Revenue Agency (“CRA”) on December 22, 2022, and commenced cannabis production during the year ended December 31, 2023.

We ~~received~~plan anto ~~operating~~grow ~~license~~by ~~from~~increasing ~~Health~~our ~~Canada~~production capacity at the Facility to support sales of cannabis to the European markets, with a focus on ~~December~~Germany 9and Israel. To support this initiative, ~~2022~~we intend to increase the number of growing rooms from six to 10 rooms over the next one to two years and to open a second drying and packing room, building and developing a ~~cannabis~~sales ~~license~~network ~~from~~in ~~the~~Germany ~~Canada~~and ~~Revenue~~Israel, ~~Agency~~and applying for European Union Good Manufacturing Practices (“~~CRA~~EU-GMP”) oncertification. ~~December 22~~Currently, ~~2022~~we are required to send our cannabis to a third-party European intermediary for packaging in compliance with EU-GMP standards. ~~Under~~Once we receive the ~~new~~EU-GMP ~~license,~~certification we ~~commenced~~will ~~cannabis~~be ~~production~~able ~~during~~to ~~the~~remove ~~year~~this ~~ended~~step ~~December~~from 31our delivery process and ship directly to countries within the European Union (“EU”), ~~2023~~reducing overall costs and shipping timelines.

~~Growth~~To facilitate our growth strategy, on November 22, 2023, we entered into an agreement with LTB Management, LLC (“LTB”) in support of building and developing a sales network in the EU and obtaining access to LTB’s e-commerce technology related to online sales of cannabis in the EU for a total purchase consideration of $4,518,127. Under this agreement, we obtained 100 Class B units of LTB in exchange for 27,224,962 share purchase warrants, each entitling the holders to purchase one share of our common shares at $0.02 per share until November 22, 2028; $3,000,000 in promissory notes payable to the LTB; and 100,000 Series C preferred shares of our company. Contingent consideration included a quarterly true up of LTB’s preferred share proportional ownership to 33% of the outstanding shares of our common shares, and an earn out whereby LTB can earn up to an additional 12% pro-rata preferred share proportional ownership (which, if earned, will result in the true up increasing by the pro-rata preferred share proportional ownership earned) based on our reaching an annual revenue threshold of $2,500,000 at any time within 24 months of the agreement date. As at December 31, 2025, the earn out period ended and we have a final obligation to issue 333,336 Series C preferred shares to LTB under the true up, valued at $2,166,681.

WeAs ~~plan to grow by increasing our growth capacity at the Facility to support sales~~ of ~~cannabis~~December ~~to the European markets~~31, ~~with a focus on Germany and Israel. To support this initiative~~2025, wemanagement ~~are~~evaluated ~~increasing~~ the ~~operations~~investment’s infair ~~the~~value ~~Facility~~using ~~from~~a ~~five~~discounted ~~growing~~cash ~~rooms~~flow toanalysis 11of ~~growing~~LTB ~~rooms~~and ~~over~~concluded ~~the~~that ~~next~~projected ~~one~~cash toflows ~~two~~available ~~years;~~to ~~building~~Class ~~and~~B ~~developing~~unitholders awere ~~sales~~negative ~~network~~ in ~~Germany~~all ~~and~~periods. ~~Israel;~~Management ~~and~~concluded ~~applying~~that ~~for~~a ~~European~~full ~~Union~~impairment ~~Good~~was ~~Manufacturing Practices (“EU-GMP”) certification~~appropriate. ~~Currently~~Accordingly, wemanagement ~~are~~determined ~~required~~the tofair ~~send~~value ~~our~~of ~~cannabis~~the investment to abe ~~third-party~~negligible ~~European~~and ~~intermediary~~fully ~~for~~impaired ~~packaging~~the incarrying ~~compliance~~amount ~~with~~of ~~EU-GMP standards. Once certified~~$4,518,127, werecognizing ~~will~~an beimpairment ~~able~~loss toof ~~remove~~the ~~this~~same ~~step~~amount ~~from~~for ~~our delivery process and ship directly to countries within~~ the ~~European~~year ~~Union~~ended ~~(“EU”)~~December 31, ~~reducing overall costs and shipping timelines~~2025.

ToOn ~~facilitate~~March ~~our~~17, ~~growth strategy~~2025, inthe ~~2022~~Company weand ~~entered~~its ~~into~~subsidiary, an2323414 ~~agreement~~Alberta toLtd. ~~acquire~~(“Alberta ~~certain~~Ltd.”), ~~equity~~which ~~interests~~operates inthe ~~LTB~~Company’s ~~Management,~~principal ~~LLC~~business ~~(“LTB”)~~activities, inincluding ~~support~~the ofcultivation, ~~building~~processing, and ~~developing~~distribution aof ~~sales~~cannabis, ~~network~~entered ininto ~~the~~a EUsecurity and ~~obtaining~~royalty ~~access~~agreement towith ~~LTB’s~~Koze ~~e-commerce~~Investments ~~technology~~LLC ~~related~~(“Koze”), toa ~~online~~California-based ~~sales~~limited ofliability ~~cannabis~~company engaged in ~~the~~providing ~~EU.~~financing We and ~~LTB~~investment ~~agreed~~services. toKoze ~~terminate~~has ~~the~~been ~~2022~~considered ~~agreement and entered into~~ a ~~new~~related ~~agreement~~party onsince ~~November~~March 2211, ~~2023~~2025, tothe ~~better~~date ~~reflect~~on ~~the~~which ~~then~~its ~~state~~manager, ofElliot ~~our~~Zemel, ~~company~~was ~~and~~appointed ~~our~~as ~~prospective~~a ~~business~~director ~~operations.~~of ~~Under~~ the ~~new~~Company. ~~agreement~~Pursuant weto ~~obtained~~the ~~100~~agreement, ~~Class~~the BCompany ~~units~~is ofrequired ~~LTB~~to inpay ~~exchange~~a ~~for~~royalty ~~27,224,962~~on ~~warrants,~~cannabis ~~each~~product ~~entitling~~sales from the ~~holders~~prior tomonth ~~purchase~~as ~~one~~an ~~share~~additional ofconsideration ~~our~~for ~~common~~the ~~stock~~lease atwith $0Formosa.02 ~~per~~If ~~share~~royalty ~~until~~payments ~~November~~are ~~22,~~not ~~2028;~~made $3on time,~~000,000~~ inthe ~~promissory~~applicable ~~notes~~rate ~~payable~~increases. toThe ~~the~~agreement ~~LTB;~~stipulates ~~and~~that ~~100,000~~a ~~Class~~default Coccurs ~~preferred~~if ~~shares~~Alberta ~~of our company~~Ltd. ~~Contingent~~fails ~~consideration~~to ~~included~~make aroyalty ~~quarterly~~or ~~true~~lease uppayments offor ~~LTB’s~~three ~~preferred~~consecutive ~~share~~months, ~~proportional~~or ~~ownership~~for toany ~~33%~~four ofmonths ~~the~~within ~~outstanding~~a ~~shares~~rolling ofsix-month ~~our~~period. ~~common~~As ~~stock~~collateral, ~~and~~the anCompany ~~earn~~granted ~~out~~Koze ~~whereby~~a ~~LTB~~security ~~can~~interest ~~earn~~in upits toentire anownership ~~additional~~interest ~~12%~~in ~~pro-rata~~Alberta ~~preferred~~Ltd., ~~share proportional ownership (~~which, ~~if earned,~~ will ~~result~~remain in ~~the~~place ~~true~~until upall ~~increasing~~obligations byare ~~the~~fully ~~pro-rata~~satisfied. ~~preferred~~As ~~share~~of ~~proportional~~December ~~ownership~~31, ~~earned)~~2025, ~~based~~Alberta onLtd. ~~our~~was ~~reaching~~in adefault ~~threshold~~ of $2its payment obligations,~~500,000~~ inand ~~annual~~Koze ~~revenue~~agreed atto ~~any~~forbear ~~time~~from ~~within~~exercising 24its ~~months~~rights ofover the ~~agreement~~ownership ~~date.~~interest Asuntil atMay ~~December~~ 31, ~~2024,~~2026. weThe ~~have~~Company analso ~~obligation~~incurred toroyalty ~~issue~~expense anunder ~~additional~~the ~~301,597~~agreement ~~Class~~and Crecorded ~~preferred~~a ~~shares~~related toroyalty ~~LTB~~payable ~~under~~liability ~~the~~as ~~true~~of ~~up,~~December ~~valued at $3~~31,~~654,009~~ 2025.

4 Table of Contents

OUR PRODUCTS

Cannabis Products

We produce and sell dried cannabis flower, which is packaged for sale as dried flower and trim shake. ~~We sell dried flower for medicinal purposes.~~ Dried flower continues to be the core of all cannabis markets globally and accordingly our focus onis to achieve consistent high-quality cultivation ~~is relentless~~.

A summary of the Company’s average selling prices by market is as follows:

	Average Price per Gram (CAD)^*
Market	Premium Batches		Medium Batches
Germany		2.05		1.6
Israel		2.0	1.6-1.8
Canada		2.0	1.1-1.5
Portugal	1.8-2.0		0.8-1.5

^* Batches with THC concentrations below 20% are generally sold at lower average prices compared to higher-THC batches.

Table of Contents

GOVERNMENT REGULATION

Canadian regulations

Summary of the Cannabis Act

On October 17, 2018, the Cannabis Act came into force as law with the effect of legalizing adult recreational use of cannabis across Canada. The Cannabis Act replaced the Access to Cannabis for Medical Purposes Regulations (“ACMPR”) and the old Industrial Hemp Regulations ~~(“IHR”)~~, both of which came into force under the Controlled Drugs and Substances Act (Canada) (the “CDSA”), which previously permitted access to cannabis for medical purposes for only those Canadians who had been authorized to use cannabis by their health care practitioner. The ACMPR replaced the Marihuana for Medical Purposes Regulations (Canada) ~~(the “MMPR”)~~, which was implemented in June 2013. The MMPR replaced the Marihuana Medical Access Regulations (Canada) (the “MMAR”) which was implemented in 2001. The MMPR and MMAR were initial steps in the Government of Canada’s legislative path towards the eventual legalization and regulating recreational and medical and recreational cannabis.

The Cannabis Act permits the recreational adult use of cannabis and regulates the production, distribution and sale of cannabis and related oil extracts in Canada, for both recreational and medical purposes. Under the Cannabis Act, Canadians who are authorized by their health care practitioner to use medical and recreational cannabis have the option of purchasing cannabis from one of the producers licensed by Health Canada and are also able to register with Health Canada to produce a limited amount of cannabis for their own medical purposes or to designate an individual who is registered with Health Canada to produce cannabis on their behalf for personal medical purposes.

Pursuant to the Cannabis Act, subject to provincial regulations, individuals over the age of 18 are able to purchase fresh cannabis, dried cannabis, cannabis oil, and cannabis plants or seeds and are able to legally possess up to 30 grams of dried cannabis, or the equivalent amount in fresh cannabis or cannabis oil. The Cannabis Act also permits households to grow a maximum of four cannabis plants. This limit applies regardless of the number of adults that reside in the household. In addition, the Cannabis Act provides provincial and municipal governments the authority to prescribe regulations regarding retail and distribution, as well as the ability to alter some of the existing baseline requirements of the Cannabis Act, such as increasing the minimum age for purchase and consumption.

With respect to retail sales of cannabis, other than online sales, the provincial and territorial regulations in Prince Edward Island, Nova Scotia and Quebec allow only for government-run cannabis stores, while the provincial and territorial regulations in Ontario, Alberta, Newfoundland and Labrador, Nunavut, Yukon, Saskatchewan and Manitoba leave the retail sale of cannabis, other than online sales, to the private sector. In New Brunswick, British Columbia and Northwest Territories, provincial and territorial regulations allow for a hybrid model in which both public and private stores can operate. In addition, in Ontario, British Columbia, Newfoundland and Labrador, Northwest Territories, New Brunswick, Nova Scotia, Prince Edward Island, Quebec and Yukon, the provincial body is solely responsible for online sales.

In connection with the framework for regulating cannabis in Canada, the Federal Government introduced corresponding penalties under the Criminal Code (Canada), including penalties for the illegal sale of cannabis, possession of cannabis over the prescribed limit, production of cannabis beyond personal cultivation limits, taking cannabis across the Canadian border, giving or selling cannabis to a youth and involving a youth to commit a cannabis-related offence.

On June 26, 2019, the Federal Government published regulations in the Canada Gazette to support the Cannabis Act, including the Cannabis Regulations, ~~new~~and Industrial Hemp Regulations. The new Industrial Hemp Regulations and the Cannabis Regulations, among other things, outline the rules for the legal cultivation, processing, research, analytical testing, distribution, sale, importation and exportation of cannabis and hemp in Canada, including the various classes of licenses that can be granted, and set standards for cannabis and hemp products. The Industrial Hemp Regulations and the Cannabis Regulations include strict specifications for the plain packaging and labeling and analytical testing of all cannabis products as well as stringent physical and personnel security requirements for all federally licensed production sites. The Industrial Hemp Regulations and the Cannabis Regulations also maintain a distinct system for access to cannabis. With the Cannabis Act now in force, cannabis has ceased to be regulated under the CDSA and is instead regulated under the Cannabis Act, and both the ACMPR and the IHR were repealed effective October 17, 2018.

In December 2023, Health Canada released guidance on cannabis products deliberately made with intoxicating cannabinoids other than delta-9-tetrahydrocannabinol (“delta-9-THC”). Health Canada defines “intoxicating cannabinoids” as cannabinoids that bind to and activate the cannabinoid receptor type 1 (“CB1 receptor”) and the guidance includes a list of 9 cannabinoids which can be revised as new evidence becomes available. This guidance recommends that license holders apply the regulatory controls (including limits on the amount of cannabinoids in certain products) currently applicable to delta-9-THC to all other cannabinoids that Health Canada considers to be “intoxicating cannabinoids” in order to minimize the risks of accidental consumption, overconsumption and adverse effects. This guidance comes at a time when various provincial regulators (such as those in Ontario, British Columbia and Alberta) are actively evaluating whether to permit the sale of or how to evaluate limits on the levels of certain cannabinoids (such as tetrahydrocannabivarin and cannabinol).

Table of Contents

~~In December 2023~~Finally, ~~Health Canada released guidance~~ on ~~cannabis~~March ~~products~~21, ~~deliberately~~2024, ~~made~~the ~~with~~final ~~intoxicating~~report ~~cannabinoids~~of ~~other than delta-9-THC. Health Canada defines “intoxicating cannabinoids” as cannabinoids that bind to and activate~~ the ~~CB1~~Expert ~~receptor~~Panel ~~and~~on the ~~guidance~~Legislative ~~includes~~Review ~~a list~~ of 9the ~~cannabinoids~~Cannabis ~~which~~Act ~~can~~(the be“Cannabis ~~revised~~Report”), aswas ~~new evidence becomes available~~issued. ~~This~~The ~~guidance~~Cannabis ~~recommends~~Report ~~that~~was ~~license~~intended ~~holders~~to ~~apply~~assess the ~~regulatory~~full ~~controls~~impact ~~(including~~of ~~limits~~legalization ~~on the amount~~ of ~~cannabinoids~~cannabis in ~~certain~~Canada ~~products)~~and ~~currenly~~considered ~~applicable~~whether tothe ~~delta-9-THC~~Cannabis toAct, ~~all~~had ~~other~~since ~~cannabinoids~~its ~~that~~coming ~~Health~~into ~~Canada~~force, ~~considers~~accomplished toits bestated ~~“intoxicating~~objectives ~~cannabinoids”~~of ~~in order to minimize~~ the ~~risks~~protection of ~~accidental~~public ~~consumption,~~health ~~overconsumption~~ and ~~adverse~~public ~~effects~~safety. ~~This~~The ~~guidance~~Cannabis ~~comes~~Report atprovided a54 ~~time~~recommendations ~~when~~for ~~various provincial regulators (such as those in Ontario, British Columbia and Alberta) are actively evaluating whether to permit~~ the ~~sale~~improvement ~~of or how to evaluate limits~~ on the ~~levels~~federal regulation of ~~certain~~Cannabis ~~cannabinoids (such as tetrahydrocannabivarin~~ and ~~cannabinol).~~noted the following:

Finally, on March 21, 2024, the final report of the Expert Panel on the Legislative Review of the Cannabis Act (the “Cannabis Report”), was issued. The report was intended to assess the full impact of legalization of cannabis n Canada and considered whether the Cannabis Act, had since its coming into force, accomplished its stated objectives of the protection of public health and public safety.

The Cannabis Report provided 54 recommendations for the improvement on the federal regulation of Cannabis and noted the following:

·	There has been significant progress made on: (i) the establishment of a licensing framework supporting a legal industry that is providing adult consumers with a quality-controlled supply of a variety of cannabis products; (ii) steady progress in shifting adult consumers to the legal cannabis market (iii) for the most part, adherence to rules on promotion, packaging and labelling, including prohibitions about making claims about health or lifestyle benefits (iv) a significant reduction (95% between 2017 and 2022) in the number of charges for the possession of cannabis and minimizing the negative impact on some individuals from interactions with the criminal justice system.
·	Shift in younger populations consuming cannabis with a trend towards the consumption of higher potency cannabis products.
·	The illicit cannabis market remains entrenched, and too many illicit retailers continue to operate both online and physical stores.
·	Industry representatives expressed concerns about the cost burden that the excise tax imposes on them originally intended to represent about 10% of the total cost of product to consumers but effectively resulting in nearly a 30% tax on products sold to consumers. In addition to the excise tax on cannabis products, additional costs also include regulatory fees and regulatory requirements that are imposed at both the federal and provincial and territorial levels.
·	There is a lack of diversity in the sector, and that communities that were disproportionately harmed prior to when cannabis was decriminalized continue to face barriers to participation in the legal market.
·	A greater commitment to enforcement is needed to avoid undermining the integrity of the regime. Inadequate enforcement emboldens criminal actors and may be interpreted by some that illicit cannabis activity does not pose health or safety concerns.
·	The current lack of high-quality scientific evidence is creating difficulties for health care professionals and insurance providers faced with patient requests about the use of cannabis for medical purposes.

Licenses

The Cannabis Regulations ~~establish~~established six classes of licenses under the Cannabis Act: cultivation; processing; analytical testing; sale to individual clients for medical purposes; research; and cannabis drug production. It also provides for subclasses of cultivation (standard cultivation, micro-cultivation and nursery) and processing (standard processing and micro-processing). The Company currently holds the Health Canada Standard Cultivation and Processing license, Control Union Medical Cannabis Standard - Good Agricultural Practice license and Good Agricultural Collection Practice certificate.

Key personnel and security clearances

The Cannabis Regulations require that license holders retain certain key personnel, depending on the class of license. Holders of a license for cultivation, processing and sale must retain a responsible person (who serves as the main point of contact with Health Canada) and head of security. Holders of a license for cultivation must also retain a master grower, and holders of a license for processing must retain a quality assurance person. ~~The~~We ~~Company~~hold ~~holds the~~ licenses for the cultivation, processing and sale of cannabis and ~~retains~~employ a master grower and a quality assurance person.

The Cannabis Regulations require a valid security clearance issued by the Minister of Health (Minister as defined in the Cannabis Act) for certain people associated with cannabis licensees. Security clearances must be held by directors, officers, individuals who exercise, or are in a position to exercise, direct control over a corporate licensee, directors and officers of any corporation that exercises, or is in a position to exercise, direct control over a corporate licensee and the key personnel noted above (responsible person, head of security, master grower and quality assurance person) and any other individuals identified by the Minister. The Minister may refuse to grant security clearances at its discretion to individuals or associations, such as those involved in organized crime or individuals with prior convictions for, or an association with, drug trafficking, corruption or violent offences (individuals with histories of non-violent, lower-risk criminal activity, for example, simple possession of cannabis, or small-scale cultivation of cannabis plants are not precluded from participating in the legal cannabis industry).

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Good production practices and cannabis products

Part 5 of the Cannabis Regulations establishes the good production practices which must be met prior to the sale, distribution or export of cannabis, and Part 6 of the Cannabis Regulations establishes rules for cannabis products, including permitted/prohibited ingredients and amounts of Tetrahydrocannabinol (“THC”). These require that cannabis and anything that will be used as an ingredient must be produced, packaged, labelled, distributed, stored, sampled and tested in accordance with standard operating procedures that are designed to ensure that those activities are conducted in accordance with the applicable requirements of Parts 5 (Good Production Practices) and Part 6 (Cannabis Products). The good production practices requirements relate to storage, distribution, the design and construction of buildings, filtration and ventilation systems, water supply, lighting, equipment, sanitation programs and testing.

The ~~good~~Cannabis ~~production~~Regulations ~~practices~~also set out the requirements ~~relate~~for tothe ~~storage,~~sale ~~distribution,~~of cannabis products at the ~~design~~retail ~~and~~level ~~construction~~permit the sale of ~~buildings~~dried cannabis, ~~filtration~~cannabis ~~and~~oil, ~~ventilation~~fresh ~~systems~~cannabis, ~~water~~cannabis ~~supply~~plants, ~~lighting~~and cannabis seeds, ~~equipment~~including in such forms as “pre-rolled” and in capsules. The THC content and serving size of cannabis products is limited by the Cannabis Regulations. The sale of edibles containing cannabis and cannabis concentrates was legalized in the fall of 2019. The Cannabis Regulations also sets standards for the safe consumption of cannabis products, ~~sanitation~~in ~~programs~~respect of being free from biological and ~~testing~~chemical contaminants and limits the amounts of THC in cannabis products.

The Cannabis Regulations set out the requirements for the sale of cannabis products at the retail level permit the sale of dried cannabis, cannabis oil, fresh cannabis, cannabis plants, and cannabis seeds, including in such forms as “pre-rolled” and in capsules. The THC content and serving size of cannabis products is limited by the Cannabis Regulations. The sale of edibles containing cannabis and cannabis concentrates was legalized in the fall of 2019.

Part 6 of the Cannabis Regulations sets standards for the safe consumption of cannabis products, in respect of being free from biological and chemical contaminants and limits the amounts of THC in cannabis products.

Cannabis tracking system

Under the Cannabis Act, the Minister established and maintains a national cannabis tracking system, which is called The Cannabis Tracking and Licensing System (the “CTLS”). The CTLS provides an online secure platform for filing applications for licenses and security clearances under the Cannabis Regulations. Through the cannabis supply chain, the CTLS also tracks cannabis from federal cannabis license holders to individual medical clients, or from federal cannabis license holders to recreational market channels. The tracking function of the CTLS serves to limit the diversion of cannabis into, and out of, the regulated medical and recreational markets.

Promotion, packaging and labelling

The Cannabis Act establishes strict prohibitions on the promotion of cannabis, and the Cannabis Regulations establish rules around plain packaging and labelling. Among other things, it is prohibited to promote cannabis in a way that could be appealing to young people, by way of a testimonial or endorsement or through depiction of a person, character or animal, whether real or fictional; or in a manner associated with a “lifestyle”. The Cannabis Regulations establish rules around packaging and labelling to promote informed consumer choice, allow for the safe handling and transportation of cannabis products, ensure childproofing on containers and reducing the appeal of cannabis to youth. The size and color of packaging, logos, names and other brand elements is restricted. Cannabis package labels must include specific information, such as: (i) product source information, including the class of cannabis and the name, phone number and email of the processor; (ii) a mandatory health warning, rotating between Heath Canada’s list of standard health warnings; (iii) the Health Canada standardized cannabis symbol; and (iv) information specifying THC and Cannabidiol content.

Cannabis for medical purposes

The medical and recreational cannabis regulatory framework shifted from the ACMPR made under the CDSA to the Cannabis Act and the Cannabis Regulations. Under ~~Part 14 of~~ the Cannabis Regulations, there are three options available to an individual who has received authorization from his/her healthcare practitioner to use cannabis for medical purposes: (i) by registering with a holder of a license to sell for medical purposes; (ii) by registering with Health Canada for the production of a limited amount of cannabis for their own medical purposes; or (iii) by designating a third party to produce cannabis for them. With respect to (ii) and (iii), the starting materials for the production of cannabis, such as cannabis plants or seeds, must be obtained from medical sales license holders.

Provincial and territorial regulatory framework

The governments of every Canadian province and territory have implemented regulatory regimes for the use, distribution and sale of cannabis products for recreational purposes within their jurisdiction. The only provinces with restrictions on classes of cannabis that may be sold in the recreational markets are Québec and Manitoba, where plants and seeds are not sold because personal cultivation for recreational purposes is prohibited in those two provinces. In addition, as of the date of this Prospectus, some provinces are considering whether or not to allow cannabis vape products to be sold, including Newfoundland and Labrador.

Regardless of the specific provincial retail framework, all cannabis products for the recreational cannabis market must be supplied by federally licensed cultivators (plants and seeds only) and processors (all other allowable classes of cannabis - currently dried cannabis, cannabis oil, cannabis edibles, cannabis extracts and cannabis topicals). In most provinces and territories, a liquor or cannabis authority operated by the province serves as a wholesaler, with retailers purchasing cannabis products from the liquor or cannabis authority or from provincially licensed distributors. The wholesalers, in turn, acquire the cannabis products from federally licensed cultivators and processors.

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Description of Canadian licenses and licensing requirements

Laws and regulations affecting the medical and recreational marijuana industry are constantly changing, which could detrimentally affect our operations. Local, state and federal medical and recreational marijuana laws and regulations are broad in scope and subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or alter our business plan. In addition, violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our operations. It is also possible that regulations may be enacted in the future that will be directly applicable to our business. These ever-changing regulations could even affect federal tax policies that may make it difficult to claim tax deductions on our returns. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.

European Union Regulatory Framework

While each country in the EU has its own laws and regulations, many common practices are being adopted relative to the developing and growing medical cannabis market. For example, to ensure quality and safe products for patients, many EU countries only permit the import and sale of medical cannabis from EU-GMP certified manufacturers.

The EU requires adherence to EU-GMP standards for the manufacture of active substances and medicinal products, including cannabis products. The EU system for certification of GMP allows a Competent Authority of any EU member state to conduct inspections of manufacturing sites and, if the strict EU-GMP standards are met, to issue a certificate of EU-GMP compliance that is also accepted in other EU member countries.

As of April 1, 2024, ~~recent~~ legislative change in Germany works in unison with existing laws and regulations in Europe. For example, the ~~recent~~ enactment of the law permitting the use of recreational cannabis in Germany to a limited extent still requires that all cannabis for medicinal purposes be EU-GMP certified, sold by EU-GMP certified manufacturers, for medical cannabis patient consumption, as prescribed by a physician. Although cannabis as of April 1, 2024 is no longer classified as a narcotic, regardless of whether for medicinal or recreational purposes, cannabis remains a licensed and controlled use product.

Israeli Regulatory Framework

The competent regulatory authority in Israel in all matters concerning the oversight, control and regulation of cannabis for medical production, use and research is the Medical Cannabis Unit (“IMCA”). The IMCA was established by the Israeli government under Resolution No. 3609, which also established an inter-ministerial safety committee, composed of representatives of government ministries, government authorities and other government bodies, for intergovernmental cooperation regarding the regulation of cannabis. The IMCA examines medical recommendations for the use of cannabis for medical purposes and in accordance with established procedures. The IMCA is also authorized to examine applications, and issue permits to hold, use and research cannabis.

Regulations Governing the Use of Cannabis for Medical Purposes

Under the Israeli Dangerous Drugs Ordinance (“Israeli DDO”), cannabis is defined as a “dangerous drug”, and the use of cannabis is prohibited unless a license is duly issued by the IMCA or a competent government agency. Pursuant to the Israeli DDO, the use of cannabis was allowed for patients and for medical purposes, in respect of certain medical conditions, under a special approval of the Ministry of Health (“MOH”). In June 2016, the Israeli government published Resolution No. 1587, which established a new regulatory framework for the “medicalization” of cannabis. Pursuant to Resolution No. 1587, the IMCA adopted regulations expanding the number of qualifying medical conditions for treatment with medical-use cannabis to include such conditions as cancer, pain, nausea, seizures, muscle spasms, epilepsy, Tourette syndrome, multiple sclerosis, amyotrophic lateral sclerosis, post-traumatic stress disorder, autism, migraines, arthritis, Parkinson’s disease, residual limb pain, spinal cord injuries, Human immunodeficiency viruses/Acquired Immunodeficiency Syndrome, Crohn’s disease, colitis, inflammatory bowel disease and terminal illnesses.

Pursuant to the Israeli DDO, the use of cannabis was allowed for patients and for medical purposes, in respect of certain medical conditions, under a special approval of the Ministry of Health (“MOH”).

In June 2016, the Israeli government published Resolution No. 1587, which established a new regulatory framework for the “medicalization” of cannabis. Pursuant to Resolution No. 1587, the IMCA adopted regulations expanding the number of qualifying medical conditions for treatment with medical-use cannabis to include such conditions as cancer, pain, nausea, seizures, muscle spasms, epilepsy, Tourette syndrome, multiple sclerosis (“MS”), amyotrophic lateral sclerosis (“ALS”), post-traumatic stress disorder (“PTSD”), autism, migraines, arthritis, Parkinson’s disease, residual limb pain, spinal cord injuries, HIV/AIDS, Crohn’s disease, colitis, inflammatory bowel disease and terminal illnesses.

Regulations Governing the Production, Manufacturing and Distribution of Cannabis for Medical Purposes

In March 2016, the IMCA published New Regulations (the “New Regulations”) that introduced strict pharmaceutical-grade standards for the production, manufacturing and distribution of cannabis for medical use pursuant to Israel Medical Cannabis-certified procedures: Israel Medical Cannabis-Good Agriculture Practices (“IMC-GAP standards”): Israel Medical Cannabis-Good Manufacturing Practice (“IMC-GMP standards”); Israel Medical Cannabis-Good Distribution Practice (“IMC-GDP standards”); Israel Medical Cannabis-Good Clinical Practice (“IMC-GCP standards”); and Israel Medical Cannabis-Good Security Practices (“IMC-GSP standards”). The goal of the New Regulations is to achieve the standardization, reproducibility and uniformity in product quality that is similar to those standards for existing conventional drugs.

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~~Under the New~~ Regulations, ~~market~~Governing ~~participants are required to apply for various licenses for~~ the ~~production~~Production, ~~manufacturing~~Manufacturing and ~~distribution~~Distribution of ~~medical~~Cannabis ~~cannabis-based products. Each license establishes that the licensee adheres to certain protocols and standards regarding the quality and standardization of practices~~ for ~~(1)~~Medical propagation and breeding, (2) cultivation, (3) extraction, formulation and packaging, (4) storage and delivery and (5) pharmacies. In addition, the New Regulation requires that the whole operation be secured under appropriate conditions, in accordance with the IMC-GSP standard.Purposes

In March 2016, the IMCA published regulations that introduced strict pharmaceutical-grade standards for the production, manufacturing and distribution of cannabis for medical use pursuant to Israel Medical Cannabis-certified procedures: Israel Medical Cannabis-Good Agriculture Practices (“IMC-GAP standards”): Israel Medical Cannabis-Good Manufacturing Practice (“IMC-GMP standards”); Israel Medical Cannabis-Good Distribution Practice (“IMC-GDP standards”); Israel Medical Cannabis-Good Clinical Practice (“IMC-GCP standards”); and Israel Medical Cannabis-Good Security Practices (“IMC-GSP standards”). The goal of the March 2016 regulations was to achieve the standardization, reproducibility and uniformity in product quality that is similar to those standards for existing conventional drugs.

Under the March 2016 regulations, market participants are required to apply for various licenses for the production, manufacturing and distribution of medical cannabis-based products. Each license establishes that the licensee adheres to certain protocols and standards regarding the quality and standardization of practices for (1) propagation and breeding, (2) cultivation, (3) extraction, formulation and packaging, (4) storage and delivery and (5) pharmacies. In addition, the March 2016 regulations requires that the whole operation be secured under appropriate conditions, in accordance with the IMC-GSP standard.

Licenses are initially granted on a provisional basis, subject to the development and completion of a facility with adequate protocols and systems to meet the standards required by the license. Applicants are not officially permitted to breed, cultivate, manufacture or distribute cannabis or cannabis products until the nursery, cultivation and manufacturing facilities are constructed and pass inspection by the IMCA. After the facilities pass inspection, the IMCA will issue the final cannabis licenses for each operation. The license is renewable subject to the limitations, terms and conditions of the IMCA, and licenses are subject to annual reviews of the licensees conduct and compliance with applicable laws and standards.

The production processes of cannabis plants used for the production of raw materials, the manufacturing and packaging processes and the procedures of distribution thereof, must all be carried out under the strict control and supervision and in accordance with the IMCA standards. Therefore, throughout the entire process, including the breeding phase, the production of the finished product and the distribution of the finished product through a pharmacy, each link in the chain is obliged to strictly maintain optimal and homogenous environmental conditions, and to strictly maintain defined and homogenous working procedures that are based on these standards. Regular and periodic analytical examinations shall be conducted throughout the entire chain of production, pursuant to the requirements, in order to ensure and to document that the plant complies with the analytical standards and the level of quality required during each of the phase of the chain of production.

Pharmacy Regulations

As part of the ~~New~~March ~~Regulation~~2016 regulations, pharmacy owners who wish to sell medical cannabis are required to apply for a dedicated license granted by the IMCA to sell, and store cannabis. Pharmacies are also subjected to regulations of several other governmental bodies including the MOH, the local municipality, and the district pharmacists. Pharmacies must also obtain a business license. Granted by the MOH and the local municipality, business license to operate a pharmacy in Israel requires approval from several authorities including, the fire department, the police, and several other departments in the local municipality. The pharmacy is also required to comply with the MOH and district pharmacists’ requirements, which includes different security measures, certain safety protocols, and compliance with the requirements for storage of narcotics (including cannabis). In addition, pharmacies require a Good Distribution Practice (“GDP”) license to sell medical cannabis. Granted by the IMCA after obtaining the final business licenses, the license to sell medical cannabis is subjected to compliance with GDP and Good Security Practice (“GSP”) standards of the IMCA, which include, but not limited to, full compliance with the GSP protocols, which are dedicated security measures for storage (which is subject to certain capacity limitations). Under the GDP, only certified cannabis pharmacists are allowed to sell cannabis and advise patients.

Pharmacies must also obtain a business license. Granted by the MOH and the local municipality, business license to operate a pharmacy in Israel requires approval from several authorities including, the fire department, the police, and several other departments in the local municipality. The pharmacy is also required to comply with the MOH and district pharmacists’ requirements, which includes different security measures, certain safety protocols, and compliance with the requirements for storage of narcotics (including cannabis).

In addition, pharmacies require a GDP license to sell medical cannabis. Granted by the IMCA after obtaining the final business licenses, the license to sell medical cannabis is subjected to compliance with GDP and GSP standards of the IMCA, which include, but not limited to, full compliance with the GSP protocols, which are dedicated security measures for storage (which is subject to certain capacity limitations). Under the GDP, only certified cannabis pharmacists are allowed to sell cannabis and advise patients.

Medical Cannabis Transportation Regulations

The transportation of medical cannabis is also ~~subjected~~subject to the GDP and GSP standards and requires a transport license from the IMCA. Certain security measures are applied to the transportation of medical cannabis which vary in accordance with the quantities shipped and where the product is shipped to. For example, shipping cannabis from manufacturers to wholesalers requires armed vehicles and with security personnel while home deliveries require lighter security measures as long as the quantity ~~handles~~ is less than one kilogram.

Export & Import of Pharmaceutical-Grade Cannabis

The State of Israel is bound by the Narcotics Convention, which governs the import and export of cannabis between countries that are a party to the Narcotics Convention. The Narcotics Convention is an international treaty to prohibit the production and supply of specific drugs (nominally narcotic drugs and drugs with similar effects) except under license for specific purposes, such as medical treatment and research. The Commission on Narcotic Drugs and the World Health Organization were empowered to add, remove, and transfer drugs among the Narcotics Convention’s four schedules of controlled substances. The International Narcotics Control Board was authorized to administer controls on drug production, international trade, and dispensation. The United Nations Office on Drugs and Crime was delegated the Board’s day-to-day work of monitoring compliance in each country and working with national authorities to ensure compliance with the Narcotics Convention. The Narcotics Convention has 186 state parties, including all the countries in which we operate and plan to operate.

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From an export perspective, in January 2019, the Israeli government approved the export of pharmaceutical-grade cannabis and cannabis-based products. Nevertheless, during the fourth quarter of 2020, the Israeli government, as part of a pilot project to issue export permits for licensed producers, granted us a temporary export permit. The pilot program (as well as our temporary export permit) was set to expire on December 31, 2020, but was subsequently extended to March 2021. The MOH extended the export pilot program multiple times, and it has now entered into its commercial phase. Export from Israel is generally permitted as long as the exporter complies with the regulations of the importing country.

From an import perspective, in January 2020, due to a shortage in the Israeli market of pharmaceutical-grade cannabis, the Israeli MOH and the IMCA expedited the process of approving import licenses of such cannabis, and for the first time ever, pharmaceutical-grade cannabis and cannabis-based products were imported into Israel. In October 2020, the IMCA published a directive that included updated qualifications for a licensee to receive an import license and the guidelines under which such import may take place. From time to time, the MOH revises the guidelines for imports, and the Company has consistently followed all the updates, ensuring a steady flow of imports.

Regulation regarding Cannabidiol (“CBD”)

On December 8, 2020, Israel’s Minister of Health signed a new regulation that removed CBD from the Israeli DDO. For the removal to be completed, the regulation must go before the Knesset’s Committee on Health, Welfare and Labor for a vote and ratification. As the Knesset was dissolved on December 23, 2020, the regulation did not go before the committee. In December 2021, the Minister of Health announced that he had formed a specialists committee to review the effect of removing CBD from the Dangerous Drugs Ordinance. The committee was established with the goal of mapping existing legislation and policies around the world regarding the use and regulation of CBD and applying the information in examining how to implement similar policies within Israel.

The committee also reviewed the quality and quantity of the raw materials used and the concentration levels within the products. The committee examined existing information regarding the safety of such products for general public use, a move that allowed it to determine the risk-management steps that would be needed in legalizing CBD production and use within Israel. The committee recommended to the Health Ministry that CBD be removed from the list of dangerous drugs, provided the maximum concentration of THC in the finished product does not exceed 0.2%.

In August 2022, the MOH published a draft outline of the transition reform from licenses to prescriptions for medical treatment of cannabis (the “Proposed Outline”). On June 13, 2023, the health committee of the Knesset approved The Dangerous Drugs Regulations (Amendment), 2023 (hereinafter referred to as the “Regulations Amendment”), which entail a model change from issuing licenses to prescriptions permits in a number of indications as a first step following the publication of the Proposed Outline. The Regulations Amendment allows accessibility and significant bureaucratic relief for patients in these indications. The purpose of the new prescription model is to enable qualified specialist doctors (excluding general practitioner, family physician, internal physician and pediatrician) to write prescriptions for medical cannabis for patients under the supervision of health care providers (widely known as Kupat Holim), without requiring a usage license from the Ministry of Health.

Intellectual Property

We ~~currently~~ do not hold any patents or patent applications.

Employees

We currently employ twenty-six full-time employees and a fluctuating number of casual staff on an as-needed basis depending on the volume of work during production. We anticipate that we will retain additional full-time employees as we continue to increase production capacity in the Facility. We believe that there are a sufficient number of ~~potential~~potentially qualified employees available to meet our future needs. No employee is a member of any union. We believe our relationship with our employees is satisfactory.

Competition

Because the cannabis market is very saturated, we have significant competition from a number of other companies. These competitors consist of both public and private companies, who are also seeking to market their products in the EU. Many of our competitors have greater resources, both financial and otherwise, than the resources presently available to us. This fact is a significant obstacle to our ~~being~~growth ~~able~~plans. toAs ~~achieve~~a ~~our~~result, ~~growth~~it ~~plans and~~ will require our management team to identify areas we can best compete in to maximize our ~~profitability~~operating performance.

ITEM 1A - RISK FACTORS

An investment in our common ~~stock~~shares is highly speculative, involves a high degree of risk and should be made only by investors who can afford a complete loss. You should carefully consider the following risk factors, together with the other information in this report, including our financial statements and the related notes, before you decide to buy our common ~~stock~~shares. If any of the following risks actually occurs, then our business, financial condition or results of operations could be materially adversely affected, the trading volume and value of our common ~~stock~~shares could decline, and you may lose all or part of your investment therein.

Substantial doubt about the Company’s ability to continue as a going concern.

Our ability to continue as a going concern is dependent upon our ability in the future to grow our revenue and achieve profitable operations and, in the meantime, to obtain the necessary financing to meet our obligations and repay our liabilities when they become due. External financing, predominantly by the issuance of equity and debt, will be sought to finance the operations of the Company; however, there can be no certainty that such funds will be available at terms acceptable to us, or at all. These conditions indicate the existence of material uncertainties that may cast significant doubt about our ability to continue as a going concern.

During the years ended December 31, 2025 and 2024, we incurred net losses of $11,131,448 and $9,905,789, respectively. As at December 31, 2025, we had cash of $1,804 and a working capital deficit of $30,278,570 and had negative operating cash flow of $789,102 for the year ended December 31, 2025. We expect that our operating expenses will increase over the next twelve months in order to continue our development activities. Based on our average monthly expenses, we estimate that our cash on hand and from operations will not be sufficient to support our operations through the balance of 2026. Should this amount not be sufficient to support our continuing operations, we do not expect to be able to raise any additional capital through debt financing from traditional lending sources since we are not currently generating a profit from operations. Therefore, we only expect to raise money through equity financing via the sale of our common shares or equity-linked securities such as convertible debt. Our operations are currently funded through advances and support from related parties. If we cannot raise the funding that we need in order to continue to operate our business, we will be forced to delay, scale back or eliminate some or all of our proposed operations. If any of these were to occur, there is a substantial risk that our business will fail. If we are unsuccessful in raising additional financing, we will need to curtail, discontinue, or cease operations.

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We have a history of losses and will require financing, which may not be available.

As of December 31, 2025, we had an accumulated deficit of $112.3 million and incurred a net loss of approximately $11.1 million on revenues of $1.4 million in the year ended December 31, 2025.We have limited assets, which increases our vulnerability to general adverse economic and industry conditions, limits our flexibility in planning for and reacting to changes in our business and industry, and may place us at a competitive disadvantage to competitors with sufficient capitalization. If we are unable to obtain sufficient financing on satisfactory terms and conditions, we will be forced to curtail or abandon our plans or operations. Our ability to obtain financing will depend upon a number of factors, many of which are beyond our control.

We have had a limited operating history in the cannabis industry and our ability to grow sales and achieve profitability is questionable.

AsWe ofhave ~~December 31, 2024, we~~ had ~~an accumulated deficit of $101.2 million and incurred~~ a ~~net~~limited ~~loss~~operating ofhistory ~~approximately $9.9 million on revenues of $820,137~~ in the ~~year~~cannabis ~~ended~~industry ~~December~~and ~~31,~~our ~~2024. Our~~ ability to increase our revenues and achieve our plans for growth and profitability depends on many factors, which include:

● obtaining additional financing; ● successfully implementing our business strategy; ● increasing revenues; and ● controlling costs.

There can be no assurance that we will be able to successfully implement our business plan, meet our challenges and become profitable in the future.

Substantial doubt about the Company’s ability to continue as a going concern.

The Company is in the growth stage and is currently seeking business arrangements to expand its product offerings in the medical and recreational cannabis industry and grow its revenue. The Company’s ability to continue as a going concern is dependent upon its ability in the future to grow its revenue and achieve profitable operations and, in the meantime, to obtain the necessary financing to meet its obligations and repay its liabilities when they become due. External financing, predominantly by the issuance of equity and debt, will be sought to finance the operations of the Company; however, there can be no certainty that such funds will be available at terms acceptable to the Company, or at all. These conditions indicate the existence of material uncertainties that may cast significant doubt about the Company’s ability to continue as a going concern.

We started to generate revenue in 2024, but as of December 31, 2024 we had cash of $2,156 and a working capital deficit of $24,733,636 and had negative operating cash flow of $1,697,232 for the year ended December 31, 2024. We expect that our operating expenses will increase over the next twelve months to continue our development activities. Based on our average monthly expenses and current burn rate of approximately $90,000 per month, we estimate that our cash on hand will not be able to support our operations through the balance of 2025. This amount could increase if we encounter difficulties that we cannot anticipate at this time or if we acquire other businesses. Should this amount not be sufficient to support our continuing operations, we do not expect to be able to raise any additional capital through debt financing from traditional lending sources since we are not currently generating a profit from operations. Therefore, we only expect to raise money through equity financing via the sale of our common stock or equity-linked securities such as convertible debt. We are currently in discussions with a number of investors who could provide the capital required for our ongoing operations. If we cannot raise the funding that we need in order to continue to operate our business, we will be forced to delay, scale back or eliminate some or all of our proposed operations. If any of these were to occur, there is a substantial risk that our business will fail. If we are unsuccessful in raising additional financing, we may need to curtail, discontinue, or cease operations.

We will need to raise additional funds in the future that may not be available on acceptable terms or available at all.

Until we are able to generate sufficient cash flow from our existing operations, we will need to issue additional debt or equity securities to fund our business and business plan. If we issue equity or convertible debt securities to raise additional funds, our existing ~~stockholders~~shareholders will likely experience dilution, and the new equity or debt securities may have rights, preferences, and privileges senior to those of our existing ~~stockholders~~shareholders. If we incur additional debt, it may increase our leverage, requiring us to pay additional interest expenses. We may not be able to obtain financing on favorable terms, or at all, in which case, we may not be able to develop or enhance our products, execute our business plan, take advantage of future opportunities, or respond to competitive pressures.

Convertible notes in default and related penalty provisions may adversely affect our financial condition

As of December 31, 2025, all of our outstanding convertible notes were past their stated maturity dates and remained unpaid. Although the notes continue to be subject to their original contractual terms, failure to repay the notes at maturity exposes us to increased financial risk, including the potential for penalties and unfavorable settlement terms.

Due to the late filing of prior annual reports and the loss of our active listing on the OTC market, the penalty provisions associated with all outstanding convertible notes became effective. We estimate that the maximum penalties could equal up to one times the face value of the outstanding convertible notes, resulting in an accrued penalty liability of $735,002 as of December 31, 2025. These accrued penalties and the continued default status of the notes may materially and adversely affect our liquidity, financial condition, and ability to obtain additional financing. We may be required to satisfy these obligations through cash payments, the issuance of equity securities, or a combination thereof, which could result in significant dilution to existing shareholders.

Our actual financial position and results of operations may differ materially from management’s expectations.

We expect to incur significant ongoing costs and obligations related to its investment in infrastructure and growth and for regulatory compliance, which could have a material adverse impact on the Company’s results of operations, financial condition and cash flows. In addition, future changes in regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to our operations, increased compliance costs or give rise to material liabilities, which could have a material adverse effect on the business, results of operations and our financial condition.. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses. We may incur significant losses in the future for a number of reasons, including the other risks described in this report, and unforeseen expenses, difficulties, complications and delays, and other unknown events. If we are unable to achieve and sustain profitability, the market price of our common ~~stock~~shares may decrease.

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The Company is reliant on the retention of licenses to produce medical and recreational cannabis products in Canada.

Our ability to grow, store and sell medical and recreational marijuana and cannabis oil in Canada is dependent on retaining the appropriate licenses with Health Canada. Failure to comply with the requirements of any license inspection or failure to retain the appropriate licenses with Health Canada would have a material adverse impact on the future business, financial condition and operating results of the Company.

Although we believe that we meet the requirements of the Cannabis at present, there can be no guarantee that Health Canada will renew the Licenses or, if renewed, that they will be renewed on the same or similar terms or that Health Canada will not revoke the Licenses. Should we fail to comply with the requirements of the Licenses or should Health Canada not renew the Licenses when required or renew the Licenses on different terms or revoke the Licenses, there would be a material adverse effect on our business, financial condition and results of operations.

Government licenses are currently, and in the future may be, required in connection with the Company’s operations, in addition to other unknown permits and approvals which may be required. To the extent such permits and approvals are required and not obtained, the Company may be prevented from operating and/or expanding its business, which could have a material adverse effect on the Company’s business, financial condition and results of operations.

We are subject to changes in Canadian laws, regulations and guidelines which could adversely affect our future business, financial condition and results of operations.

On October 17, 2018, the Canadian federal government legalized the production, distribution and sale of recreational cannabis for adult use under the Cannabis Act (see “Regulatory Overview”). No legal market previously existed for adult recreational use of cannabis in Canada. For this reason, projections for both short and long-term market conditions for the retail of cannabis remain uncertain.

Our operations are subject to various laws, regulations and guidelines relating to the manufacture, management, packaging/labeling, advertising, sale, transportation, storage and disposal of medical and recreational cannabis but also including laws and regulations relating to drugs, controlled substances, health and safety, the conduct of operations and the protection of the environment. Changes to such laws, regulations and guidelines due to matters beyond our control may cause material adverse effects to our business, financial condition and results of operations.

To date, fresh cannabis, dried cannabis, cannabis oil products, primarily edibles and beverages infused with cannabis are permitted under the Cannabis Act. However, there is uncertainty regarding how and when certain regulatory changes will be implemented. Further, the general legislation framework pertaining to the Canadian recreational cannabis market is subject to significant provincial and territorial regulation, which varies across provinces and territories. Unfavorable regulatory changes, delays or both may therefore materially and adversely affect the future business, financial condition and results of operations of the Company.

However, there is uncertainty regarding how and when certain regulatory changes will be implemented. Further, the general legislation framework pertaining to the Canadian recreational cannabis market is subject to significant provincial and territorial regulation, which varies across provinces and territories. Unfavorable regulatory changes, delays or both may therefore materially and adversely affect the future business, financial condition and results of operations of the Company.

We may not be able to develop our products which could prevent us from ever becoming profitable.

If we cannot successfully develop, manufacture and distribute our products, or if we experience difficulties in the development process, such as capacity constraints, quality control problems or other disruptions, we may not be able to develop market-ready commercial products at acceptable costs, which would adversely affect our ability to effectively enter the European and Asian cannabis market. A failure by the Company to achieve a low-cost structure through economies of scale or improvements in cultivation and manufacturing processes would have a material adverse effect on our commercialization plans and our business, prospects, results of operations and financial condition.

No assurance of sustainable revenues.

There can be no assurance that we will generate sufficient and sustainable revenues to enable us to operate at profitable levels or to generate positive cash flow. As a result of our limited operating history in the cannabis market and the nature of the markets in which we compete, we may not be able to accurately predict our revenues. Any failure by us to accurately make such predictions could have a material adverse effect on our business, results of operations, and financial condition. Further, our current and future expense levels are based largely on our investment plans and estimates of future revenues. We expect operating results to fluctuate significantly in the future as a result of a variety of factors, many of which are outside of our control. Factors that may adversely affect our operating results include, among others, demand for our products and services, the budgeting cycles of potential customers, lack of enforcement of or changes in governmental regulations or laws, the amount and timing of capital expenditures and other costs relating to the expansion of our operations, the introduction of new or enhanced products and services by us or our competitors, the timing and number of new hires, changes in our pricing policy or those of our competitors, the mix of our products, increases in the cost of raw materials, technical difficulties with the products, incurrence of costs relating to future acquisitions, general economic conditions, and market acceptance of our products. As a strategic response to changes in the competitive environment, we may, from time to time, make certain decisions regarding pricing, service, marketing or business combinations that could have a material adverse effect on our business, results of operations, and financial condition. Any seasonality is likely to cause quarterly fluctuations in our operating results, and there can be no assurance that such patterns will not have a material adverse effect on our business, results of operations, and financial condition. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall.

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We may not be able to effectively manage our growth and operations, which could materially and adversely affect our business.

We plan to grow through development of sales into the EU and Israel. If we are successful in implementing our plans, we may in the future experience rapid growth, which will require, among other things, continued development of our financial and management controls and management information systems, stringent control of costs, the ability to attract and retain qualified management personnel and the training of new personnel. We intend to utilize outsourced resources, and hire additional personnel, to manage our expected growth and expansion. Failure to successfully manage such growth and development could have a material adverse effect on our business and operations.

We face competition from companies that have significantly greater resources.

The cannabis market is very saturated and we have significant competition from a number of other companies. These competitors consist of both public and private companies, who are also seeking to market their products in the EU. Many of our competitors have greater resources, both financial and otherwise, than the resources presently available to us. This fact is a significant obstacle to our being able to achieve our growth plans and will require our management team to identify areas we can best compete in to maximize our profitability.

If we are unable to attract and retain key personnel, we may not be able to compete effectively in the cannabis market.

~~The~~Our ~~Company’s~~ future success will depend upon ~~its~~our ability to attract and retain key management, including our President/Chief Executive Officer, technical experts and sales personnel. We intend to enhance our management and technical expertise by recruiting qualified individuals who possess desired skills and experience in certain targeted areas. Our inability to retain employees and attract and retain sufficient additional employees or engineering and technical support resources could have a material adverse effect on our business, results of operations and financial condition. Shortages in qualified personnel or the loss of key personnel limit our ability to develop and market our cannabis-related products. The loss of any of our senior management or key employees could materially adversely affect our ability to execute our business plan and strategy, and we may not be able to find adequate replacements on a timely basis, or at all.

If we are unable to keep up with technological developments, our business could be negatively affected.

The markets for our products are expected to be characterized by rapid technological change and be highly competitive with respect to timely innovations. Accordingly, we believe that our ability to succeed in the sale of our products will depend significantly upon the technological quality of our products and services relative to those of our competitors, and upon our ability to continue to develop and introduce new and enhanced products and services at competitive prices and in a timely and cost-effective manner. To develop such new products, we will depend upon close relationships with existing customers by leveraging upon their feedback on the quality of our products, our ability to continue to develop and introduce new and enhanced products at competitive prices and in a timely and cost-effective manner and grow the markets that we offer these products. There can be no assurance that we will be able to develop and market our products successfully or respond effectively to the technological changes or new product offerings of our potential competitors. We may not be able to develop the required technologies or products on a cost-effective and timely basis, and any inability to do so could have a material adverse effect on our business, results of operations and financial condition, and.

We may be exposed to significant currency exchange fluctuations.

Our revenues and expenses are expected to be primarily denominated in Canadian dollars (“CAD”) and Euros (“EUR”) and therefore may be exposed to significant currency exchange fluctuations due to translation to the Company’s reporting currency in United States dollars (“USD”). Recent events in the global financial markets have been coupled with increased volatility in the currency markets. Fluctuations in the exchange rate between the USD and the CAD may have a material adverse effect on the Company’s business, financial condition and operating results. The Company may, in the future, establish a program to hedge a portion of its foreign currency exposure with the objective of minimizing the impact of adverse foreign currency exchange movements. However, even if the Company develops a hedging program, there can be no assurance that it will effectively mitigate currency risks.

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We may be subject to product recalls self-imposed or imposed by regulators for product defects.

Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling disclosure. If any of our products are recalled due to an alleged product defect or for any other reason, we could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. We may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention. Although we have detailed procedures in place for testing our products, there can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. A recall for any of the foregoing reasons would likely lead to decreased demand for our products and could have a material adverse effect on the results of our operations and our financial condition. Additionally, product recalls may lead to increased scrutiny of our operations by Health Canada or other regulatory agencies, requiring further management attention and potential legal fees and other expenses.

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Changes in product specifications and regulatory standards could have a material adverse effect on our costs and operating results.

Our business is subject to evolving product specifications and regulatory standards applicable to cannabis products, including requirements related to THC levels. Changes in these standards have affected the recoverability of certain products and increased cost of goods sold due to product rework or inventory write‑offs. Any future changes in regulatory requirements or product specifications may further reduce inventory recoverability and materially impact the Company’s financial condition and operating results.

We are reliant on key inputs, such as water and utilities, and any interruption of these services could have a material adverse effect on our finances and operating results.

Our business is dependent on several key inputs and their related costs including raw materials and supplies related to its growing operations, as well as electricity, water and other local utilities. Any significant interruption or negative change in the availability or economics of the supply chain for these key inputs could materially impact our business, financial condition and operating results.

We may be subject to liability claims for damages and other expenses not covered by insurance.

Our business, profitability, and growth prospects could be adversely affected if we are required to pay damages or defense costs in connection with a liability claim that falls outside the scope of our insurance coverage. While we have historically maintained insurance coverage with respect to builder’s risk, general liability, and property, we have not paid any insurance premiums since early 2024. As a result, our current insurance coverage may have lapsed or may not be sufficient to cover potential claims. There is no assurance that we will be able to reinstate or obtain insurance in the future in amounts, or at a cost, that would enable us to be adequately protected. Additionally, if our insurance costs or claim-related expenses increase, our operating cash flows may be negatively impacted. Further, market rates for insurance premiums and deductibles have been steadily increasing, which may further limit our ability to secure adequate insurance coverage going forward.

We operate within the cannabis industry, which might result in additional difficulties and complexities associated with obtaining adequate insurance coverage.

At the date of this report, we have ~~secured insurance coverage with respect to builder’s risk, general liability and property. We have~~ not yet secured insurance coverage with respect to workers’ compensation, directors’ and officers’ insurance, fire and other similar policies customarily obtained for businesses to the extent commercially appropriate; and, because we are engaged in and operate within the cannabis industry, there might be exclusions and additional difficulties and complexities associated with obtaining such insurance coverage that could cause us to suffer uninsured losses, which could adversely affect our business, results of operations, and profitability. There is no assurance that we will be able to obtain and utilize such insurance coverage, if necessary.

The cultivation of cannabis includes risks inherent in an agricultural business including the risk of crop loss, sudden changes in environmental conditions, equipment failure, product recalls and others.

Our business involves the growing of medical and recreational marijuana. Such business is subject to the risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks. Although we expect that any such growing will be completed indoors under climate-controlled conditions, there can be no assurance that natural elements will not have a material adverse effect on future production. The Company depends on a single facility for cannabis production, and any disruption to operations at this location cannot be offset by an alternative production site. As a result, any loss in production could materially impact the Company’s ability to meet demand and fulfill its business objectives.

The cultivation of cannabis involves a reliance on third party ~~transportation~~distribution services which could result in supply delays, reliability of delivery and other related risks.

For our customers to receive their product, we rely on third party ~~transportation~~distribution services. This can cause logistical problems with and delays in patients obtaining their orders and cannot be directly controlled by the Company. Any delay by third party ~~transportation~~distribution services may adversely affect the Company’s financial performance. Moreover, security of the product during transportation to and from the Company’s facilities is critical due to the nature of the product. A breach of security during transport could have material adverse effects on the Company’s business, financials and prospects. Any such breach could impact the Company’s future ability to continue operating under its licenses or the prospect of renewing its licenses.

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We are reliant on information technology systems and may be damaged by cyber- attacks.

We have entered into agreements with third parties for hardware, software, telecommunications and other information technology (“IT”) services in connection with our operations. Our operations depend, in part, on how our suppliers protect networks, equipment, IT systems and software against damage from a number of threats, including, but not limited to, cyber-attacks, cable cuts, damage to physical plants, natural disasters, intentional damage and destruction, fire, power loss, hacking, computer viruses, vandalism and theft. The Company’s operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as ~~preemptive~~pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenditures. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact our reputation and results of operations.

We have not experienced any material losses to date relating to cyber-attacks or other information security breaches, but there can be no assurance that we will not incur such losses in the future. Our risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access is a priority. As cyber threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

We may be subject to breaches of security at our Canadian facility, or in respect of electronic documents and data storage and may face risks related to breaches of applicable privacy laws.

Given the nature of the Company’s product and its lack of legal availability outside of channels approved by the Government of Canada, as well as the concentration of inventory in our facilities, despite meeting or exceeding Health Canada’s security requirements, there remains a risk of shrinkage as well as theft. A security breach at our facilities could expose us to additional liability and to potentially costly litigation, ~~increase~~increased expenses relating to the resolution and future prevention of these breaches and may deter potential customers from choosing the Company’s products.

A privacy breach may occur through procedural or process failure, information technology malfunction, or deliberate unauthorized intrusions. Theft of data for competitive purposes is an ongoing risk whether perpetrated via employee collusion or negligence or through deliberate cyber-attack. Any such theft or privacy breach would have a material adverse effect on our business, financial condition and results of operations.

We may in the future be subject to legal proceedings, regulatory disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, and materially harm our business, results of operations, cash flows, and financial condition.

From time to time, we may be subject to claims, lawsuits, government investigations, and other proceedings involving product liability, consumer protection, competition and antitrust, intellectual property, privacy, securities, tax, labor and employment, health and safety, our direct distribution model, environmental claims, commercial disputes, corporate, and other matters that could adversely affect our business, results of operations, cash flows, and financial condition. In the ordinary course of business, we have been the subject of complaints or litigation, including claims.

Litigation and regulatory proceedings may be protracted and expensive, and the results are difficult to predict. Additionally, our litigation costs could be significant, even if we achieve favorable outcomes. As of the date of this report, we have outstanding lawsuits against us. Adverse outcomes with respect to litigation or any of these legal proceedings may result in significant settlement costs or judgments, penalties and fines, or require us to modify, make temporarily unavailable, or stop manufacturing or selling our vehicles in some or all markets, all of which could negatively affect our sales and revenue growth and adversely affect our business, prospects, results of operations, cash flows, and financial condition.

The results of litigation, investigations, claims, and regulatory proceedings cannot be predicted with certainty, and determining reserves for pending litigation and other legal and regulatory matters requires significant judgment. There can be no assurances that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, results of operations, cash flows, and financial condition. In addition, the threat or announcement of litigation or investigations by governmental authorities or other parties, irrespective of the merits of the underlying claims, may itself have an adverse impact on the trading price of our securities.

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Risks Related to the Regulatory System and Business Environment for Cannabis

The expansion of the medical and recreational cannabis industry may require new clinical research into effective medical therapies.

Research in Canada, the U.S. and internationally regarding the medical benefits, viability, safety, efficacy, dosing and social acceptance of cannabis or isolated cannabinoids remains in early stages. There have been relatively few clinical trials on the benefits of cannabis or isolated cannabinoids. Although the Company believes that the articles, reports and studies support its beliefs regarding the medical benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, future research and clinical trials may prove such statements to be incorrect, or could raise concerns regarding, and perceptions relating to, cannabis. Given these risks, uncertainties and assumptions, investors should not place undue reliance on such articles and reports. Future research studies and clinical trials may draw opposing conclusions to those stated in this Prospectus or reach negative conclusions regarding the medical benefits, viability, safety, efficacy, dosing, social acceptance or other facts and perceptions related to medical and recreational cannabis, which could have a material adverse effect on the demand for the Company’s products with the potential to lead to a material adverse effect on the Company’s business, financial condition and results of operations.

~~Under~~Regulatory ~~Canadian regulations, a licensed producer of cannabis may have~~ restrictions on the ~~type~~marketing and ~~form~~sale of ~~marketing~~cannabis itproducts ~~can~~in ~~undertake~~our ~~which~~target markets could materially impact ~~sales~~our ~~performance~~operating results.

The development of our business and operating results may be ~~hindered~~adversely affected by ~~applicable~~ restrictions on sales, ~~and~~ marketing, ~~activities~~product ~~imposed~~specifications, byand ~~Health~~distribution ~~Canada~~imposed orby ~~U.S.~~ regulatory authorities. ~~The~~in ~~regulatory~~the ~~environment~~jurisdictions in ~~Canada~~which ~~limits~~we ~~our~~seek ~~ability~~ to ~~compete~~operate, ~~for~~including ~~market~~in ~~share~~the European Union and Asia. Cannabis-related regulations in athese ~~manner~~markets ~~similar~~impose tolimitations ~~other~~on ~~industries.~~advertising, Iflabeling, weproduct ~~are~~form, ~~unable~~THC content, and distribution channels, which may restrict the Company’s ability to effectively market ~~our~~its products and compete for market share,. orIf ifwe ~~the~~are ~~costs~~unable ofto ~~compliance~~comply with ~~government~~evolving ~~legislation~~regulatory ~~and~~requirements ~~regulation~~or if the costs associated with compliance cannot be ~~absorbed~~offset through ~~increased~~pricing ~~selling~~or ~~prices~~operational ~~for its products~~efficiencies, our ~~sales~~financial condition and operating results ~~would~~could be materially adversely affected.

Publicity or consumer perception may influence our business.

We believe the recreational and medical ~~and recreational~~ cannabis industries are highly dependent upon consumer perception regarding the safety, efficacy and quality of the cannabis produced. Consumer perception of our products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the consumption of cannabis products.

There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the cannabis market generally, any particular product or consistent with earlier publicity. Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or publicity could have a material adverse effect on the demand for our products and our business, results of operations and financial condition. Our dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a material adverse effect on our company, the demand for our products, and our results of operations, and financial condition. Adverse publicity reports or other media attention regarding the safety, efficacy and quality of medical and recreational cannabis in general, or the Company’s products specifically, or associating the consumption of cannabis with illness or other negative effects or events, could have such a material adverse effect. Such adverse publicity reports or other media attention could arise even if the adverse effects associated with such products resulted from consumers’ failure to consume such products appropriately or as directed.

16Regulatory ~~Table~~scrutiny of ~~Contents~~our industry may negatively impact our ability to raise additional capital.

Regulatory scrutiny of our industry may negatively impact our ability to raise additional capital

Our business activities rely on newly established and/or developing laws and regulations in Canada and other jurisdictions in which we intend to operate. These laws and regulations are rapidly evolving and subject to change with minimal notice. Regulatory changes may adversely affect our profitability or cause us to cease operations entirely. The cannabis industry may come under the scrutiny or further scrutiny by Health Canada and other regulatory bodies. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any proposals will become law. The regulatory uncertainty surrounding our industry may adversely affect our business and operations, including without limitation, the costs to remain compliant with applicable laws and the impairment of its ability to raise additional capital, which could reduce, delay or eliminate any return on investment in our company.

~~Marijuana~~16 ~~remains~~Table ~~illegal~~of ~~under U.S. federal law.~~Contents

~~Our~~Risks ~~activities~~related ~~are, and will continue~~ to ~~be,~~our ~~subject~~common toshares ~~evolving regulation by governmental authorities. The legality of the production, cultivation, extraction, distribution, transportation~~ and ~~use~~their ofmarket cannabis differs among states in the United States. Marijuana remains a Schedule I drug under the Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute, use or possess cannabis in the United States. In those states in which the cultivation, production, extraction, distribution, transportation, possession or use of marijuana has been legalized, these actions continue to be a violation of federal law pursuant to the Controlled Substances Act. Due to the current regulatory environment in the United States, new risks may emerge; management may not be able to predict all such risks.value:

~~Since~~A ~~federal~~limited ~~law~~public ~~criminalizing~~trading ~~the~~market ~~cultivation,~~exists ~~production,~~for ~~extraction,~~our ~~distribution,~~common ~~transportation~~shares, ~~possession~~which ormakes ~~use~~it ofdifficult ~~marijuana~~for ~~pre-empts state laws that legalize such actions, enforcement of federal law regarding marijuana is a significant risk and would greatly harm~~ our ~~business,~~shareholders ~~prospects,~~to ~~revenue,~~sell ~~results~~their ofcommon ~~operation and financial condition~~shares. Any ~~proceedings~~trading ~~brought~~in ~~against~~our ~~Vireo~~shares ~~under~~may ~~federal~~have ~~law~~a ~~may~~significant ~~materially,~~effect ~~adversely~~on ~~affect~~ our ~~operations~~share ~~and financial performance~~price.

~~Due~~Historically our common shares have traded on the OTC Markets under the symbol “CPMD.” However, as of the filing of this report, our common shares have been relegated to being only traded on the ~~conflicting~~“expert ~~views~~market”. ~~between~~We ~~state~~expect ~~legislatures~~with our filing of this annual report, our common shares will resume trading on the OTC Markets. Until that time, however, our shareholders will experience difficulty trading our common shares. Even when we were current in our reports, the trading activity of our common shares was volatile and a market may not develop or be sustained. As a result, any trading price of our common shares may not be an accurate indicator of the ~~federal~~valuation ~~government~~of ~~regarding~~our ~~cannabis~~common shares. If a more liquid public market for our common shares does not develop, ~~cannabis~~investors ~~businesses~~may ~~are~~not ~~subject~~be able to ~~inconsistent~~resell ~~laws~~the shares of our common shares that they have purchased and ~~regulations~~may lose all of their investment. ~~There~~No assurance can be nogiven ~~assurance~~ that ~~the~~an ~~federal~~active ~~government~~market will develop or that a shareholder will ever be able to liquidate their shares without considerable delay, if at all. Many brokerage firms may not ~~enforce~~be ~~federal~~willing ~~laws~~to ~~relating~~affect transactions in our common shares. Even if an investor finds a broker willing to ~~marijuana~~affect a transaction in our common shares, the combination of brokerage commissions, state transfer taxes, if any, and ~~seek~~any toother ~~prosecute~~selling ~~cases~~costs ~~involving~~may ~~marijuana~~exceed ~~businesses~~the selling price. Furthermore, our share price may be impacted by factors that are ~~otherwise~~unrelated ~~compliant~~or ~~with~~disproportionate ~~state~~to ~~laws~~our inoperating performance. These market fluctuations, as well as general economic, political, and market conditions, such as recessions, interest rates, and international currency fluctuations, may adversely affect the ~~future.~~market price and liquidity of our common shares.

~~Risks~~We ~~related~~may be subject to heightened scrutiny by United States and Canadian authorities, which could ultimately lead to the market for our common ~~stock~~shares becoming highly illiquid and ~~its~~our ~~market~~shareholders ~~value:~~having no ability to effect trades

WeCurrently, ~~have~~our ~~limited~~common ~~capitalization~~shares are traded on OTC Pink Sheets in the United States. Our investments in the United States, may become the subject of heightened scrutiny by regulators, shares exchanges and ~~will~~other ~~require~~authorities ~~financing~~in Canada and the United States. As a result, ~~which~~we may ~~not~~be subject to significant direct and indirect interaction with public officials. There can be ~~available~~no assurance that this heightened scrutiny will not in turn lead to the imposition of certain restrictions on our ability to operate or invest in the United States or any other jurisdiction, in addition to those described herein.

WeExisting ~~have~~shareholders limited capitalization, which increases our vulnerability to general adverse economic and industry conditions, limits our flexibility in planning for and reacting to changes in our business and industry, and may ~~place~~be usdiluted ~~at a competitive disadvantage~~ to ~~competitors~~the ~~with~~extent ~~sufficient capitalization. If~~ we ~~are~~raise ~~unable~~additional tofunds ~~obtain~~through ~~sufficient~~future ~~financing~~equity on satisfactory terms and conditions, we will be forced to curtail or abandon our plans or operations. Our ability to obtain financing will depend upon a number of factors, many of which are beyond our control.financings

AWe ~~limited~~continue ~~public~~to ~~trading~~sell ~~market~~shares ~~exists~~and issue notes convertible into shares for cash to fund our ~~common~~operations ~~stock,~~that ~~which~~will ~~makes~~dilute itthe ~~difficult~~current ~~for~~shareholders. ~~our~~There ~~stockholders~~is no guarantee that the Company will be able to ~~sell~~achieve ~~their~~its ~~common~~business ~~stock~~objectives. onThe ~~the~~continued ~~public~~development ~~markets~~of our company will require additional financing. ~~Any~~The ~~trading~~failure to raise such capital could result in ~~our~~the ~~shares~~delay ~~may~~or ~~have~~indefinite apostponement ~~significant~~of ~~effect~~current onbusiness objectives or our ~~stock~~going ~~prices~~out of business. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable to us.

~~Historically~~If ~~our~~additional ~~common~~funds ~~stock~~are ~~has~~raised ~~traded~~through onissuances ~~the~~of ~~OTC~~equity ~~Markets~~or ~~under~~convertible ~~the~~debt ~~symbol “CPMD.” However~~securities, asexisting ofshareholders ~~the~~will ~~filing~~suffer ~~of this Report~~dilution, ~~our~~which ~~common~~in ~~stock~~some ~~has~~cases ~~been~~may ~~relegated~~be tosignificant, ~~being~~and ~~only~~any ~~traded~~new onequity ~~the~~securities ~~“expert~~issued ~~market”.~~could Wehave ~~expect with our filing of this Report~~rights, ~~our~~preferences ~~common~~and ~~stock~~privileges ~~will~~superior ~~resume~~to ~~trading~~those onof ~~the~~holders ~~OTC~~of ~~Markets. Until that time however,~~ our ~~shareholders will experience difficulty trading our~~ common ~~stock~~shares. ~~Even~~Our ~~when~~articles weof ~~were~~incorporation ~~current~~permit ~~in our reports,~~ the ~~trading~~issuance ~~activity~~ of ~~our~~5,000,000,000 common ~~stock~~shares, ~~is volatile~~ and ~~may~~shareholders ~~not~~have ~~develop~~no orpre-emptive berights ~~sustained.~~in Asconnection awith ~~result,~~further ~~any~~issuances. ~~trading~~The ~~price~~directors of ~~our~~the ~~common~~Company ~~stock~~have ~~may~~discretion ~~not~~to bedetermine anthe ~~accurate~~price ~~indicator~~and of the ~~valuation~~terms of ~~our~~further ~~common stock~~issuances. ~~Any~~In ~~trading~~addition, infrom ~~our~~time ~~shares~~to ~~could have a significant effect on our stock price. If a more liquid public market for our common stock does not develop~~time, ~~then~~we ~~investors~~ may ~~not~~enter beinto ~~able~~transactions to ~~resell~~acquire assets or the shares of ~~our~~other ~~common~~companies. ~~stock~~These ~~that~~transactions ~~they have purchased and~~ may ~~lose all of their investment. No assurance can~~ be ~~given~~financed ~~that~~wholly ~~an active market will develop~~ or ~~that~~partially awith ~~stockholder~~debt, ~~will~~which ~~ever~~may betemporarily ~~able~~increase toour ~~liquidate~~debt ~~its shares of common stock without considerable delay, if at all~~levels. ~~Many~~Any ~~brokerage~~debt ~~firms~~financing ~~may~~secured ~~not be willing to affect transactions~~ in the ~~securities.~~future ~~Even~~could ifinvolve anrestrictive ~~investor~~covenants ~~finds~~relating ~~a broker willing~~ to ~~affect~~capital araising ~~transaction~~activities inand ~~our~~other ~~securities,~~financial ~~the~~and ~~combination~~operational ~~of brokerage commissions~~matters, ~~state~~which ~~transfer taxes, if any, and any other selling costs~~ may ~~exceed~~make ~~the~~it ~~selling~~more ~~price.~~difficult ~~Furthermore,~~for ~~our~~us ~~stock~~to ~~price~~obtain ~~may~~additional becapital ~~impacted~~and byto ~~factors~~pursue ~~that~~business ~~are~~opportunities, ~~unrelated~~including orpotential ~~disproportionate to our operating performance~~acquisitions. ~~These~~We ~~market~~will ~~fluctuations,~~require asadditional ~~well~~financing asto ~~general~~fund ~~economic,~~our ~~political,~~operations ~~and~~to ~~market~~the ~~conditions,~~point ~~such~~where aswe ~~recessions,~~generate ~~interest~~positive ~~rates,~~cash ~~and~~flow. ~~international~~Negative ~~currency~~cash ~~fluctuations,~~flow may ~~adversely~~restrict ~~affect~~our ~~the~~ability ~~market~~to ~~price~~pursue ~~and liquidity of~~ our ~~common~~business ~~stock~~objectives.

WeOur ~~may~~share beprice ~~subject~~has toundergone ~~heightened~~a ~~scrutiny~~great bydeal ~~United~~of ~~States and Canadian authorities~~volatility, ~~which~~including ~~could~~a ~~ultimately~~significant ~~lead~~decrease toover the ~~market~~past ~~for~~few ~~our~~years. ~~Common Stock becoming highly illiquid and our shareholders having no ability to effect trades~~

~~Currently~~From January 1, 2025 through the date of this annual report, the price per share of our common ~~stock~~shares ishas ~~listed~~ranged onfrom ~~the~~a ~~OTC~~high ~~Markets~~of in$0.008 ~~the~~to ~~United~~a ~~States~~low of $0.002. ~~Our~~The ~~business~~price of our common shares has been, ~~operations~~and may continue to be, highly volatile and ~~investments~~subject to wide fluctuations. The market value of our common shares has declined in the ~~United States~~past, due in part to our operating performance and ~~any~~to ~~such~~conversions ~~future~~of ~~business,~~dilutive debt instruments that we have issued to fund operations,. orIn ~~investments~~the future, broad market and industry factors may ~~become~~decrease the ~~subject~~market price of ~~heightened~~our ~~scrutiny~~common ~~by regulators~~shares, ~~stock~~regardless ~~exchanges~~of ~~and~~our ~~other~~actual ~~authorities~~operating performance. Recent declines in ~~Canada~~the market price of our common shares have and ~~the~~could ~~United~~continue ~~States.~~to Asaffect aour ~~result~~access to capital, weand may, beif ~~subject~~they tocontinue, ~~significant~~impact ~~direct~~our ~~and~~ability ~~indirect~~to ~~interaction~~continue ~~with~~operations ~~public~~at ~~officials~~the current level. ~~There~~In ~~can~~addition, beany nocontinuation ~~assurance~~of ~~that~~the ~~this~~recent ~~heightened~~declines ~~scrutiny~~in ~~will~~the ~~not~~price inof ~~turn~~our ~~lead~~common shares may curtail investment opportunities presented to ~~the~~us ~~imposition~~and negatively impact other aspects of ~~certain~~our ~~restrictions~~business, onincluding our ability to ~~operate~~fund orour ~~invest~~operations. inAs ~~the~~a ~~United~~result ~~States~~of or any ~~other~~such ~~jurisdiction~~declines, inmany ~~addition~~shareholders have been become unable to ~~those~~resell ~~described~~their ~~herein~~shares.

InThe ~~2017,~~market ~~there~~price ~~were~~of ~~concerns~~our ~~that~~common ~~the~~shares ~~Canadian~~could ~~Depository~~fluctuate ~~for~~widely ~~Securities~~in ~~Limited,~~price ~~through~~in ~~its~~response ~~subsidiary~~to ~~CDS~~various ~~Clearing and Depository Services Inc. (“CDS”)~~factors, ~~Canada’s~~many ~~central~~of ~~securities~~which ~~depository~~are ~~(clearing~~beyond ~~and~~our ~~settling trades in the Canadian equity~~control, ~~fixed~~including ~~income, and money markets), would refuse to settle trades for cannabis issuers that have investments in~~ the ~~United States. However, CDS has not implemented this policy.~~following:

On· ~~February~~our 8,common ~~2018,~~shares ~~the~~being ~~Canadian~~held ~~Securities~~by ~~Administrators~~a ~~published~~small ~~Staff~~number ~~Notice~~of ~~51-352~~persons ~~describing~~whose ~~the~~sales ~~Canadian~~(or ~~Securities~~lack ~~Administrators’~~of ~~disclosure~~sales) ~~expectations~~could ~~for~~result ~~specific~~in ~~risks~~positive ~~facing~~or ~~issuers~~negative ~~with~~pricing ~~cannabis-related~~pressure ~~activities~~on in the ~~U.S.~~market ~~Staff~~price ~~Notice~~for ~~51-352~~our ~~confirms~~common ~~that~~shares; a· ~~disclosure-based~~actual ~~approach~~or ~~remains~~anticipated ~~appropriate~~variations ~~for~~in ~~issuers~~our ~~with~~quarterly ~~U.S.~~operating ~~cannabis-related~~results; ~~activities.~~· ~~Staff~~changes ~~Notice~~in ~~51-352~~our ~~includes~~earnings ~~additional~~estimates; ~~disclosure~~· ~~expectations~~our ~~that~~ability ~~apply~~ to ~~all~~obtain ~~issuers~~adequate ~~with~~working ~~U.S.~~capital ~~cannabis-related~~financing; ~~activities,~~· ~~including~~changes ~~those~~in ~~with~~market ~~direct~~valuations ~~and~~of ~~indirect~~similar ~~involvement~~companies; in· ~~the~~publication ~~cultivation~~(or ~~and~~lack ~~distribution~~of publication) of ~~cannabis,~~research asreports ~~well~~about asus; ~~issuers~~· ~~that~~changes ~~provide~~in ~~goods~~applicable ~~and~~laws ~~services~~or toregulations, ~~third~~court ~~parties~~rulings, ~~involved~~enforcement, inand ~~the~~legal ~~U.S.~~actions; ~~cannabis~~· ~~industry.~~loss of any strategic relationships;

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On· ~~February~~additions 8,or ~~2018,~~departures ~~following discussions with the Canadian Securities Administrators and recognized Canadian securities exchanges, the TMX Group, which is the owner and operator~~ of ~~CDS,~~key ~~announced~~management ~~the~~personnel; ~~signing~~· ofactions aby ~~Memorandum~~our ofShareholders ~~Understanding~~ (~~“MOU”)~~including ~~with~~transactions ~~Aequitas~~in ~~NEO~~our ~~Exchange Inc., the Canadian Securities Exchange, the Toronto Stock Exchange (“TSX”~~shares); ~~and~~· ~~the~~speculation ~~TSX~~in ~~Venture Exchange. The MOU outlines~~ the ~~parties’~~press ~~understanding~~or ofinvestment ~~Canada’s~~community; ~~regulatory~~· ~~framework~~increases ~~applicable~~in tomarket ~~the~~interest ~~rules~~rates, ~~procedures,~~which ~~and~~may ~~regulatory~~increase ~~oversight~~our cost of ~~the~~capital; ~~exchanges~~· ~~and~~changes ~~CDS as it relates to issuers with cannabis-related activities~~ in ~~the~~our ~~United~~industry; ~~States.~~· ~~The~~competitive ~~MOU~~pricing ~~confirms,~~pressures; ~~with~~· ~~respect~~our toability ~~the clearing of listed securities, that CDS relies on the Canadian securities exchanges~~ to ~~review~~execute ~~the~~our ~~conduct~~business ofplan; ~~listed~~and ~~issuers.~~· ~~The~~economic ~~MOU notes that securities regulation requires that the rules of each of the exchanges must not be contrary to the public interest~~ and ~~that~~other ~~the~~external ~~rules of each of the exchanges have been approved by the securities regulators~~factors. ~~Pursuant~~In toaddition, the ~~MOU, CDS will not ban accepting deposits of or transactions for clearing and settlement of~~ securities ofmarkets ~~issuers~~have ~~with~~from ~~cannabis~~time-~~related~~to-time ~~activities~~experienced insignificant ~~the~~price ~~United~~and ~~States.~~volume ~~Even~~fluctuations ~~though the MOU indicated~~ that ~~there~~ are nounrelated ~~plans~~ to ~~ban~~ the ~~settlement~~operating ofperformance securities through CDS, there can be no guarantee that this approach to regulation will continue in the future. If such a ban were implemented at a time when our common stock is listed on a Canadian stock exchange, it would have a material, adverse effect on the ability of ~~holders~~particular ~~of shares to make and settle trades~~companies.

~~Existing~~These ~~shareholders~~market fluctuations may bealso ~~diluted~~materially toand ~~the~~adversely ~~extent~~affect wethe ~~raise~~market ~~additional~~price ~~funds~~of ~~through~~our ~~additional~~common ~~equity financings~~shares.

WeOur ~~continue~~common ~~to sell~~ shares ~~and~~are ~~issue~~categorized ~~notes~~as ~~convertible~~penny ~~into~~ shares ~~for cash to fund operations, capital expansion, mergers and acquisitions that will dilute the current shareholders~~. ~~There~~Trading ~~is no guarantee that the Company will be able to achieve its business objectives. The continued development~~ of our ~~company~~shares ~~will~~are ~~require~~restricted ~~additional~~by ~~financing.~~the ~~The~~SEC’s ~~failure~~penny toshares ~~raise~~regulations ~~such~~which ~~capital~~may ~~could~~limit ~~result~~a inshareholder’s ~~the~~ability ~~delay~~to orbuy ~~indefinite~~and ~~postponement~~sell ~~of current business objectives or~~ our going out of business. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable to us.shares

IfOur ~~additional~~common ~~funds~~shares are ~~raised~~categorized ~~through~~as ~~issuances~~“penny ofshares” ~~equity~~as orthat ~~convertible~~term ~~debt~~is ~~securities,~~defined ~~existing~~in ~~shareholders~~SEC ~~will~~Rule ~~suffer dilution~~3a51-1, which ingenerally ~~some~~provides ~~cases~~that ~~may~~a be“penny ~~significant~~share”, ~~and~~is any ~~new~~ equity ~~securities~~security ~~issued~~that ~~could~~has ~~have~~a ~~rights,~~market ~~preferences~~price ~~and~~(as ~~privileges~~defined) ~~superior~~less tothan ~~those~~U.S. of$5.00 ~~holders~~per ofshare, ~~common~~subject ~~stock~~to certain exceptions. Our ~~articles~~securities ofare ~~incorporation~~subject ~~permit~~to the ~~issuance~~penny ofshares ~~300~~rules,~~000~~ including Rule 15g-9,~~000~~ which imposes additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny shares ofrules ~~common~~require ~~stock~~a broker-dealer, prior to a transaction in a penny shares not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny shares and ~~shareholders~~the ~~have~~nature noand ~~preemptive~~level ~~rights~~of risks in ~~connection~~the ~~with~~penny ~~further~~shares ~~issuances~~market. The ~~directors~~broker-dealer ofalso must provide the ~~Company~~customer ~~have~~with ~~discretion~~current tobid ~~determine~~and offer quotations for the ~~price~~penny ~~and~~shares, the ~~terms~~compensation of ~~further~~the ~~issuances.~~broker-dealer Inand ~~addition,~~its ~~from~~salesperson ~~time~~in tothe ~~time~~transaction, weand ~~may~~monthly ~~enter~~account ~~into~~statements ~~transactions~~showing tothe ~~acquire~~market ~~assets~~value orof ~~the~~each penny shares ofheld ~~other~~in ~~companies~~the customer’s account. ~~These~~The ~~transactions~~bid ~~may~~and offer quotations, and the broker-dealer and salesperson compensation information, must be ~~financed~~given ~~wholly~~to the customer orally or ~~partially~~in ~~with~~writing ~~debt,~~prior ~~which~~to ~~may~~effecting ~~temporarily~~the ~~increase~~transaction ~~our~~and ~~debt~~must ~~levels.~~be ~~Any~~given ~~debt~~to ~~financing~~the ~~secured~~customer in writing before or with the ~~future~~customer’s ~~could~~confirmation. ~~involve~~In ~~restrictive~~addition, ~~covenants~~the ~~relating~~penny shares rules require that prior to ~~capital~~a ~~raising~~transaction ~~activities~~in ~~and~~a ~~other~~penny ~~financial~~shares ~~and~~not ~~operational~~otherwise ~~matters~~exempt from these rules, ~~which~~the ~~may~~broker-dealer must make ita ~~more~~special ~~difficult~~written ~~for~~determination usthat tothe ~~obtain~~penny ~~additional~~shares ~~capital~~are a suitable investment for the purchaser and toreceive ~~pursue~~the ~~business~~purchaser’s ~~opportunities,~~written ~~including~~agreement ~~potential~~to ~~acquisitions~~the transaction. WeThese ~~will~~disclosure ~~require~~requirements ~~additional~~may ~~financing~~have tothe ~~fund~~effect ~~our~~of ~~operations~~reducing tothe level of trading activity in the ~~point~~secondary ~~where~~market wefor ~~generate~~the ~~positive~~shares ~~cash~~that ~~flow~~are subject to these penny shares rules. ~~Negative~~Consequently, ~~cash~~these ~~flow~~penny shares rules may ~~restrict~~affect ~~our~~the ability of broker-dealers to ~~pursue~~trade our ~~business~~securities ~~objectives~~and reduce the number of potential investors. We believe that the penny shares rules discourage investor interest in and limit the marketability of our common shares.

~~Our~~Financial ~~stock~~Industry ~~price~~Regulatory ~~has~~Authority ~~undergone~~(“FINRA”) asales ~~great~~practice ~~deal~~requirements ofmay ~~volatility,~~also ~~including~~limit a ~~significant~~shareholder’s ~~decrease~~ability ~~over~~to ~~the~~buy ~~past~~and ~~few~~sell ~~years. The volatility may mean that, at times,~~ our ~~stockholders may be unable to resell their~~ shares ~~at or above the price at which they acquired them~~

~~From~~In ~~January~~addition 1,to ~~2024 through~~ the ~~date~~“penny ofshares” ~~this~~rules ~~Report~~described above, ~~the~~FINRA ~~price~~has ~~per~~adopted ~~share~~rules ofthat ~~our~~require ~~common~~that ~~stock~~in ~~has~~recommending ~~ranged~~an ~~from~~investment ~~a high of $0.020~~ to a ~~low~~customer, ofa ~~$0.001.~~broker-dealer ~~The~~must ~~price~~have ofreasonable ~~our~~grounds ~~common~~for ~~stock~~believing ~~has~~that ~~been,~~the ~~and~~investment ~~may~~is ~~continue~~suitable tofor ~~be,~~that ~~highly~~customer. ~~volatile~~Prior ~~and subject~~ to ~~wide~~recommending ~~fluctuations.~~speculative ~~The~~low-priced ~~market~~securities ~~value~~to oftheir ~~our~~non-institutional ~~common stock has declined in the past~~customers, ~~due~~broker-dealers inmust ~~part~~make toreasonable ~~our~~efforts ~~operating performance and~~ to ~~conversions~~obtain ofinformation ~~dilutive~~about ~~debt~~the ~~instruments~~customer’s ~~that~~financial westatus, ~~have~~tax ~~issued~~status, toinvestment ~~fund operations. In the future~~objectives, ~~broad market~~ and ~~industry~~other ~~factors~~information. ~~may~~Under ~~decrease~~interpretations ~~the market price~~ of ~~our~~these ~~common stock~~rules, ~~regardless~~FINRA ofbelieves ~~our~~that ~~actual~~there ~~operating~~is ~~performance.~~a ~~Recent~~high ~~declines~~probability inthat ~~the~~speculatively ~~market~~low-priced ~~price~~securities ofwill ~~our~~not ~~common~~be ~~stock~~suitable ~~have~~for ~~and~~at ~~could~~least ~~continue~~some tocustomers. ~~affect~~The ~~our~~FINRA ~~access~~requirements tomake ~~capital,~~it ~~and~~more ~~may,~~difficult iffor ~~they~~broker-dealers ~~continue, impact our ability~~ to ~~continue~~recommend ~~operations~~that attheir ~~the~~customers ~~current~~buy ~~level. In addition, any continuation of the recent declines in the price of~~ our common ~~stock~~shares, which may ~~curtail~~limit ~~investment~~your ~~opportunities~~ability ~~presented~~ to usbuy and ~~negatively~~sell ~~impact other aspects of~~ our ~~business,~~shares ~~including~~and ~~our ability to fund our operations. As a result of any such declines, many stockholders~~ have ~~been~~an oradverse ~~may~~effect ~~become~~on ~~unable to resell their shares at or above~~ the ~~price~~market atfor ~~which~~our ~~they acquired them~~shares.

~~The~~We ~~volatility~~have ofnot ~~the~~voluntarily ~~market~~implemented ~~price~~various ofcorporate ~~our~~governance ~~common~~measures, ~~stock~~in ~~could~~the ~~fluctuate~~absence ~~widely~~of inwhich, ~~price~~shareholders inmay ~~response~~have tomore ~~various~~limited ~~factors,~~protections ~~many~~against ofinterested ~~which~~director ~~are~~transactions, ~~beyond~~conflicts ~~our~~of ~~control,~~interest ~~including~~and ~~the~~similar ~~following:~~matters

·Federal ~~our~~legislation, ~~common~~including ~~stock~~the ~~being~~Sarbanes-Oxley ~~held~~Act byof a2002, ~~small~~has ~~number~~resulted in the adoption of ~~persons~~various ~~whose~~corporate ~~sales~~governance ~~(or~~measures ~~lack~~designed to promote the integrity of ~~sales)~~corporate ~~could~~management ~~result~~and the securities markets. Some of these measures have been adopted in ~~positive~~response orto ~~negative~~legal ~~pricing~~requirements. ~~pressure~~Others have been adopted by companies in response to the requirements of national securities exchanges, on which their securities are listed. Among the ~~market~~corporate ~~price~~governance ~~for~~measures ~~our~~that ~~common~~are ~~stock;~~required ·under ~~actual~~the orrules ~~anticipated~~of ~~variations~~national insecurities ~~our~~exchanges ~~quarterly~~and ~~operating~~National ~~results;~~Association ·of ~~changes~~Securities inDealers ~~our~~Automated ~~earnings~~Quotations ~~estimates;~~(“NASDAQ”) ·are ~~our~~those ~~ability~~that toaddress ~~obtain~~board ~~adequate~~of ~~working~~directors’ ~~capital~~independence, ~~financing;~~audit ·committee ~~changes~~oversight inand ~~market~~the ~~valuations~~adoption of ~~similar~~a ~~companies;~~code ·of ~~publication~~ethics. ~~(or~~While ~~lack~~our board of ~~publication)~~directors has adopted a Code of ~~research~~Ethics ~~reports~~and ~~about~~an ~~us;~~Audit ·Committee ~~changes~~Charter, inwe ~~applicable~~have ~~laws~~not yet adopted any of the other corporate governance measures, and, since our securities are not currently listed on a national securities exchange or ~~regulations~~NASDAQ, ~~court~~we ~~rulings~~are not currently required to do so. If our common shares become listed, ~~enforcement~~we will be required to adopt these other corporate governance measures, and ~~legal~~we ~~actions;~~intend ·to ~~loss~~do ofso. ~~any~~It ~~strategic~~is ~~relationships;~~possible ·that ~~additions~~if we were to adopt some or ~~departures~~all of ~~key~~these ~~management~~corporate ~~personnel;~~governance ·measures, ~~actions~~shareholders bywould ~~our~~benefit ~~stockholders~~from ~~(including~~somewhat ~~transactions~~greater inassurances ~~our~~that ~~shares);~~internal ·corporate ~~speculation~~decisions inwere ~~the~~being ~~press~~made orby ~~investment~~disinterested ~~community;~~directors ·and ~~increases~~that policies had been implemented to define responsible conduct. For example, in ~~market~~the ~~interest~~absence ~~rates~~of audit, ~~which~~nominating ~~may~~and ~~increase~~compensation ~~our~~committees ~~cost~~comprised of ~~capital;~~at ·least ~~changes~~a inmajority ~~our~~of ~~industry;~~independent ·directors, ~~competitive~~decisions ~~pricing~~concerning ~~pressures;~~matters ·such ~~our~~as ~~ability~~compensation packages to ~~execute~~ our ~~business~~senior ~~plan;~~officers and ·recommendations ~~economic~~for ~~and~~director ~~other~~nominees ~~external~~may ~~factors.~~be Inmade ~~addition,~~by ~~the~~a ~~securities~~majority ~~markets~~of directors who have ~~from~~an ~~time-to-time~~interest ~~experienced~~in ~~significant~~the ~~price~~outcome ~~and~~of ~~volume~~the ~~fluctuations~~matters ~~that~~being ~~are~~decided. ~~unrelated~~Prospective toinvestors ~~the~~should ~~operating~~bear ~~performance~~in mind our current lack of ~~particular~~corporate ~~companies~~governance measures in formulating their investment decisions.

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These market fluctuations may also materially and adversely affect the market price of our common stock.

Our stock is categorized as a penny stock. Trading of our stock may be restricted by the sec’s penny stock regulations which may limit a stockholder’s ability to buy and sell our stock

Our stock is categorized as a “penny stock”, as that term is defined in SEC Rule 3a51-1, which generally provides that a “penny stock”, is any equity security that has a market price (as defined) less than U.S. $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, including Rule 15g-9, which imposes additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities and reduce the number of potential investors. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

According to SEC Release No. 34-29093, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns include: (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and through false and misleading press releases; (3) boiler-room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; (4) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The occurrence of these patterns or practices could increase the future volatility of our share price.

Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and sell our stock

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their noninstitutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

We have not voluntarily implemented various corporate governance measures, in the absence of which, stockholders may have more limited protections against interested director transactions, conflicts of interest and similar matters

Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges and National Association of Securities Dealers Automated Quotations (“NASDAQ”) are those that address board of directors’ independence, audit committee oversight and the adoption of a code of ethics. While our board of directors has adopted a Code of Ethics and an Audit Committee Charter, we have not yet adopted any of the other corporate governance measures, and, since our securities are not currently listed on a national securities exchange or NASDAQ, we are not currently required to do so. If our common stock becomes listed, we will be required to adopt these other corporate governance measures, and we intend to do so. It is possible that if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

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To date, we have not paid any cash dividends, and no cash dividends will be paid in the foreseeable future

We dohave not ~~anticipate~~paid ~~paying~~any cash dividends onto ~~our~~date ~~common stock in the foreseeable future~~ and wedo ~~may~~ not ~~have~~anticipate ~~sufficient~~paying ~~funds~~cash ~~legally available to pay~~ dividends. ~~Even~~in if the ~~funds~~foreseeable ~~are legally available for distribution, we may nevertheless decide not to pay any dividends~~future. Further, other classes of our preferred ~~stock~~shares have priority to dividends meaning that even if we had sufficient funds to pay a dividend, there may not be sufficient funds to pay common ~~stockholders~~shareholders any dividend, after fulfilling our obligations to holders of preferred ~~stock~~shares. We currently intend to retain all earnings for our operations.

If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately to report our financial results or prevent financial fraud. As a result, current and potential ~~stockholders~~shareholders could lose confidence in our financial reporting

We are subject to the risk that sometime in the future our independent registered public accounting firm could communicate to the board of directors that we have deficiencies in our internal control structure that they consider to be “significant deficiencies.” A “significant deficiency” is defined as a deficiency, or a combination of deficiencies, in internal controls over financial reporting such that there is more than a remote likelihood that a material misstatement of the entity’s financial statements will not be prevented or detected by the entity’s internal controls.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we could be subject to regulatory action or other litigation and our operating results could be harmed. We are required to document and test our internal control procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act,” or “SOX”), which requires our management to annually assess the effectiveness of our internal control over financial reporting.

We currently are not an “accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) requires us to include an internal control report with our Annual Report on Form 10-K. That report must include management’s assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year. This report must also include disclosure of any material weaknesses in internal control over financial reporting that we have identified. As of December 31, ~~2024~~2025, the management of our company assessed the effectiveness of the Company’s internal control over financial reporting based on SEC guidance on conducting such assessments and on the criteria for effective internal control over financial reporting established in Internal Control and Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management concluded, during the year ended December 31, ~~2024~~2025, that the Company’s internal controls and procedures were effective to detect the inappropriate application of U.S. Generally Accepted Accounting Principles (“US GAAP”). A material weakness in the effectiveness of our internal controls over financial reporting may increase the chance of fraud and the loss of customers, reduce our ability to obtain financing, and require additional expenditures to comply with these requirements. Any of these consequences could have a material adverse effect on our business, results of operations and financial condition. For additional information, see Item 9A - Controls and Procedures.

It ~~may~~will be time-consuming, difficult, and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls, and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, then we may not be able to obtain the independent accountant certifications required by such act, which may preclude us from keeping our filings with the SEC current.

If we are unable to maintain the adequacy of our internal controls, as those standards are modified, supplemented, or amended from time to time, we may not be able to ensure that we may conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Failure to achieve and maintain an effective internal control environment could cause us to face regulatory action and cause investors to lose confidence in our reported financial information, either of which could adversely affect the value of our common ~~stock~~shares.

20Because ~~Table~~our current directors, executive officers, and preferred shareholders beneficially own or control 30.7% of ~~Contents~~our common shares on a fully diluted basis, they can exert significant control over our business and affairs and have actual or potential interests that may depart from those of our other shareholders.

~~Because~~Our ~~our~~ current directors, ~~executive officers,~~ and ~~preferred~~our ~~stockholders~~executive officers beneficially own or control 35approximately 30.87% of our common shares on a fully diluted ~~shares~~basis as of ~~common~~December ~~stock~~31, ~~they~~2025. ~~can~~Additionally, ~~exert~~the ~~significant~~holdings ~~control~~of ~~over~~ our ~~business~~directors, and ~~affairs~~executive officers, and ~~have~~preferred ~~actual~~Shareholders may increase in the future upon vesting or ~~potential~~other maturation of exercise rights under any of the restricted shares grants, share options, or share purchase warrants they may hold or in the future be granted, or if they otherwise acquire additional common shares. The interests ~~that~~of such persons may ~~depart~~differ from ~~those~~the interests of ~~subscribers~~our other shareholders. As a result, in ~~our~~addition ~~private~~to ~~placements~~their board seats and offices, such persons may have significant influence over and may control corporate actions requiring shareholder approval, including the following actions:

~~Our~~19 ~~current~~Table ~~directors and our executive officers beneficially own or control approximately 35.8%~~ of our fully diluted shares of common stock as of December 31, 2024. Additionally, the holdings of our directors, and executive officers, and preferred stockholders may increase in the future upon vesting or other maturation of exercise rights under any of the restricted stock grants, options, or warrants they may hold or in the future be granted, or if they otherwise acquire additional shares of our common stock. The interests of such persons may differ from the interests of our other stockholders. As a result, in addition to their board seats and offices, such persons, irrespective of how the Company’s other stockholders vote, may have significant influence over and may control corporate actions requiring stockholder approval, including the following actions:Contents

· electing or defeating the election our directors; · to amending or preventing the amendment of our Articles of Incorporation or By-laws; · effecting or preventing a transaction, sale of assets, or other corporate transaction; and · controlling the outcome of any other matter submitted to our ~~stockholders~~Shareholders for vote.

Such ~~persons' stock~~ ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of ~~the~~our ~~Company~~company, which in turn could reduce our ~~stock~~share price or prevent our ~~stockholders~~shareholders from realizing a ~~premium~~profit ~~over~~on ~~our~~their ~~stock price~~investments.

Our articles of incorporation allow our board to create new series of preferred ~~stock~~shares without approval by our ~~stockholders~~shareholders, which could adversely affect the rights of the holders of our common ~~stock~~shares

Our board of directors has the authority to fix and determine the relative rights and preferences of preferred ~~stock~~shares. Our board of directors also has the authority to issue preferred ~~stock~~shares without ~~stockholder~~Shareholder approval. As a result, our board of directors could authorize the issuance of a series of preferred ~~stock~~shares granting holders a preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common ~~stock~~shares, and the right to redemption of the shares, together with a premium prior to the redemption of our common ~~stock~~shares. In addition, our board of directors could authorize the issuance of a series of preferred ~~stock~~shares that has greater voting power than our common ~~stock~~shares or that is convertible into our common ~~stock~~shares, which could decrease the relative voting power of our common ~~stock~~shares or result in dilution to our existing ~~stockholders~~Shareholders.

ITEM 1B - UNRESOLVED STAFF COMMENTS

None.

ITEM 1C - CYBERSECURITY

Risk management and strategy

Data integrity, privacy, availability, and security are critical to the corporate information technology, communication networks, accounting and financial reporting platforms, and related systems which are necessary for the operation of our business. These systems are used to manage our vendor relationships, for internal communications, for accounting and record-keeping functions, and for many other key aspects of our business including site security. Our business operations rely on the data privacy and security necessary to safeguard and protect secure collection, storage, transmission, and other processing of proprietary, confidential, and sensitive data.

We are continually assessing the need to implement and maintain various information security processes designed to identify, assess, and manage material risks from cybersecurity threats to our critical computer networks, third-party hosted services, communications systems, hardware and software, and our critical data, including confidential information that is proprietary, strategic or competitive in nature.

We engage a third-party provider to identify, assess, and manage cybersecurity threats and risks which is achieved through monitoring and evaluating our threat environment and our risk profile using various methods including the use of manual and automated tools, analysis of reports of threats and threat actors, scanning the threat environment, and evaluation of our industry’s risk profile.

Various technical, physical, and organizational measures, processes, standards, and policies designed to manage and mitigate material risks from cybersecurity threats to our systems and data have been implemented and are maintained. These include risk assessments, incident detection and response, vulnerability management, disaster recovery and business continuity plans, internal controls within our accounting and financial reporting functions, encryption of data, network security controls, access controls, physical security, systems monitoring, employee training, and penetration testing.

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We engage certain third-party service providers to perform a variety of functions within our business and seek to ensure that we work with reliable, reputable service providers that maintain cybersecurity programs. Depending on the nature of the services provided, the sensitivity and quantity of information processed, and the identity of the service provider, our vendor management process may include reviewing provider cybersecurity practices, conducting provider security assessments, and conducting periodic provider reassessments during their engagement.

Table of Contents

We are not aware of any risks from cybersecurity threats or cybersecurity incidents which have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.

Governance

Our board of directors is responsible for oversight of our strategy and risk management, including material risks related to cybersecurity threats. The board of directors engages in regular discussions with management regarding our significant financial risk exposures and the measures implemented to monitor and control these risks, including those that may result from material cybersecurity threats.

Our management, ~~represented~~led by ~~Director~~our Chief Executive Officer, ~~Rick~~Constantine ~~Orman~~Nkafu, leads our cybersecurity risk assessment and management processes and oversees their implementation and maintenance, including integration of cybersecurity risk considerations into our overall risk management strategy and communication of key priorities to relevant personnel. Management is responsible for cybersecurity-related matters including approval of processes; review of assessments and other matters; evaluation of potential impact of incidents to determine materiality based on the nature and scope of the incident and any impact to operations, assets, or reputation; and response to incidents, including reporting certain incidents to the ~~audit~~board ~~committee~~of directors. ~~The~~Our ~~audit~~board ~~committee~~of directors receives periodic reports from management, ~~including our acting Chief Executive Officer~~ concerning any cybersecurity threats and risks considered to be significant and the processes we have implemented to address them.

ITEM 2 - PROPERTIES

Our executive offices are located at ~~302,~~4439 ~~3204—Rideau~~Township ~~Place~~Road ~~SW.~~304, ~~Calgary~~Mountain View County, Alberta, Canada ~~T2S~~T0M ~~1Z2~~0R0. Our growing facility which is located in Cremona, Alberta is subject to a 20-year operating lease ~~that~~with Formosa Mountain, which became a related party upon the appointment of its manager, Elliot Zemel, as a director of the Company on March 11, 2025 and will expire in 2042. We utilize this 55,000 square foot facility for growing, drying and packaging of our cannabis products. Lease payments for the growing facility are subject to annual increases,. ~~beginning~~Our atrent ~~$82,500~~for ~~CAD~~the ~~per~~Facility ~~month~~ in ~~2022,~~2025 ~~the~~was ~~year the lease commenced, and increasing to~~ $~~207~~125,~~991~~000 CAD per month ~~by 2041~~. We believe ~~these~~that our facilities are sufficient for our current business purposes.

ITEM 3 - LEGAL PROCEEDINGS

~~Ataraxia~~Steven ~~Canada, Inc.~~Barber

As part of our acquisition of Alternative Medical Solutions Inc. (“AMS”) in 2018, we ~~assumed~~are ancurrently ~~action~~reviewing ~~filed~~with ~~against~~our ~~AMS~~legal bycounsel ~~Ataraxia~~to ~~Canada,~~ascertain ~~Inc.~~whether ~~(“Ataraxia”),~~we ~~alleging~~have ~~breach~~claims ofagainst ~~contract,~~Steven ~~specifically,~~Barber ~~breach~~arising out of ahis ~~non-binding~~default ~~term~~of ~~sheet~~the ~~providing~~Consulting ~~for~~Agreement ~~Ataraxia~~we toentered ~~acquire~~into ~~controlling~~as ~~interest~~part inof the AMS. ~~Ataraxia is seeking $15 million in damages~~acquisition. AIn ~~Statement~~January of2020, ~~Claim~~we ~~was~~received ~~prepared~~correspondence byfrom ~~Ataraxia,~~counsel asfor ~~plaintiff,~~Mr. ~~and~~Barber ~~circulated~~demanding topayment ~~AMS, as defendant,~~ on ~~August~~amounts 2,purported ~~2018,~~to ~~under~~be ~~the~~due ~~Ontario~~pursuant ~~Superior~~to ~~Court~~his ofConsulting ~~Justice~~Agreement ~~(Court~~with ~~file no~~us. ~~CV-17-580157).~~We ~~The parties~~ have ~~engaged~~reviewed inwhether ~~discussions with respect to a potential settlement of this matter~~Mr. ~~Counsel~~Barber has ~~advised~~performed ~~that~~pursuant ~~it believes it is premature~~ to ~~speculate~~the onterms ~~any outcome~~ of ~~this litigation, including~~ the ~~likelihood~~Consulting ofAgreement aand ~~settlement~~noticed ~~or any potential liability at this time~~concerns.

~~Our~~No ~~agreement~~decision toon ~~acquire~~whether ~~AMS contained a provision requiring us~~ to ~~diligently~~proceed ~~defend~~on ~~against~~either ~~the~~of ~~claims~~these ~~brought~~situations ~~forth~~has ~~in,~~been ~~and~~reached ~~assume~~as ~~full~~at ~~and~~the ~~complete~~date ~~control~~ of, ~~the~~this ~~Ataraxia litigation~~report, ~~provided~~but ~~that~~ we ~~shall~~do not ~~enter~~believe ~~into~~that ~~any~~these ~~compromise~~situations orpresent ~~settlement~~a inprobability ~~respect~~ of ~~the~~material ~~Ataraxia~~risk ~~litigation~~and ~~without~~therefore ~~the~~a ~~prior~~loss ~~written~~contingency ~~consent of the sellers, which consent~~ is not toreflected bein ~~unreasonably~~our ~~withheld,~~consolidated ~~conditioned~~financial ~~or delayed~~statements. ~~The~~As ~~sellers~~of ~~are~~December ~~obligated~~31, ~~to cooperate fully and make available to us all pertinent information and witnesses under their control~~2025, ~~make~~we ~~such~~have ~~assignments~~an ~~and~~outstanding ~~take~~payable ~~such other steps as in the opinion~~ of ~~our~~$549,780 ~~counsel~~(December ~~are~~31, ~~reasonably~~2024 ~~necessary~~- ~~to enable us to defend against the claims brought forth in the Ataraxia litigation~~$549,780).

We are currently reviewing two separate situations with our legal counsel in order to ascertain whether we have claims against Steven Barber arising out of his default of the Consulting Agreement we entered into as part of the AMS acquisition and various claims against Gary Herick, a former officer and director. In January 2020, we received correspondence from counsel for Mr. Barber demanding payment on amounts purported to be due pursuant to his Consulting Agreement with us. We are currently reviewing whether Mr. Barber has performed pursuant to the terms of the Consulting Agreement.

No decision on whether to proceed on either of these situations has been reached as at the date of this Report, but we do not believe that these situations present a probability of material risk and therefore a loss contingency is not reflected in our consolidated financial statements.

22 Table of Contents

Bristol Capital Investors, LLC

On April 15, 2021, Bristol Capital Investors, LLC (“BCI”) filed a lawsuit in the Superior Court of the State of California, County of Los Angeles against CannaPharmaRX Inc. and Does 1 - 50, inclusive (Case No. 21st CV1 3696). The lawsuit alleges that CPMD breached the Amended and Restated Limited Liability Company Membership Purchase Agreement it had entered into with BCI to purchase BCI’s interest in Ramon Road Production Campus, LLC, a single asset entity which owned an improved property, known as the Glass House, located in Cathedral City, California. BCI alleges causes of action for Fraud, Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing, and Negligent Misrepresentation, and seeks compensatory and consequential damages in the amount of $10.5 million dollars plus attorneys’ fees and costs. We intend to vigorously defend against BCI’s lawsuit. The parties conducted a court-ordered mediation and are engaging in on-going discussions.

We do not believe that these situations present a probability of material risk and therefore a loss contingency is not reflected in our consolidated financial statements.

Deloitte LLP

On July 18, 2024, Deloitte LLP (“Deloitte”) filed a civil claim in the Alberta Court of Justice, alleging a breach of contract. Deloitte was engaged by us to ~~assist~~pursuant ~~with~~to ~~fiscal~~an ~~year 2022 Finance Backfill and Diagnostic services and in accordance with a signed~~ engagement letter dated August 29, 2022, ~~proceeded to perform the professional services.~~ Deloitte ~~pleads~~alleged that it has discharged its responsibilities ~~and delivered its accounts to~~ .us. We acknowledged the satisfactory completion of services and the debts rendered but made no further payment as agreed other than an instalment payment on April 18, 2024. Deloitte is seeking recovery of the amount owed. As of December 31, 2025, the amount payable to Deloitte included in accounts payable and accrued liabilities was $34,530 (December 31, 2024 - $32,891).

Former Executives

InFormer ~~July 2024, two former~~ executives ~~of the Company,~~ John Cassels and Andrew Steedman, filed a lawsuit against ~~our~~us ~~Company~~alleging inwrongful ~~Calgary~~termination, atrelated ~~the~~misconduct, and unpaid compensation (Alberta Court of King’s Bench ofAction ~~Alberta~~No. ~~alleging~~2401-16218: ~~wrongful~~John ~~termination~~Cassels ~~with~~and ~~back~~Andrew ~~pay~~Steedman ~~due~~v. toCannaPharmaRX ~~them~~Canada inCorp., ~~the~~CannaPharmaRX, ~~amount~~Inc., ofet al.). The plaintiffs seek $3 million, in compensatory damages ofand an ~~undisclosed~~additional ~~monetary~~$3 ~~amount,~~million ~~and~~in ~~other~~punitive ~~claims~~damages. As of ~~misconduct.~~December We31, 2025, we have ~~engaged~~maintained ~~legal~~an ~~counsel~~accrual of approximately $931,571 for unpaid salaries owed to ~~resolve~~the ~~these~~plaintiffs ~~matters~~for services rendered from April 2019 through June 2023. InNo ~~the~~additional ~~meantime,~~loss wecontingency ~~are~~has ~~working~~been torecorded, ~~settle~~as the ~~matters~~lawsuit ~~with~~remains ~~both~~in ~~Mr.~~its ~~Steedman~~early stages and ~~Mr.~~the ~~Cassels~~ultimate outcome is uncertain.

As21 ofTable ~~December 31, 2024, management has assessed the likelihood~~ of an unfavorable outcome as reasonably possible but not probable. The Company has not recorded an accrual for this matter because a reasonable estimate of potential loss cannot be determined at this time; however, the Company has included an accrual of approximately $887,000 in our financial statements for unpaid salaries to Mr. Cassels and Mr. Steedman for the period from April 2019 through June 2023. The Company continues to monitor this matter closely and will update its assessment as additional information becomes available.Contents

InAstor ~~2019,~~Street we completed the filing of the Company's financial statements with the British Columbia Securities Commission and the Alberta Securities Commission, and we were in the process of completing an application to list our common stock on the Canadian Stock Exchange. We received a Failure-to-File Cease Trade Order (FFCTO) issued under National Policy 11-207. We are currently discussing the FFCTO with the British Columbia Securities Commission.LLC

We issued two promissory notes to Astor Street LLC in January 2021 and granted a security interest in all present and after acquired assets of our company. Astor Street LLC commenced a claim to recover the amounts owing for CAD $312,303 in April 2022, obtained default judgment in the amount of CAD $314,273 in March 2023 (Alberta Court of King’s Bench Action No. 2203-05892: Astor street LLC v. CannaPharmaRX, Inc.). On December 31, 2025, Astor Street LLC took steps to seize assets belonging to us. We are currently assessing the validity of the claim and default judgment, and whether it is necessary to come to a negotiated resolution. As of December 31, 2025, the amount payable on the promissory notes was $218,882 (CAD $300,000).

Cease Trade Order (“CTO”)

In 2023, the British Columbia Securities Commission (“BCSC”) issued a Cease Trade Order (“CTO”) against us due to our failure to file certain continuous disclosure documents under Canadian securities laws. The CTO restricted the trading in our securities in Canada, including share issuances and conversions of convertible instruments. We filed an application to the BCSC to revoke the CTO, and on December 12, 2025, the BCSC rescinded the CTO in full.

We are not a party to any other legal proceeding or aware of any other threatened action as of the date of this Report.

ITEM 4 - MINE SAFETY DISCLOSURES

Not applicable.

23ITEM ~~Table~~5 of- ~~Contents~~MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market information

~~Due~~Our ~~to our delinquency in filing some of our required SEC reports, our~~ common ~~stock~~shares isare only traded on the OTC ~~“Expert~~Pink ~~Market”~~Sheets under the trading symbol “CPMD.” This significantly reduces the trading volume and ability to trade our common stock. As a result, current shareholders may not be able to liquidate their holdings of common stock in a timely manner, if at all. If our common stock returns to trading on the OTC Markets, there may be excessive pent-up demand to sale our common stock and the trading price of our common stock would be subject to significant fluctuations. There can be no assurance that a liquid market will develop in the foreseeable future.

Transfer of shares of our common stock may also be restricted under the securities or blue-sky laws of certain states and foreign jurisdictions. Consequently, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an indefinite period of time.

The following table sets forth the high and low bid quotations for our Common Stock as reported on the pink sheets for the periods indicated:

Fiscal 2024	High		Low
First Quarter	$	0.020	$	0.001
Second Quarter		0.019		0.010
Third Quarter		0.014		0.007
Fourth Quarter		0.011		0.003

Fiscal 2023	High		Low
First Quarter	$	0.014	$	0.008
Second Quarter		0.011		0.007
Third Quarter		0.014		0.009
Fourth Quarter		0.014		0.001

Holders

As of the date of this report, there were ~~662~~678,501,405 shares of our common ~~stock~~shares outstanding, which were held by ~~320~~322 ~~stockholders~~shareholders of record, not including those persons holding shares in “street name.”

~~Stock~~Transfer ~~transfer~~ agent

~~Our~~The ~~stock~~ transfer agent for our securities is Mountain Share Transfer, Inc., 2030 Powers Ferry Road SE, Suite 212, Atlanta, GA 30339. Their telephone number is (~~303~~404) ~~460~~474-~~1149~~3110.

Dividends

We have never declared or paid any cash dividends on our common ~~stock~~shares. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future ~~on our common stock~~.

Securities authorized for issuance under equity compensation plans

We did not have any equity compensation plans ~~approved~~as byof ~~shareholders at~~ December 31, ~~2024~~2025.

Recent sales of unregistered securities

~~During~~Subsequent ~~the~~to year-end, ~~ended~~on ~~December~~February 3120, ~~2024~~2026, we issued 16,000,000 common shares to a company as consideration for $142,800 of investor relation services. As at December 31, 2025, the ~~following~~shares ~~restricted~~were recognized as shares to be issued at the par value of ~~common~~$0.0001 ~~stock:~~per share for a total value of $1,600 and the remaining $141,200 was recognized as additional paid in capital.

·22 ~~204,353,254~~Table ~~shares~~ of common stock valued at $1,570,354 were issued to three persons upon the conversion of convertible notes. · 10,000 shares of Series A Preferred Stock were converted to 12,500,000 shares of common stock by one person. · 4,895,849 shares of common stock were issued upon the exercise of 5,000,000 warrants by one person. · Issued $294,000 in new convertible notes to accredited investors with interest rates from 12% to 24% and converted $134,910 of the outstanding convertible notes into 204,353,254 shares of common stock. · Entered into two additional notes payable agreements for $50,000 and $70,000, respectively, with a second private individual, each bearing interest at 10% per annum, the $50,000 note payable maturing on May 10, 2024 and the $70,000 note payable on May 31, 2024. · Entered into an additional note payable agreement for $50,000 with a third private individual, bearing interest at 15% per annum, maturing on April 14, 2025.Contents

During the year ended December 31, 2024, we issued the following restricted common shares:

·	204,353,254 common shares valued at $1,570,354 were issued to three persons upon the conversion of convertible notes.
·	10,000 shares of Series A Preferred Shares were converted to 12,500,000 common shares by one person.
·	4,895,849 shares of common shares were issued upon the exercise of 5,000,000 share purchase warrants.
·	Issued $294,000 in new convertible notes to accredited investors with interest rates from 12% to 24% and converted $134,910 of the outstanding convertible notes into 204,353,254 shares of common shares.
·	Entered into two additional notes payable agreements for $50,000 and $70,000, respectively, with a second private individual, each bearing interest at 10% per annum, the $50,000 note payable maturing on May 10, 2024 and the $70,000 note payable on May 31, 2024.
·	Entered into an additional note payable agreement for $50,000 with a third private individual, bearing interest at 15% per annum, maturing on April 14, 2025.

Issuer purchases of equity securities

We did not purchase any of our securities during the year ended December 31, ~~2024~~2025.

24 Table of Contents

ITEM 6 - [RESERVED]

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations for the period as at and for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 should be read together with the Company’s financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.

Overview

We were originally incorporated in the state of Colorado in August 1998 as Network Acquisitions, Inc. Since then, we ~~have~~underwent ~~focused~~several ~~our~~name ~~business~~changes ~~efforts~~over onthe ~~evaluation~~years and, ~~negotiation~~in October 2014, ~~acquisition~~changed our legal name to CannaPharmaRx, ~~and~~Inc.We ~~development~~focus our business efforts on the operation of cannabis cultivation ~~projects~~facilities in Canada.

On January 6, 2022, we entered into a 20-year operating lease ~~with Formosa Mountain Ltd.~~ for the use of a ~~leased~~ facility located in Cremona, Alberta, Canada. We recommissioned the 55,000 square foot facility ~~into~~(the a“Facility”) ~~new~~into an indoor cannabis farm with 1110 growing rooms and 1one drying and packing room during 2022. ~~The~~During ~~Facility~~2025, ~~currently~~we ~~operates~~added 5one ofadditional ~~these~~growing room to our operations. The Facility now has six growing rooms and ~~the~~one drying and packing room in operation and plans to increase capacity over the next one to two years to open a second drying and packing room and to operate all ~~the~~10 11 growing rooms.

We received an operating license from Health Canada on December 9, 2022, and a cannabis license from the CRA on December 22, 2022. ~~Under~~and ~~the new license, we~~ commenced cannabis production during the year ended December 31, 2023 and began to make sales in 2024.

Going concern

Substantial doubt exists as to our ability to continue as a going concern based on the fact that we do not have adequate working capital to finance our day-to-day operations. For the year ended December 31, ~~2024~~2025, ~~the~~we ~~Company~~ reported $~~820~~1,~~137~~362,163 (~~2023~~2024 - $~~nil~~820,137) in revenue. ~~and~~As at December 31, 2025, we had cash of $1,804, a working capital deficiency of $2430,~~733~~278,~~636~~570 ~~(2023~~and -an accumulated deficit of $17112,~~532~~315,~~490)~~590. Additionally, for the year ended December 31, 2025, we used $789,102 of cash in our operating activities.

~~The~~These financial metrics and the Company’s accumulated deficit of $~~101~~112,~~184~~315,~~142~~590 as of December 31, ~~2024~~2025 ~~indicates~~indicate ~~substantial~~material uncertainty ~~about~~over the Company’s ability to continue as a going concern. Management’s plans ~~include~~to ~~engaging~~mitigate inthis ~~further~~uncertainty ~~research~~involve ~~and~~securing ~~development and raising~~ additional capital in the short term toprimarily ~~fund such activities~~ through sales of ~~its~~ common ~~stock.~~shares ~~Management’s~~or ~~ability~~other toinstruments. ~~implement~~Given ~~its~~the ~~plans~~Company's ~~and~~classification ~~continue~~ as a ~~going~~penny ~~concern~~stock ~~may~~traded ~~be dependent upon raising additional capital. Our continued existence depends~~ on the ~~success~~OTC ofMarkets, ~~our~~its ~~efforts~~constrained toliquidity ~~raise~~and ~~additional~~solvency ~~capital~~position, ~~necessary to meet our obligations as they come due~~ and tothe ~~obtain~~limited ~~sufficient~~availability ~~capital~~of tothird-party ~~execute~~financing, ~~our~~management ~~business~~expects ~~plan.~~that Weany ~~may~~significant ~~obtain~~additional ~~capital~~funding ~~primarily~~will ~~through~~most ~~issuances~~likely ofneed ~~debt~~to orbe ~~equity~~sourced orfrom ~~entering~~related ~~into collaborative arrangements with corporate partners~~parties. There can be no assurance that we will be successful in completing additional financing or collaboration transactions or, if financing is available, that it can be obtained on commercially reasonable terms or in amounts sufficient to meet its obligations as they become due and support execution of its business plan. If we are not able to obtain the additional financing on a timely basis, we may be required to ~~further~~ scale down or perhaps even cease the ~~operation~~operations of our business. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current ~~stockholders~~shareholders. Obtaining commercial or related party loans, assuming those loans would be available, will increase our liabilities and future cash commitments. We are subject to pending litigation and legal proceedings, the outcomes of which are uncertain and could result in significant costs, settlements, or judgments. While management does not currently believe these matters will have a material adverse effect, unfavorable outcomes could adversely impact the Company’s liquidity, results of operations, and ability to continue as a going concern. Our financial statements doinclude ~~not~~certain ~~include~~accruals and adjustments ~~that~~based ~~might~~on ~~result~~management’s ~~from~~best estimates regarding this uncertainty; however, the ~~outcome~~ultimate resolution of ~~this~~these ~~uncertainty~~matters could differ materially from these estimates and result in additional adjustments.

2523 Table of Contents

Results of operations

Revenue

During the years ended December 31, ~~2024~~2025 and ~~2023~~2024, the Company reported revenue of $~~820~~1,~~137~~362,163 and $~~nil~~820,137, respectively. ~~Product~~The ~~sales~~increase in 2025 was primarily driven by the continued expansion of the Company’s medical cannabis ~~commenced~~product ~~during~~line, ~~2024~~improved ~~and~~distribution ~~therefore~~capabilities, increased market penetration, and the ~~Company~~onboarding ~~reported~~of nonew ~~revenue~~retail inpartners ~~the~~since ~~prior~~late ~~year~~2024.

Cost of goods sold

During the years ended December 31, ~~2024~~2025 and ~~2023~~2024, the Company reported cost of goods sold of $3,~~755~~447,~~064~~071 and $~~nil~~3,755,064, respectively. ~~Product~~The ~~sales~~decrease ~~commenced~~in ~~during~~cost ~~2024~~of goods sold was primarily attributable to improved operating efficiencies and economies of scale in our cultivation and processing operations, which more than offset the additional expenditures on raw materials, labor, and variable overhead associated with the increased production levels. Included in cost of goods sold for the ~~year~~years ended December 31, 2025 and 2024 isare losses on the impairment of inventory of $1,984,359 and $1,884,864, respectively, primarily due to ~~lower~~downward ~~net~~pricing ~~realizable~~pressures ~~value~~in ~~attributed~~the tomarket ~~early~~and ~~batches~~changes in product specifications and regulatory standards that affected the recoverability of ~~cannabis~~select ~~product~~products. asFurthermore, a ~~result~~portion of ~~suboptimal~~the inventory was identified as having THC potency levels below the Company’s established thresholds, diminishing its appeal in the marketplace and adversely impacting its expected selling price and commercial feasibility.

Gross loss

During the years ended December 31, ~~2024~~2025 and ~~2023~~2024, the Company reported a gross loss of $2,~~934~~084,~~927~~908 and $~~nil~~2,934,927, respectively. The decrease in gross loss in ~~2024~~2025 iswas primarily due to ~~the~~higher ~~Company’s~~sales ~~ongoing optimization of production processes~~volumes, which ~~led~~drove tostronger ~~higher~~revenue ~~production~~growth ~~costs~~ that ~~were~~outpaced ~~not~~the ~~recovered~~rise ~~through~~in ~~sales.~~cost ~~Furthermore,~~of ~~product~~goods ~~pricing was set below market levels due to suboptimal THC levels, further impacting profitability~~sold.

Operating expenses

The summary of the Company’s operating expenses for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 is as follows:

	2024		2023
	2025		2024
Amortization and depreciation	$	-	$	127,847
General and administrative	$	489,641	$	145,713
General and administrative		116,640		703,596
Payroll and consulting fees		-		114,798
Payroll and consulting fees		114,798		412,083
Professional fees		469,690		435,511
Professional fees		435,511		334,979
Royalty expense		303,525		-
Rent		4,381		2,599
	$	1,262,856	$	696,022
	$	671,330	$	1,581,104

During the years ended December 31, ~~2024~~2025 and ~~2023~~2024, the Company’s operating expenses consisted primarily of ~~amortization and depreciation,~~ general and administrative expenses, payroll ~~land~~and consulting fees, ~~and legal and~~ professional fees associated with the costs for services or employees in finance, accounting, sales, and administrative activities, and ~~the~~royalty ~~compliance of a public company~~expense. Overall operating expenses for the year ended December 31, ~~2024~~2025 ~~were~~was $~~671~~1,~~330~~262,856 compared to ~~operating expenses of~~ $1696,~~581,104~~022 in ~~the comparable period~~2024, aan ~~decrease~~increase of $~~909~~566,~~774~~834. The ~~decrease~~increase is primarily attributable to the following:

·	A $~~586~~343,~~956~~928 ~~decrease~~increase in general and administrative expenses primarily due to ~~a reduction in advertising and promotion expenditures,~~ an ~~overall~~increase ~~decrease~~ in ~~discretionary~~investor relations and ~~extraneous~~advertising ~~spending,~~ and ~~due~~promotion ~~to the capitalization of certain production-related expenses into inventory~~expenditures.
·	A $~~297~~303,~~285~~525 ~~reduction~~increase in ~~payroll~~royalty ~~and~~expense ~~consulting fees~~ primarily due to a ~~change~~royalty inagreement ~~management~~entered ~~which~~into ~~resulted~~by inthe aCompany ~~reduction~~with inKoze ~~payroll~~on ~~accruals~~March ~~for officers~~17, ~~and~~2025. ~~the~~No ~~allocation~~similar ofroyalty aarrangement ~~portion~~existed ~~of the payroll and consulting expenses to inventory~~ in ~~the current year to align more closely with the work completed and services provided related to production of goods~~2024.
The increase was partly offset by decreases in the following expenses:
·	A $114,798 reduction in payroll and consulting fees primarily due to consulting fees payable of the same amount to the former CEO, Dean Medwid which was recorded in 2024. All other payroll and consulting expenses were reclassified to inventory in 2025 and 2024 to align more closely with the production of goods.

~~The~~24 ~~decrease~~Table ~~was~~of ~~partly offset by increases in the following expense:~~Contents

·	A $127,847 decrease in amortization and depreciation expense due to the capitalization of amortization and depreciation expense as inventory.
·	A $100,532 increase in professional fees due to higher accounting fees associated with the additional accounting activities required for the product sales that began during 2024.

26 Table of Contents

Other income (expenses)

The summary of the Company’s other income (~~expense~~expenses) for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 is as follows:

	2024			2023
	2025			2024
Change in the fair value of derivative conversion feature	$	~~105~~(850,~~064~~152	)	$	~~(255~~105,~~520~~064	)
Change in the fair value of obligation to issue shares		(31,~~449~~487,~~789~~328	)		~~401~~(3,~~778~~449,789	)
Gain on loan dissolution		-			7,547,905
Foreign exchange gain		66,252			24,692
Interest expense		(21,~~264~~958,~~095~~785	)		(12,~~690~~264,~~924~~095	)
Loss on extinguishment of debt		(690,712	)		(654,919	)
Imputed interest expense		(490,630	)		-
Loss on impairment of investment		-			(78,760	)
Loss on the extinguishment of debt		-			(690,712	)
	$	(6,299,532	)	$	5,269,560
Loss on impairment of investment		(4,518,127	)		-
Gain on write-off of accounts payable and accrued liabilities		410,430			-
Other expense		(1,930,000	)		-
	$	(7,783,684	)	$	(6,274,840	)

~~Other~~Total ~~expense~~other ~~was~~expenses were $67,~~299~~783,~~532~~684 for the year ended December 31, ~~2024~~2025 compared to ~~other income of~~ $56,~~269~~274,~~560~~840 in the prior year, resulting in an increase in total expense of $111,~~569~~508,~~092~~844. The ~~change~~increase is primarily attributable to the following:

· AThe ~~$360,584 increase in the~~ fair value of the derivative conversion feature ~~primarily~~liability ~~due~~related to ~~fluctuations~~convertible innotes ~~market~~increased ~~conditions~~from ~~and~~$1,159,324 ~~changes~~at inDecember ~~underlying~~31, ~~assumptions~~2024 ~~used~~to $2,009,476 at December 31, 2025, resulting in ~~valuation~~a loss of $850,152. In 2024, the ~~derivative~~fair ~~conversion~~value ~~feature~~declined offrom ~~convertible~~$1,264,388 ~~notes~~at ·December A31, 2023 to $31,~~851~~159,~~567~~324 ~~decrease~~at inDecember ~~the~~31, ~~fair~~2024, ~~value~~resulting in a gain of ~~obligation~~$105,064. toThe ~~issue~~primary ~~shares~~drivers ~~was~~of ~~primarily~~these ~~due~~fair tovalue changes were fluctuations in the common shares of the Company'’s ~~stock~~peers ~~price~~as ~~and~~the ~~other~~Company’s ~~assumptions~~common ~~affecting~~shares trade infrequently on the ~~value~~OTC ofMarkets, the ~~obligation~~remaining ~~related~~term to expiration of the ~~LTB~~convertible ~~transaction~~notes ~~(Note~~and 6)the conversion feature's exercise price. · A $~~573~~490,~~171~~630 increase in imputed interest expense ~~primarily~~ due to ~~additional~~a ~~interest~~debt ~~expense~~modification ~~recognized~~of oncertain ~~the~~promissory ~~lease~~and ~~for~~convertible ~~the~~notes ~~Facility~~to ~~during~~related ~~the~~parties, ~~current~~which ~~year.~~resulted ·in ~~During~~a remeasurement of the ~~prior~~liabilities ~~year,~~and ~~there~~recognition ~~was~~of aadditional ~~$7,547,905~~imputed ~~gain~~interest onexpense. ~~loan~~· ~~dissolution~~A ~~related~~loss toon ~~the~~impairment ~~statute~~of investment of ~~limitations~~$4,518,127 ~~expiry~~was onrecognized ~~claims~~in ~~related~~2025 due to the ~~AMS~~full ~~promissory~~impairment ~~note~~of ~~(Note~~the 8)LTB investment. No ~~such~~impairment ~~gain~~was onrecognized ~~loan~~in ~~dissolution~~2024. ~~was~~· ~~recognized~~During ~~for~~ the year ended December 31, ~~2024~~2025, a one-time adjustment of $1,930,000 was made to lease-related rent expense due to a clarification in the interpretation of the lease terms between management and Formosa.

The increase in other expenses was partially offset by the following decreases:

·	The fair value of the obligation to issue shares liability decreased from $3,654,009 as at December 31, 2024 to $2,166,681 as at December 31, 2025, resulting in a gain of $1,487,328 from the change in the fair value of the obligation to issue shares In 2024, the fair value of the obligation to issue shares liability changed from $204,220 as at December 31, 2023 to $3,654,009 as at December 31, 2024, resulting in a loss of $3,449,789 from the change in the fair value of the obligation to issue shares recognized during the year ended December 31, 2024. Key factors influencing the measurement of the obligation to issue shares include fluctuations in the Company's common shares price and term to expiration.

·	A $41,560 increase in the foreign exchange gain primarily due to currency fluctuations between the USD, CAD and EUR.

·	A $305,310 decrease in interest expense is primarily attributable to a reduction in the interest rate for certain loans from related parties, pursuant to a debt modification agreement entered into by the Company with those related parties.

·	A $690,712 decrease in loss on extinguishment of debt was incurred in 2024 related to extinguishment of certain convertible notes.

·	A $410,430 gain due to write-off of historical accounts payable and accrued liabilities that occurred during 2025. No such write-off was recorded during 2024.

Net income (loss)

As a result of the foregoing, during the year ended December 31, ~~2024~~2025, we incurred a net loss of $911,~~905~~131,~~789~~448 or $0.02 per share compared to ~~net~~a ~~income~~loss of $39,~~688~~905,~~456~~789 or $0.0102 per share in the prior year.

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Liquidity and capital resources

As of December 31, 2025, the Company had $1,804 in cash as compared to $2,156, and working capital deficiency of $30,278,570 compared to $24,733,636 as of December 31, 2024. During the year ended December 31, ~~2024~~2025, ~~we:~~the Company’s funding was primarily attributable to advances from Koze, a related party. Total amounts advanced during the year amounted to $2,100,510. This promissory note represents an ongoing funding arrangement under which additional amounts are funded by Koze based on the Company’s operational needs from time to time.

·The ~~Issued~~summary ~~$294,000 in new convertible notes to accredited investors with interest rates from 12% to 24% and converted $134,910~~ of the ~~outstanding~~Company’s ~~convertible~~cash ~~notes~~flows ~~into 204,353,254 shares of common stock. · Entered into two additional notes payable agreements~~ for ~~$50,000 and $70,000, respectively, with a second private individual, each bearing interest at 10% per annum,~~ the ~~$50,000~~years ~~note~~ended ~~payable~~December ~~maturing on May 10~~31, ~~2024~~2025 and ~~the $70,000 note payable on May 31,~~ 2024. ·is ~~Entered~~as ~~into an additional note payable agreement for $50,000 with a third private individual, bearing interest at 15% per annum, maturing on April 14, 2025.~~follows:

During the year ended December 31, 2023, we issued $213,750 in new convertible debentures to accredited investors with 12-month terms to maturity and interest rates between 10% and 12% and converted $222,096 of the outstanding convertible notes into shares of common stock.

	2025			2024
Cash used in operating activities	$	(789,102	)	$	(1,697,232	)
Cash used in investing activities		(5,519	)		-
Cash provided by financing activities		794,269			1,698,738
	$	(352	)	$	1,506

~~The~~Cash ~~summary~~used ofin ~~the~~operating ~~Company’s cash flows for the years ended December 31, 2024 and 2023 is as follows:~~activities

	2024			2023
Cash used in operating activities	$	(1,697,232	)	$	(2,274,452	)
Cash used in investing activities		-			(80,634	)
Cash provided by financing activities		1,698,738			2,353,419
	$	1,506		$	(1,667	)

Cash used in operating activities for the year ended December 31, 2025 decreased by $908,130 compared to the prior year, primarily due to more efficient working capital management, including better inventory turnover and stronger management of accounts payable and accrued liabilities.

AsCash offlows ~~December~~used ~~31, 2024, the Company had $2,156~~ in ~~cash~~investing ~~as compared to $650 in the previous year.~~activities

27Cash ~~Table~~used in investing activities was $5,519 for the year ended December 31, 2025 compared to $nil in 2024, due to the purchase of ~~Contents~~new equipment in 2025.

Cash ~~used~~provided ~~in operating activities for the year ended December 31, 2024 decreased~~ by ~~$577,220~~financing ~~compared to the prior year, due to management’s efforts to increase inventory turnover and improve working capital management.~~activities

Cash ~~used~~provided inby ~~investing~~financing activities for the year ended December 31, 2025 were $794,269 compared to $1,698,738 in 2024, ~~decreased~~representing bya decrease of $80904,~~634~~469. ~~compared~~This decrease was primarily attributable to the ~~prior~~absence ~~year~~of ~~due~~financing toinflows noin ~~purchase~~2025 from notes payable of ~~property~~$1,548,738 ~~plant~~ and ~~equipment~~convertible notes of $150,000 that occurred in 2024. The decrease was partially offset by the ~~current~~proceeds ~~year~~from related party loans of $794,269 in 2025 with no such proceeds in 2024.

Cash provided by financing activities for the year ended December 31, 2024 decreased by $654,681 compared to the prior year primarily due to no proceeds from related party loans and a reduction of approximately $250,000 in proceeds from convertible notes, offset by $1,500,000 increase in proceeds from secured notes payable.

Related party transactions

~~Loan~~a) ~~payable~~Key - related party transactions

AsA atsummary ~~December~~of ~~31, 2024,~~ the ~~loan~~Company’s ~~payable -~~ related party transactions is as follows:

·	A $12,818 interest-free loan from PLC International Investments Inc., a Company owned by Dominic Colvin, who currently serves as a director of the Company;
		2025		2024
·	A $450,000 promissory note entered into on November 22, 2023 with Mr. Tal, a shareholder of the Company with a “principal owner” designation as defined by the US Securities and Exchange Commission, as part of the LTB transaction (Note 6). The promissory note bears interest at 13% per annum and matures on November 22, 2024. During the year ended December 31, 2024, the Company recorded interest payable of $50,047 (2023 - $6,251) on the promissory note.
Revenue		$	394,633	$	770,265
Lease expense payable to Formosa included in cost of goods sold			1,073,328		-
Rent expense included in general and administrative expense			2,124		4,381
Marketing expense included in general and administrative expense			71,287		-
Professional fees			259,834		225,794
Royalty expense			303,525		-
Interest expense			1,850,868		110,795
Imputed interest expense			490,630		-
Other expense			1,930,000		-
Total related party transactions		$	6,376,229	$	1,111,235

~~Convertible notes~~Revenue

~~As at December 31, 2024, $212,555 (December 31, 2023 - $231,250) of the Company’s convertible notes balance was attributable to amounts owed to Mr. Tal.~~ During the year ended December 31, ~~2023~~2025, ~~Mr. Tal did not convert any of~~ the ~~convertible~~Company ~~notes~~recognized ~~into~~revenue ~~shares~~ of ~~common~~$394,633 ~~stock~~(2024 of- ~~the Company. During the year ended December 31~~$770,265) ~~2024,~~from MrD.N.S. ~~Tal~~CANTEK ~~converted~~2019 ~~$18,695~~LTD (~~2023 - $nil~~“Cantek”), ofan ~~the~~Israeli ~~convertible~~limited ~~notes~~corporation ~~into~~owned 23by Koze,~~368,212~~ ~~(2023~~and -for ~~nil)~~which ~~shares~~Mr. ofTal ~~common~~serves ~~stock~~as ofa ~~the~~financial ~~Company~~advisor.

~~Obligation~~These related party relationships did not influence our business decisions or pricing, as sales are determined primarily based on market demand and the ability to ~~issue~~achieve ~~shares~~the highest possible selling price.

As26 atTable ~~December 31, 2024, the Company has an obligation to issue an additional 150,799 (December 31, 2023 - 48,052) Class C preferred shares to Mr. Tal as part~~ of ~~the LTB transaction (Note 6), valued at $1,827,005 (December 31, 2023 - $102,110).~~Contents

28A ~~Table~~summary of ~~Contents~~the Company’s average selling prices by market is as follows:

	Average Price per Gram (CAD)^*
Market	Premium Batches		Medium Batches
Germany		2.05		1.6
Israel		2.0	1.6-1.8
Canada		2.0	1.1-1.5
Portugal	1.8-2.0		0.8-1.5

^* Batches with THC concentrations below 20% are generally sold at lower average prices compared to higher-THC batches.

Lease expense

The Company has a lease with Formosa, which became a related party upon the appointment of its manager, Elliot Zemel, as a director of the Company on March 11, 2025. During the year ended December 31, 2025, the Company incurred lease expense of $1,073,328 associated with the Formosa lease, which is included in cost of goods sold.

Rent

Effective February 1, 2023, the Company entered into a ~~lease~~rental agreement togranting ~~lease~~it anthe right to use office space located at Suite 3600, 888 5th Avenue SW, Calgary, Alberta, Canada, T2P 3R7. ~~The~~for a monthly rent isof CAD $500 ~~CAD~~ per month. This space was provided by a company toaffiliated ~~which~~with Richard Orman (“Mr. Orman”), ~~the~~ chairman of the Company’s board of directors,. isThe ~~related~~Company ceased using the office space and accordingly stopped accruing rent expense after June 30, 2025. During the year ended December 31, ~~2024~~2025, the Company incurred rent expense of $42,~~381~~124 (~~2023~~2024 - $24,~~599~~381) for this space which is recorded as a general and administrative expense.

~~The~~Marketing related party liabilities as at December 31, 2023 also comprised of promissory notes from Koze Investments LLC (“Koze”), a company partially owned by Elliot Zemel, who is a shareholder of the Company and a separate note from Mr. Zemel himself. The Company also has lease liabilities from a lease agreement with Formosa Mountain Ltd., a company managed by Mr. Zemel. The shareholder was previously not considered to be a related party of the Company.expense

During the year ended December 31, 2025, the Company incurred marketing expense of $71,287 (2024 - $nil) with Sky Home Services LLC, a company managed by Mr. Tal, which is recorded as a general and administrative expense.

Professional fees

	·	During the year ended December 31, 2025, the Company incurred professional expenses of $203,727 (2024 - $180,899) related to accounting fees payable to Invictus Accounting Group LLP (“Invictus”), a company which provides part-time CFO, financial reporting, and bookkeeping services to the Company. Mr. Oliver Foeste is the Managing Partner of Invictus.
	·	During the year ended December 31, 2025, the Company incurred professional expenses of $56,107 payable to Fabian Vancott (2024 - $44,895) related to legal fees. Anthony Panek who is a partner in Fabian Vancott, is also a director of the Company.

Royalty expense

On March 17, 2025, the Company and Alberta Ltd., entered into a security and royalty agreement with Koze (the “Royalty Agreement”), pursuant to which the Company is required to pay a monthly royalty of CAD $0.20 per gram on cannabis product sales, payable at the beginning of the month for the previous month, as additional consideration related to the lease with Formosa. Immediately upon failure to pay the royalty when due, the royalty rate increases to CAD $0.40 per gram sold for the applicable month. As of December 31, 2025, Alberta Ltd. was in default of its payment obligations, and Koze agreed to forbear from exercising its rights over the ownership interest until May 31, 2026. During the year ended December 31, 2025, the Company sold 1,046,769 grams of cannabis products and incurred a royalty expense of $303,525 (2024 - $nil).

Interest expense

	·	During the year ended December 31, 2025, the Company incurred interest expense on promissory and convertible notes with Mr. Tal of $82,602 (2024 - $110,795).
	·	During the year ended December 31, 2025, the Company incurred interest expense on promissory and convertible notes with Koze of $1,264,887.
	·	During the year ended December 31, 2025, the Company incurred interest expense on promissory note with Formosa of $102,648.
	·	During the year ended December 31, 2025, the Company incurred interest expense on rent in default with Formosa of $400,731.

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Imputed interest expense

	·	During the year ended December 31, 2025, the Company incurred imputed interest expense on promissory and convertible notes with Mr. Tal of $29,675 (2024 - $nil).
	·	During the year ended December 31, 2025, the Company incurred imputed interest expense on promissory and convertible notes with Koze of $386,231.
	·	During the year ended December 31, 2025, the Company incurred imputed interest expense on promissory note with Formosa of $74,724.

Other expense

During the year ended December 31, 2025, the Company made a one-time adjustment of $1,930,000 to lease-related rent expense due to a clarification in the interpretation of the lease terms for the Facility, which is recorded as other expense.

b) Amounts due to related parties

A summary of the Company’s related party liabilities as at December 31, 2025 and 2024, is as follows:

	2025		2024
Accounts payable and accrued liabilities	$	5,416,889	$	1,038,963
Accrued interest		1,352,899		56,298
Convertible notes		-		212,555
Loans payable to related parties		13,116,485		462,818
Royalty payable		305,492		-
Obligation to issue shares		2,166,681		1,827,005
Total related party liabilities	$	22,358,446	$	3,597,639

Accounts payable and accrued liabilities

As at December 31, 2025, accounts payable and accrued liabilities include balances owing to related parties as follows:

	·	As at December 31, 2025, $4,283,706 was payable to Formosa for outstanding lease payments. As at December 31, 2025, accrued interest on unpaid lease payments on the Formosa lease was $1,037,180.
	·	As at December 31, 2025, $146,306 (December 31, 2024 - $89,392) was payable to Invictus for part-time CFO, financial reporting, and bookkeeping services provided to the Company.
	·	As at December 31, 2025, $319,279 (December 31, 2024 - $319,279) was payable to Mr. Orman for unpaid directors’ fees for 2021 through 2023.
	·	As at December 31, 2025, $551,953 (December 31, 2024 - $525,754) was payable to Dominic Colvin, a director of the Company, for unpaid salary and expense reimbursement amounts during Mr. Colvin’s employment with the Company as its CEO during the years 2019 through 2022. Mr. Colvin has disputed this amount and is asserting a claim for $1,679,060. As of December 31, 2025, the Company is in the process of reviewing the claim and remains in ongoing discussions with Mr. Colvin. No resolution has been reached with respect to this matter.
	·	As at December 31, 2025, $115,645 (December 31, 2024 - $104,538) was payable to Fabian Vancott in respect of unpaid legal fees.

Loans payable to related parties

As at December 31, 2025, the loans payable to related parties consists of the following:

PLC International Investments Inc. (“PLC”)

A $13,430 interest-free loan from PLC, a company owned by Dominic Colvin, a director of the Company;

Loans payable to Koze

On March 11, 2025, Koze became a related party upon the appointment of its manager as a director of the Company. As a result, the balance owing on promissory notes was reclassified from notes payable to loans payable to related parties during the three months ended March 31, 2025.

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On August 7, 2025, the Company entered into the Debt Modification agreement with Koze to amend the annual interest rates on all outstanding promissory and convertible notes held by Koze to 6%, compounding annually.

Koze LTB:

On November 22, 2023, the Company entered into promissory notes of $2,550,000 with Koze, as part of the LTB transaction, bearing interest at 13% per annum. Originally due on November 22, 2024, the maturity date for this note was extended to December 31, 2025, by agreement with Koze. On March 18, 2026, Mr. Tal and Koze agreed to extend the maturity date of the promissory notes to December 31, 2026.

As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $2,550,000 and $555,406, respectively, were extinguished. A new note (“Koze LTB”) of $2,978,661 bearing 6% interest, compounding annually, was recognized resulting in a gain of $126,745 from extinguishment, recorded directly to additional paid-in capital.

During the year ended December 31, 2025, the Company recognized interest expense of $268,604 and imputed interest expense of $114,817 related to the note. As at December 31, 2025, the outstanding principal balance on the note was $3,093,478 and accrued interest payable on the note was $76,062.

Koze A:

On May 25, 2023, the Company entered into a promissory note with Koze, bearing interest at 24% compounded monthly, to fund for certain documented expenses.

As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $849,278 and $443,339, respectively, were extinguished. A new note (“Koze A”) of $1,134,669 bearing 6% interest, compounding annually, was recognized resulting in a gain of $157,949 from extinguishment, recorded directly to additional paid-in capital.

During the year ended December 31, 2025, the Company received additional funding of $216,924 under the note. During the year ended December 31, 2025, the Company recognized interest expense of $173,181 and imputed interest expense of $48,650 related to the note. As at December 31, 2025, the outstanding principal balance on the note was $1,400,243 and accrued interest payable on the note was $31,070.

Koze B:

On May 25, 2023, the Company entered into another promissory note with Koze, bearing interest at 24% compounded monthly, to fund certain documented expenses.

As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $4,040,474 and $1,366,780, respectively, were extinguished. A new note (“Koze B”) of $4,767,106 bearing 6% interest, compounding annually, was recognized resulting in a gain of $640,148 from extinguishment, recorded directly to additional paid-in capital.

During the year ended December 31, 2025, the Company received additional funding of $498,630 under the note. During the year ended December 31, 2025, the Company recognized interest expense of $763,630 and imputed interest expense of $204,591 related to the note. As at December 31, 2025, the outstanding principal balance on the note was $5,529,686 and accrued interest payable on the note was $132,215.

Koze C:

On February 8, 2024, the Company entered into another promissory note with Koze, bearing interest at 24% compounded monthly.

As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $275,000 and $97,403, respectively, were extinguished. A new note (“Koze C”) of $330,551 bearing 6% interest, compounding annually, was recognized resulting in a gain of $41,852 from extinguishment, recorded directly to additional paid-in capital.

During the year ended December 31, 2025, the Company recognized interest expense of $46,668 and imputed interest expense of $13,150 related to the note. As at December 31, 2025, the outstanding principal balance on the note was $343,701 and accrued interest payable on the note was $8,394.

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Koze convertible note (“Koze CN”):

The Company has a convertible note with Koze, bearing interest at 24%.

As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $68,555 and $75,714, respectively, were extinguished. A new note, Koze CN, of $126,275 bearing 6% interest, compounding annually, was recognized resulting in a gain of $17,995 from extinguishment, recorded directly to additional paid-in capital.

During the year ended December 31, 2025, the Company recognized interest expense of $12,804 and imputed interest expense of $5,023 related to the note. As at December 31, 2025, the outstanding principal balance on the note was $131,298 and accrued interest payable on the note was $3,207.

During the year ended December 31, 2025, Koze made payments of $2,086,675 directly to the Company’s suppliers. In addition, $819,867 was received directly by Koze, as collections from customers.

Loans payable to Mr. Tal

On August 7, 2025, the Company entered into the Debt Modification agreement with Mr. Tal to amend the annual interest rates on all outstanding promissory and convertible notes held by him to 6%, compounding annually.

Mr. Tal LTB:

On November 22, 2023, the Company entered into a promissory note of $450,000 with Mr. Tal as part of the LTB transaction, bearing interest at 13% per annum. Originally due on November 22, 2024, the maturity date for this note was extended to December 31, 2025, by agreement with Mr. Tal. On March 18, 2026, Mr. Tal and Koze agreed to extend the maturity date of the promissory notes to December 31, 2026.

As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $438,296 and $89,768, respectively, were extinguished. A new note (“Mr. Tal LTB”) of $507,422 bearing 6% interest, compounding annually, was recognized resulting in a gain of $20,641 from extinguishment, recorded directly to additional paid-in capital.

During the year ended December 31, 2025, the Company recorded payments to the note of $77,729 (2024 - $nil). During the year ended December 31, 2025, the Company recognized interest expense of $45,357 (2024 - $58,660) and imputed interest expense of $17,954 related to the note. As at December 31, 2025, the outstanding balance on the note was $447,647 (December 31, 2024 - $450,000) and accrued interest payable on the note was $11,887 (December 31, 2024 - $56,298).

Mr. Tal convertible note (“Mr. Tal CN”):

The Company has a convertible note with Mr. Tal, bearing interest at 24%.

As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $212,555 and $121,427, respectively, were extinguished. A new note, Mr. Tal CN, of $294,850 bearing 6% interest, compounding annually, was recognized resulting in a gain of $39,132 from extinguishment, recorded directly to additional paid-in capital.

During the year ended December 31, 2025, the Company recognized interest expense of $37,245 (2024 - $52,135) and imputed interest expense of $11,721 related to the note. As at December 31, 2025, the outstanding principal balance on the note was $306,571 (December 31, 2024 - $212,555) and accrued interest payable on the note was $7,488 (December 31, 2024 - $91,669).

Promissory note with Formosa

As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $1,930,000 and $58,098, respectively, were extinguished. A new note of $1,775,707 bearing 6% interest, compounding annually, was recognized resulting in a gain of $212,391 from extinguishment, recorded directly to additional paid-in capital.

During the year ended December 31, 2025, the Company recognized interest expense of $102,648 and imputed interest expense of $74,724 related to the note. As at December 31, 2025, the outstanding principal balance on the note was $1,850,431 (December 31, 2024 - $nil) and accrued interest payable on the note was $45,396 (December 31, 2024 - $nil).

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A summary of the Company’s loans payable to related parties as at December 31, 2025 and 2024 is as follows:

	2025		2024
PLC	$	13,430	$	23,510
Koze LTB		3,093,478		-
Koze A		1,400,243		-
Koze B		5,529,686		-
Koze C		343,701		-
Koze CN		131,298		-
Mr. Tal LTB		447,647		439,308
Mr. Tal CN		306,571		-
Promissory note with Formosa		1,850,431		-
	$	13,116,485	$	462,818

A summary of the accrued interest of the Company’s loans payable to related parties as at December 31, 2025 and 2024 is as follows:

	2025		2024
Koze LTB	$	76,062	$	-
Koze A		31,070		-
Koze B		132,215		-
Koze C		8,394		-
Koze CN		3,207		-
Mr. Tal LTB		11,887		56,298
Mr. Tal CN		7,488		-
Promissory note with Formosa		45,396		-
	$	315,719	$	56,298

Royalty payable

Pursuant to the Royalty Agreement, as of December 31, 2025, the royalty amount payable to Koze was $305,492 (CAD $418,707) (2024 - $nil).

Obligation to issue shares

As at December 31, 2025, the Company has an obligation to issue an additional 166,668 preferred shares Series C to each of Mr. Tal and Koze (December 31, 2024 - 150,799 each) as part of the LTB transaction, valued at $1,083,341 for each party (December 31, 2024 - $1,827,005 each).

Subsequent events

On ~~March~~January 318, ~~2025~~2026, ~~Elliot~~Richard ~~Zemel~~Orman ~~was~~resigned ~~appointed~~from asthe aBoard ~~director~~ of ~~the~~Directors Company (Note 13). The Company has $68,555 in convertible debt and $2,825,000 in promissory notes with Koze Investments LLC, a company partially owned by Mr. Zemel, and a lease with Formosa Mountain Ltd., a company managed by Mr. Zemel. The Company has not made any lease payments since lease inception and the unpaid lease balance as at year ended December 31, 2024 was $3,037,910 (December 31, 2023 - $2,479,586). Additionally, Mr. Zemel pays for certain of the Company~~’s operating expenses on an ongoing basis~~. ~~As at December 31, 2024, amounts payable to Mr. Zemel were $3,382,380 towards advances for ongoing operating expenses.~~

Pursuant to an investor relations agreement with another company, the Company agreed to issue 16,000,000 common shares in exchange for services provided. The shares were issued subsequent to December 31, 2025, but prior to the issuance of these financial statements.

Critical accounting estimates

The Company’s financial statements and accompanying notes have been prepared in accordance with US GAAP. The preparation of these financial statements requires management to make estimates, judgments, and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare the financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Our significant accounting policies are described in Note 1 in this Annual Report.

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Recently issued accounting pronouncements

~~Management~~New ~~have reviewed recently issued, but not yet effective,~~ accounting ~~pronouncements~~standards ~~and do not believe the future adoption of any such pronouncements will have a material impact on our financial condition or the results of our operations.~~ adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. We adopted ASU 2023-09 beginning January 1, 2025. The adoption did not have any significant impact on our financial statement disclosures.

New accounting standards not yet adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires an entity to disclose the amounts of inventory purchases, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. It also requires an entity to include certain amounts that are already required to be disclosed under current GAAP in the same disclosure. Additionally, it requires an entity to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and to disclose the total amount of selling expenses. The ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

In September 2025, the FASB issued ASU 2025-06: Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software. This standard modernizes the accounting for costs related to internal-use software by removing references to project stages and by clarifying the thresholds entities apply to begin capitalizing costs. The amendments in this update are effective for interim and annual periods beginning after December 15, 2027, and early adoption is permitted.

We are currently evaluating how the adoption of these standards may impact our consolidated financial statements.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting Company, we are not required to provide this information.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary financial information required by this Item are set forth immediately following the signature page and are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A - CONTROLS AND PROCEDURES

Disclosure controls and procedures

Controls and procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Report.

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These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO/CFO to allow timely decisions regarding required disclosure.

Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as of December 31, ~~2024~~2025, at reasonable assurance levels.

We believe that our financial statements presented in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.

Inherent limitations

Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures will prevent all ~~error~~errors and all ~~fraud~~fraudulent actions. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that ~~breakdown~~breakdowns can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting during our fiscal year ended December 31, ~~2024~~2025, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report.

Management Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d15(f) promulgated under the Exchange Act. Those rules define internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
·	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and the receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
·	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the Company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2024~~2025. In making this assessment, our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013).

Based on its assessment, management has concluded that as of December 31, ~~2024~~2025, our disclosure controls and procedures and internal control over financial reporting were not effective and that a material weakness existed in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a Company’s annual or interim financial statements will not be prevented or detected on a timely basis. ~~Management has identified deficiencies in operating effectiveness that, in combination, represent a material weakness in internal control over financial reporting as follows:~~

·Management has identified deficiencies in operating effectiveness that, in combination, represent a material weakness in internal control over financial reporting. Due to ~~recent~~ management and staff turnover in the prior years, accurate information and records were not consistently maintained within our records and there were instances where documentation to support certain transactions was difficult to obtain or unobtainable. These deficiencies represent a material weakness in our internal control over financial reporting.

Because of the material weakness identified, management has concluded that its internal control over financial reporting was not effective as of December 31, ~~2024~~2025. We are in the process of developing and implementing remediation plans to address the material weakness described above.

ITEM 9B - OTHER INFORMATION

During the quarter and year ended December 31, ~~2024~~2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

ITEM 9C - DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Set forth below are the directors and executive officers of the Company. Except as set forth below, there are no other persons who have been nominated or chosen to become directors, nor are there any other persons who have been chosen to become executive officers. Other than as set forth below, there are no arrangements or understandings between any of the directors, officers and other persons pursuant to which such person was selected as a director or an officer.

Name	Position Held with the Company	Age	Date First Electedor Appointed
Dominic Colvin	Director, Former CEO	5758	April 2018
Richard D. Orman	Director	76	April 2019
Anthony Panek	Director	40	August 2023
Anthony Panek	Director	39	August 2023
Oliver Foeste	CFO	50	September 2023
Oliver Foeste	CFO	49	September 2023
Elliot Zemel	Director	41	March 11, 2025
Elliot Zemel	Director	40	March 31, 2025
Constantine Nkafu	CEO and Director	50	September 2024
Constantine Nkafu	Interim CEO and Director	49	September 2024

~~Our~~On ~~Board~~January of8, ~~Directors~~2026, ~~believes~~Mr. ~~that~~Richard ~~all~~Orman ~~members~~resigned offrom the Board ~~and~~of ~~all~~Directors ~~executive officers encompass a range~~ of ~~talent,~~the ~~skill, and experience sufficient to provide sound and prudent guidance with respect to our operations and interests~~Company. ~~The information below with respect to our sole officer and director includes his experience, qualifications, attributes, and skills necessary for him to serve as a director and/or executive officer.~~

Our Board of Directors believe that its members of the Board and the executive officers of our company have a range of talent, skill, and experience sufficient to provide sound and prudent guidance with respect to our operations and interests.

Biographies

Dominic Colvin

Mr. Colvin was appointed as the Company’s CEO, President and a Director in April 2018. He resigned from his position as CEO and President on May 30, 2023~~, but remains a Director of the Company~~. Mr. Colvin ishas also been the President at PLC Investments, Inc (an investment advisory firm) since 2007. Additionally, he held the position of Director & Vice President-Operations at Cobalt Coal Ltd. from 2009 to 2010. He also worked as the Senior Vice President-Business Development at Renewable Power & Light Plc.

Constantine Nkafu

Mr. Nkafu was appointed ~~interim~~ CEO on September 7, 2024 and appointed as a Director on March 3111, 2025. Mr. Nkafu holds a Master of Science degree in Pharmaceutical Sciences from the London Metropolitan University, London, United Kingdom and has extensive experience in the ~~Pharmaceutical~~pharmaceutical, ~~Cannabis~~cannabis, and ~~Medical~~medical ~~Device~~device industries. Since 2020, Mr. Nkafu has held the position of Principal Consultant of NEC Consulting and has successfully led operations from start-up to becoming fully operational. He has supported submissions to the Food and Drug Administration, Health Canada and other jurisdictions. Mr. Nkafu’s roles in Quality and Regulatory affairs have given him insight into how to set up and run complex operations and meet both customer and regulatory requirements for a given jurisdiction. As CEO, Mr. Nkafu ensures the operations are meeting all the requirements by fostering healthy relationships between employees and providing the necessary guidance to make sure the company is meeting corporate objectives. ~~Since 2020, Mr. Nkafu has held the position of Principal Consultant of NEC Consulting and has successfully led operations from start-up to becoming fully operational.~~

~~Richard~~34 D.Table ~~Orman~~of Contents

Mr. Orman was appointed as a Director of our Company in April 2019. In addition, he is currently the President of PLM Consultants, LTD, Calgary, Alberta, Canada, a privately held business consulting Company, a position he has held since 1982. In 1986, Mr. Orman was elected to the Legislative Assembly of Alberta and was appointed to the provincial cabinet as Minister of Career Development and Employment. In 1988, he was appointed Minister of Labor. He was re-elected in 1989 and was then appointed Minster of Energy. He has over 35 years of experience with publicly traded companies in Canada, including Chairman and CEO of Kappa Energy Company, Inc., from 1994 to 2001, a director of Vanguard Oil Corp. from 1998 through 2001, and Executive Vice Chairman of Exceed Energy Company, Inc. from 2003 through 2005, Each of the aforesaid companies had their securities traded on the Toronto Stock Exchange. In addition, he was Vice Chairman of Novatel Inc., a Company traded on NASDAQ from 2004 through 2007 and from 2007 through 2011 he was the lead director of Daylight Energy Ltd, also traded on the TSX. From 2015 through February 2019, he was a consultant and senior counsel at Canadian Strategy Group, a government relations firm located in Edmonton, Alberta. In 2012 he was elected to the Board of Directors and currently serves as Chairman of the Board of Wescan Energy Corp. a Company traded on the TSX. In 2016 he was elected and currently serves as an independent non-executive director of Persta Resources, Inc., a Company traded on the Hong Kong Stock Exchange. Mr. Orman received a Bachelor of Arts degree with honors from Eastern Washington University in 1971.

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Oliver W. Foeste

Mr. Foeste, CPA, CA was appointed as the Company’s CFO on October 13, ~~2023.~~2023He ~~He brings more than a decade of financial reporting and executive experience across sectors including resource-based, construction, manufacturing, technology and real estate. He~~ founded Invictus Accounting Group LLP (“Invictus”) in 2012, a professional accounting firm in Vancouver, British Columbia, Canada and has been the Managing Partner of the firm since then. Invictus specializes in providing business advisory, financial and technical advisory, and practice management. He has assisted with CFO services, IFRS conversions, US GAAP reporting, outsourced controllership, income tax provisions, multi-jurisdiction consolidations, and financial and accounting solutions for large and small clients. Previously, ~~Oliver~~Mr. Foeste held senior management and executive positions inwith multinational and small-cap ~~capitalization~~ companies listed on exchanges in Canada and the USUnited States, including positions at Deloitte, where he led audit and assurance engagements for private and public companies, and at Walsh King Chartered Accountants where he prepared tax returns and financial statements for private clients.

Anthony Panek

Mr. Panek, age 3940, was appointed as a Director in August 2023. He is a corporate mergers and acquisitions attorney and venture capital investor with expertise in capital raising and the formation and growing of businesses. He has worked with private equity and venture capital funds to allocate capital to emerging growth companies and works with emerging growth companies, both public and private, to raise capital and acquire assets and corporate talent. He has been an investor in many emerging growth companies and private funds investing in similar companies. He works with companies from a business and legal perspective to navigate and manage growth challenges facing emerging growth companies and helping companies complying with their SEC reporting obligations. He completed the Venture Capital Certificate Program at Startup@Berkeley Law and received an LLM in Securities and Financial Regulation. Mr. Panek is the partner at Fabian Vancott, a full-service business law firm based in Salt Lake City, Utah since April 2019. Mr. Panek was selected to serve on the Company’s Board based upon his experience as an attorney and venture capital and private equity investor helping emerging companies raise capital, comply with SEC reporting and governance requirements, and his work with other cannabis companies.

Elliot Zemel

Mr. Zemel, age 4041, was appointed as a ~~director~~Director on March 3111, 2025. Mr. Zemel has operated multiple businesses including healthcare, e-commerce, and real estate management for over 13 years. He has been investing in both real property and venture capital as a Limited Partner and General Partner for over 20 years and has a penchant for identifying breakthrough companies. Mr. Zemel has networks and international distribution channels in the cannabis industry.

Family relationships

There are no family relationships between and among any of our directors or executive officers.

Involvement in certain legal proceedings

To the best of our knowledge, during the past five years, none of the following occurred with respect to a present or former director or executive officer of the Company: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of any competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the commodities futures trading commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Insider Trading Policy

Our insider trading policy as part of our code of ethics ~~(the “Insider Trading Policy”)~~ governs the purchase, sale, and/or any other dispositions of our securities by directors, officers, employees and other covered persons and is designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to us. To the extent we engage in transactions in our securities, we do so in accordance with applicable laws.

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Committees of the Board

~~Our~~During the year ended December 31, 2025, our Board of Directors held notwo formal meetings into approve the ~~year~~quarterly ~~ended~~10-Q ~~December~~financial ~~31,~~reports. ~~2024~~Each meeting was attended by all directors then in office. All proceedings of the Board of Directors were conducted by resolutions consented to in writing by all of the directors and filed with the minutes of the ~~Company~~meetings.

33The ~~Table~~Board of ~~Contents~~Directors has not established any standing committees.

Board nominations and appointments

In ~~considering~~evaluating ~~whether~~nominees ~~to nominate any particular candidate~~ for election to the Board of Directors, we ~~will~~consider ~~use~~a ~~various~~variety ~~criteria~~of ~~to evaluate each candidate~~factors, including, anamong ~~evaluation~~others, ~~of each candidate’s~~ integrity, business ~~acumen~~judgment, ~~knowledge of our business and~~ industry knowledge, relevant experience, diligence, potential conflicts of interest, and the ability to act in the best interests of our ~~stockholders~~shareholders. The Board of Directors ~~plans~~intends to ~~evaluate~~review biographical information and ~~interview~~conduct interviews of selected candidates induring the next fiscal year and will also ~~plans to~~ consider whether aany ~~potential~~ nominee ~~would~~satisfies ~~satisfy~~applicable ~~the~~NASDAQ ~~listing standards for “~~independence” ofrequirements ~~the NASDAQ~~ and the SEC’s definition of an “audit committee financial expert.” The Board ~~of Directors~~ does not ~~plan to~~ assign specific weights to ~~particular~~these criteria, and no ~~particular~~single ~~criterion~~factor ~~will~~is bedeterminative aor ~~prerequisite~~required for ~~each prospective nominee~~nomination.

WeAlthough we do not ~~have~~maintain a formal policy ~~with~~regarding ~~regard to~~ the consideration of director candidates recommended by ~~our stockholders~~shareholders, ~~however,~~the ~~stockholder~~Board ~~recommendations~~will ~~relating~~consider tosuch ~~director~~recommendations ~~nominees~~if ~~may~~properly be submitted in accordance with the procedures ~~set~~described ~~forth~~ below under the heading “Communicating with the Board of Directors”.”

Communicating with the Board of Directors

~~Stockholders~~Shareholders who wish to send communications to the Board of Directors may do so by writing to ~~302,~~4439 ~~3204—Rideau~~Township ~~Place~~Rd ~~SW.~~304, ~~Calgary~~Mountain View County, Alberta, Canada ~~T2S~~T0M ~~1Z2~~0R0. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “~~Stockholder~~Shareholder-Board Communication.” All such letters must identify the author as a ~~stockholder~~Shareholder and must include the ~~stockholder~~Shareholder’s full name, address and a valid telephone number. The name of any specific intended recipient should be noted in the communication. We will forward any such correspondence to the intended recipients; however, prior to forwarding any such correspondence, and we will review such correspondence, and in our discretion, may not forward communications that relate to ordinary business affairs, communications that are primarily commercial in nature, personal grievances or communications that relate to an improper or irrelevant topic or are otherwise inappropriate for the Board of Director’s consideration.

Compensation of directors

In January 2019, the Board authorized and approved a monthly director fee of $10,000 (CAD) for each director. Fees were accrued up to ~~June~~December 3031, ~~2023~~2022, at which time the Board determined that monthly director fees would no longer be paid to directors. As of December 31, ~~2024~~2025, the Company owed $1,~~135~~687,~~632~~585 in unpaid director fees, which includes $~~502~~1,~~359~~135,632 owed to former directors. Directors are not paid for meetings attended. However, we intend to review and consider future proposals regarding board compensation. All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred.

Compensation committee interlocks and insider participation

No interlocking relationship exists between our Board of Directors and the board of directors or compensation committee of any other Company, nor has any interlocking relationship existed in the past.

Code of ethics

As part of our system of corporate governance, our Board of Directors has adopted a Code of Business Conduct and Ethics (the “Code”) for directors and executive officers of the Company. This Code is intended to focus each director and executive officer on areas of ethical risk, provide guidance to directors and executive officer to help them recognize and deal with ethical issues, provide mechanisms to report unethical conduct, and help foster a culture of honesty and accountability. Each director and executive officer must comply with the letter and spirit of this Code. We have also adopted a Code of Ethics for Financial Executives applicable to our Chief Executive Officer and senior financial officers to promote honest and ethical conduct; full, fair, accurate, timely and understandable disclosure; and compliance with applicable laws, rules and regulations. We intend to disclose any changes in or waivers from our Code of Business Conduct and Ethics and our Code of Ethics for Financial Executives by filing a Form 8-K or by posting such information on our website.

Board of Directors

Our board of directors currently consists of five members. Our bylaws permit our board of directors to establish by resolution the authorized number of directors, and five directors are currently authorized.

3436 Table of Contents

Director independence

~~Under~~Our ~~the rules of the national securities exchanges, a majority of a listed Company’s~~ board of directors ~~must~~had bepreviously ~~comprised~~determined ofRichard ~~independent~~Orman ~~directors, and each member of a listed Company’s audit, compensation, and nominating and corporate governance committees must be independent~~ as ~~well. Under the same rules, a director will only qualify as~~ an “independent director” ~~if that Company’s board of directors affirmatively determines that such director has no material relationship with that Company, either directly or~~ as adefined ~~partner,~~in ~~shareholder~~the orNASDAQ ~~officer~~listing ~~of an organization that has a relationship with that Company. We evaluate independence by the~~ standards ~~for~~and ~~director independence established by~~ applicable ~~laws,~~SEC rules,. ~~and~~On ~~listing~~January ~~standards including~~8, ~~without limitation~~2026, ~~the~~Mr. ~~standards~~Orman ~~for~~resigned ~~independent~~from ~~directors established by~~ the ~~NYSE,~~Board ~~NASDAQ,~~of ~~and~~Directors of the ~~SEC~~Company.

Subject to some exceptions, these standards generally provide that a director will not be independent if (a) the director is, or in the past three years has been, an employee of ours; (b) a member of the director’s immediate family is, or in the past three years has been, an executive officer of ours; (c) the director or a member of the director’s immediate family has received more than $120,000 per year in direct compensation from us other than for service as a director (or for a family member, as a non-executive employee); (d) the director or a member of the director’s immediate family is, or in the past three years has been, employed in a professional capacity by our independent public accountants, or has worked for such firm in any capacity on our audit; (e) the director or a member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a Company where one of our executive officers serves on the compensation committee; or (f) the director or a member of the director’s immediate family is an executive officer of a Company that makes payments to, or receives payments from, us in an amount which, in any twelve-month period during the past three years, exceeds the greater of $1,000,000 or two percent of that other Company’s consolidated gross revenues. Based on these standards, we have determined that our director is not an independent director.

Our board of directors has determined Mr. Orman is an “independent director” as defined in the NASDAQ listing standards and applicable SEC rules.

In addition, following the effectiveness of the registration statement of which this report is a part, the members of our audit committee must satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or Rule 10A-3. In order to be considered to be independent for purposes of Rule 10A-3, no member of the audit committee may, other than in his capacity as a member of the audit committee, the board of directors or any other board committee: (1) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the Company or any of its subsidiaries or (2) be an affiliated person of the Company or any of its subsidiaries.

Indemnification of directors and officers

Our articles of incorporation provide that we shall, to the fullest extent permitted by the laws of the State of Delaware, indemnify our directors, officers and certain other persons. Our bylaws provides that our directors, officers and certain other persons shall be indemnified and held harmless by us to the fullest extent permitted by the laws of the State of Delaware.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common ~~stock~~shares, to file reports regarding ownership of, and transactions in, our securities with the SEC and to provide us with copies of those filings.

Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during the year ended December 31, ~~2024~~2025, none of our directors, executive officers or greater than 10% percent beneficial owners failed to comply on a timely basis with all applicable filing requirements under Section 16(a) of the Exchange Act.

35 Table of Contents

ITEM 11 - EXECUTIVE COMPENSATION

General philosophy

Our Board of Directors is responsible for establishing and administering the Company’s executive and director compensation.

Executive compensation

The following summary compensation table indicates the cash compensation earned from the Company during the years ended December 31, ~~2024~~2025 and ~~2023~~2024 for our named executive officers:

SUMMARY COMPENSATION TABLE
Nameand Principal Position	~~Fiscal Year~~FiscalYear	Salary($)		Bonus($)		~~StockAwards~~SharesAwards($)		Option Awards($)		Non-Equity Incentive Plan Compensation($)		Change inPensionValue andNonqualified Deferred CompensationEarnings($)		AllOther Compensation(4)($)		Total($)
Dean Medwid, Former CEO (1)	~~2024~~2025		~~76,145~~-		-		-		-		-		-		-		~~76,145~~-
	2023		138,600		-		-		-		-		-		-		138,600
	2024		76,145		-		-		-		-		-		-		76,145
Constantine Nkafu, Interim CEO (2)	2024		29,292		-		-		-		-		-		-		29,292
Constantine Nkafu, CEO (2)	2025		122,464		-		-		-		-		-		-		122,464
	2023		-		-		-		-		-		-		-		-
	2024		29,292		-		-		-		-		-		-		29,292
Oliver Foeste,CFO (3)	2024		-		-		-		-		-		-		99,837		99,837
Oliver Foeste, CFO (3)	2025		-		-		-		-		-		-		203,727		203,727
	2023		-		-		-		-		-		-		18,464		18,464
	2024		-		-		-		-		-		-		99,837		99,837

(1)	Mr. Medwid resigned from the position on September 1, 2024.
(2)	Mr. Nkafu was appointed as ~~interim~~ Chief Executive Officer on September 7, 2024.
(3)	Mr. Foeste was appointed as Chief Financial Officer of the Company on October 13, 2023.
(4)	Professional fees paid to Invictus, aan ~~company~~accounting firm to which ~~Mr.~~Oliver Foeste is Managing Partner. Invictus provides part-time CFO, controllership, accounting, and tax services for the Company.

~~Key~~37 ~~employee~~Table ~~employment~~of ~~agreements~~Contents

~~The~~Key ~~Company~~employee has a services agreement with Invictus, a company to which Oliver Foeste is Managing Partner, to provide part-time CFO, financial reporting, and bookkeeping services. The agreement is dated July 25, 2023 with an initial estimated fee range of $4,000 to $7,500 per month, with fees ultimately subject to time and materials based on expanding/contracting requirements of the Company.agreements

The Company ~~entered~~has ~~into~~a anservices ~~employment~~ agreement with ~~Constantine~~Invictus, ~~Nkafu~~an accounting firm to ~~serve~~which asOliver ~~Interim~~Foeste ~~CEO~~is Managing Partner, ~~effective~~to ~~September~~provide 7part-time CFO, ~~2024~~financial ~~for~~reporting, ~~oversight~~and ofbookkeeping ~~the~~services. ~~Company’s~~The ~~day-~~agreement is dated July 25, 2023 and provides for fees subject to~~-day~~ ~~operations~~time ~~during~~and ~~the~~materials ~~transition~~based ~~period~~on ~~until~~expanding aor ~~permanent~~contracting ~~CEO~~requirements isof ~~appointed~~the Company.

36The ~~Table~~Company entered into an employment agreement with Constantine Nkafu to serve as CEO, effective September 7, 2024 for oversight of ~~Contents~~the Company’s day-to-day operations.

Options granted to named executives

None

Outstanding equity awards at fiscal year end

None

Pension benefits

None of our named executive officers is covered by a pension plan or other similar benefit plan that provides for payments or other benefits at, following, or in connection with retirement.

Nonqualified deferred compensation

None of our named executive officers is covered by a defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax qualified.

Equity incentive plan

As of the date of this report, we do not have any equity compensation plan but may adopt one or more in the future.

Changes in control

There are currently no arrangements which may result in a change of control of our Company.

~~Non-cumulative~~38 ~~voting~~Table of Contents

~~The~~ITEM ~~holders~~12 of- ~~our~~SECURITY ~~shares~~OWNERSHIP ofOF ~~common~~CERTAIN ~~stock~~BENEFICIAL doOWNERS ~~not~~AND ~~have~~MANAGEMENT ~~cumulative~~AND ~~voting~~RELATED ~~rights,~~SHAREHOLDER which means that the holders of more than 50% of such outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose. In such event, the holders of the remaining shares will not be able to elect any of our directors.MATTERS

~~ITEM~~Except 12as -otherwise ~~SECURITY~~stated, ~~OWNERSHIP~~the OFtable ~~CERTAIN~~below ~~BENEFICIAL~~sets ~~OWNERS~~forth ~~AND~~information ~~MANAGEMENT~~concerning ~~AND~~the ~~RELATED~~beneficial ~~STOCKHOLDER~~ownership ~~MATTERS~~of our common shares as of March 31, 2026 for: (1) each director currently serving on our Board of Directors; (2) each of our named executive officers; (3) our directors and executive officers as a group; and (4) each person known to the Company to beneficially own more than 5% of the outstanding shares of Common Shares. As of December 31, 2025, there were 662,501,405 shares of common shares outstanding, 74,416 shares of Preferred Shares Series A convertible into 93,020,000 shares of common shares, 455,000 shares of Preferred Shares Series B convertible into 455,000 shares of common shares, and 100,000 Preferred Shares Series C convertible into 125,000,000 shares of common shares, for a total of 880,976,405 fully diluted shares of common shares. Except as otherwise noted, each Shareholder has sole voting and investment power with respect to the shares beneficially owned.

Except as otherwise stated, the table below sets forth information concerning the beneficial ownership of our common stock as of March 31, 2025 for: (1) each director currently serving on our Board of Directors; (2) each of our named executive officers; (3) our directors and executive officers as a group; and (4) each person known to the Company to beneficially own more than 5% of the outstanding shares of Common Stock. As of December 31, 2024, there were 662,501,405 shares of common stock outstanding, 74,416 shares of Series A Preferred Stock convertible into 93,020,000 shares of common stock, 455,000 shares of Series B Preferred Stock convertible into 455,000 shares of common stock, and 100,000 Series C Preferred Shares convertible into 125,000,000 shares of common stock, for a total of 880,976,405 fully diluted shares of common stock. Except as otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned.

Name and Address of Beneficial Owner

Common Shares

Preferred Shares

Series A

Preferred Shares

Series C

Combined Voting Power⁽²⁾

% of class

Directors and Executive Officers:

Dominic Colvin via

PLC International Investments, Inc.

Suite 206, 1180 Sunset Drive

Kelowna, BC V1Y 9W6

1,004,454

8,715,000

9.37

1.09

Elliot Zemel

Koze Investments, LLC⁽¹⁾

327 N. Formosa Ave,

Los Angeles, CA, 55402

21,464,986

3.17

62,500,000

50.00

4.99

All directors and executive officers as a group (3 individuals)

22,469,440

3.32

8,715,000

9.37

62,500,000

50.00

6.08

375% ~~Table~~or Greater Shareholders of ~~Contents~~CannaPharmaRX Inc.:

Name and Address of Beneficial Owner	Common Stock				Series A Preferred				Series C Preferred				Combined Voting Power(2)
	#		% of class		#		% of class		#		% of class		%
Directors and Executive Officers:
Dominic Colvin via PLC International Investments, Inc.Suite 206, 1180 Sunset DriveKelowna, BC V1Y 9W6		1,004,454	*			8,715,000		9.37		-		-		1.11
Richard D. Orman302, 3204 Rideau Place SWCalgary, B T2S 1Z2		625,725	*			-		-		-		-	*
Elliot ZemelKoze Investments, LLC(1)327 N. Formosa Ave,Los Angeles, CA, 55402		21,464,986		3.25		-		-		62,500,000		50.00		4.99
All directors and executive officers as a group (3 individuals)		23,095,165		3.50		8,715,000		9.37		62,500,000		50.00		6.17
5% or Greater Shareholders of CannaPharmaRX Inc.:
None

None

* Denotes less than 1%

(1)

Under the terms of the LTB transaction, Koze Investments, LLC (“Koze”) and Mr. Amir Tal were issued (i)13,612,481 warrants entitling the holder to purchase one share of common stock of the Company at $0.02 per share until November 22, 2028; (ii) a $1,500,000 promissory note payable to Koze and Mr. Tal; (iii) a $1,500,000 promissory note payable to Koze; (iv) 50,000 Series C Preferred Shares, each convertible into 1,250 shares of common stock, to each of Koze and Mr. Tal. In addition, neither Koze nor Mr. Tal are permitted to, at any time, own more than 4.99% of the outstanding shares of common stock of the Company. As such, at any given time, the combined voting power of Koze Investments, LLC and Mr. Tal are each 4.99%.

(2)

Percentage of total voting power represents voting power with respect to all shares as a single class. Shares of our common stock subject to stock options that are currently exercisable or exercisable within 60 days of December 31, 2024 that are expected to vest and settle within 60 days of December 31, 2024 are deemed to be outstanding and to be beneficially owned by the person holding such stock options for purposes of computing the percentage ownership of that person but are not treated as outstanding for purposes of computing the percentage ownership of any other person.

⁽¹⁾ Under the terms of the LTB transaction, Koze Investments, LLC (“Koze”) and Mr. Amir Tal each were issued (i)13,612,481 share purchase warrants each entitling the holder to purchase one common share of the Company at $0.02 per share until November 22, 2028; (ii) a $1,500,000 promissory note payable to Koze and Mr. Tal; (iii) a $1,500,000 promissory note payable to Koze; (iv) 50,000 Series C Preferred Shares, each convertible into 1,250 common shares, to each of Koze and Mr. Tal. Neither Koze nor Mr. Tal are permitted to, at any time, to own more than 4.99% of the outstanding common shares of the Company. As such, at any given time, the combined voting power of Koze Investments, LLC and Mr. Tal are each 4.99%.

⁽²⁾ Percentage of total voting power represents voting power with respect to all shares as a single class. Shares of our common shares subject to shares options that are currently exercisable or exercisable within 60 days of December 31, 2025 that are expected to vest and settle within 60 days of March 31, 2026 are deemed to be outstanding and to be beneficially owned by the person holding such shares options for purposes of computing the percentage ownership of that person but are not treated as outstanding for purposes of computing the percentage ownership of any other person.

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ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Transactions with related persons

AsA ofsummary ~~December 31, 2024, there have been no transactions, or currently proposed transactions, in which we were or are to be a participant and the amount involved exceeds the lesser~~ of ~~$120,000 or one percent of~~ the ~~average of our total assets at year-end for the last two completed years, and in which any of the~~ Company’s ~~executive~~related ~~officers~~party ~~and~~transactions ~~directors~~is oras ~~controlling shareholders had or will have a direct or indirect material interest.~~ follows:

	2025		2024
Revenue	$	394,633	$	770,265
Lease expense payable to Formosa included in cost of goods sold		1,073,328		-
Rent expense included in general and administrative expense		2,124		4,381
Marketing expense included in general and administrative expense		71,287		-
Professional fees		259,834		225,794
Royalty expense		303,525		-
Interest expense		1,850,868		110,795
Imputed interest expense		490,630		-
Other expense		1,930,000		-
Total related party transactions	$	6,376,229	$	1,111,235

Named executive officers and current directors

For information regarding compensation for our named executive officers and current directors, see “Executive Compensation”.

Definition of Related Party Transactions

For purposes of Item 404 of Regulation S‑K, a related party transaction includes any transaction, arrangement, or relationship (or series of similar transactions) in which the Company was or is to be a participant, where the amount involved exceeds the applicable disclosure threshold, and in which any related party had or will have a direct or indirect material interest. Related parties include the Company’s directors, executive officers, significant shareholders, beneficial owners of more than 5% of any class of voting securities, immediate family members of the foregoing, and entities in which such persons have a significant ownership, management role, or ability to exercise influence.

Identified related parties and their relationships to the Company

The following individuals and entities were identified as related parties during the fiscal year, based solely on the transactions and relationships disclosed in this Report.

Koze Investments LLC (“Koze”) and Formosa Mountain Ltd. (“Formosa”)

Koze is a significant financing counterparty to the Company and holder of multiple promissory and convertible notes. Koze is also the owner of D.N.S. Cantek 2019 Ltd., a major customer of the Company, and is the royalty recipient under a royalty and security agreement entered into on March 17, 2025.

Formosa provides the leased facility in which the Company operates and also holds financing arrangements and accrued lease‑related balances with the Company.

Koze and Formosa became related parties on March 11, 2025, when their manager, Elliot Zemel, was appointed as a director of the Company.

Mr. Amir Tal

Mr. Tal is identified as a control person and financial advisor to Koze. He holds promissory and convertible notes issued by the Company and is considered a related party by virtue of these positions and his influence.

Invictus Accounting Group LLP

Invictus is a provider of professional accounting and financial reporting services. The Company’s Chief Financial Officer, Oliver Foeste, is the Managing Partner of Invictus, making the entity a related party.

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Fabian Vancott

Fabian Vancott is a law firm that provides legal services to the Company. Director Anthony Panek is a partner of the firm. Unpaid professional fees to this firm are included in the Company’s related‑party accounts payable.

Richard Orman

Mr. Orman served as the Chairman of the Board of Directors. An entity affiliated with him provided office space to the Company till June 30, 2025, resulting in related‑party rent expense. Mr. Orman resigned from the Board on January 8, 2026.

Dominic Colvin and PLC International Investments Inc. (“PLC”)

Mr. Colvin, a former Chief Executive Officer and director of the Company, and is thereby, a related party. Amounts owed to him for unpaid salary and reimbursable expenses are included in related‑party accrued liabilities.

PLC is a holder of a note payable from the Company and is affiliated with Mr. Colvin, thereby constituting a related‑party financial arrangement.

D.N.S. Cantek 2019 Ltd. (“Cantek”)

Cantek is a customer entity owned by Koze. Revenues from Cantek constitute related‑party sales. Mr. Tal serves as an advisor to Cantek.

Related party transactions

~~The~~a) ~~summary~~Key ~~of the Company’s~~ related party ~~liabilities as at December 31, 2024 and 2023 is as follows:~~ transactions

	2024		2023
Accounts payable and accrued liabilities	$	2,070,057	$	2,027,693
Accrued interest		56,298		-
Loan payable - related party		462,818		2,155,484
Convertible notes		212,555		231,250
Liability for right-of-use building, current portion		-		754,608
Liability for right-of-use building		-		5,170,531
Obligation to issue shares of common stock		1,827,005		102,110
Total loan payable, related parties	$	4,628,733	$	10,441,676

A summary of the Company’s related party transactions is as follows:

	2025		2024
Revenue	$	394,633	$	770,265
Lease expense payable to Formosa included in cost of goods sold		1,073,328		-
Rent expense included in general and administrative expense		2,124		4,381
Marketing expense included in general and administrative expense		71,287		-
Professional fees		259,834		225,794
Royalty expense		303,525		-
Interest expense		1,850,868		110,795
Imputed interest expense		490,630		-
Other expense		1,930,000		-
Total related party transactions	$	6,376,229	$	1,111,235

Revenue

During the year ended December 31, 2025, the Company recognized revenue of $394,633 (2024 - $770,265) from D.N.S. CANTEK 2019 LTD (“Cantek”), an Israeli limited corporation owned by Koze, and for which Mr. Tal serves as a financial advisor.

These related party relationships did not influence our business decisions or pricing, as sales are determined primarily based on market demand and the ability to achieve the highest possible selling price.

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A summary of the Company’s average selling prices by market is as follows:

	Average Price per Gram (CAD)^*
Market	Premium Batches		Medium Batches
Germany		2.05		1.6
Israel		2.0	1.6-1.8
Canada		2.0	1.1-1.5
Portugal	1.8-2.0		0.8-1.5

^* Batches with THC concentrations below 20% are generally sold at lower average prices compared to higher-THC batches.

Lease expense

Rent

Effective February 1, 2023, the Company entered into a rental agreement granting it the right to use office space located at Suite 3600, 888 5^th Avenue SW, Calgary, Alberta, Canada, T2P 3R7 for a monthly rent of CAD $500 per month. This space was provided by a company affiliated with Richard Orman (“Mr. Orman”), chairman of the Company’s board of directors. The Company ceased using the office space and accordingly stopped accruing rent expense after June 30, 2025. During the year ended December 31, 2025, the Company incurred rent expense of $2,124 (2024 - $4,381) for this space which is recorded as a general and administrative expense.

Marketing expense

Professional fees

	·	During the year ended December 31, 2025, the Company incurred professional expenses of $203,727 (2024 - $180,899) related to accounting fees payable to Invictus Accounting Group LLP (“Invictus”), a company which provides part-time CFO, financial reporting, and bookkeeping services to the Company. Mr. Oliver Foeste is the Managing Partner of Invictus.
	·	During the year ended December 31, 2025, the Company incurred professional expenses of $56,107 payable to Fabian Vancott (2024 - $44,895) related to legal fees. Anthony Panek who is a partner in Fabian Vancott, is also a director of the Company.

Royalty expense

Interest expense

	·	During the year ended December 31, 2025, the Company incurred interest expense on promissory and convertible notes with Mr. Tal of $82,602 (2024 - $110,795).
	·	During the year ended December 31, 2025, the Company incurred interest expense on promissory and convertible notes with Koze of $1,264,887.
	·	During the year ended December 31, 2025, the Company incurred interest expense on promissory note with Formosa of $102,648.
	·	During the year ended December 31, 2025, the Company incurred interest expense on rent in default with Formosa of $400,731.

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Imputed interest expense

	·	During the year ended December 31, 2025, the Company incurred imputed interest expense on promissory and convertible notes with Mr. Tal of $29,675 (2024 - $nil).
	·	During the year ended December 31, 2025, the Company incurred imputed interest expense on promissory and convertible notes with Koze of $386,231.
	·	During the year ended December 31, 2025, the Company incurred imputed interest expense on promissory note with Formosa of $74,724.

Other expense

b) Amounts due to related parties

A summary of the Company’s related party liabilities as at December 31, 2025 and 2024, is as follows:

	2025		2024
Accounts payable and accrued liabilities	$	5,416,889	$	1,038,963
Accrued interest		1,352,899		56,298
Convertible notes		-		212,555
Loans payable to related parties		13,116,485		462,818
Royalty payable		305,492		-
Obligation to issue shares		2,166,681		1,827,005
Total related party liabilities	$	22,358,446	$	3,597,639

Accounts payable and accrued liabilities

As at December 31, ~~2024~~2025, accounts payable and accrued liabilities include balances owing to related parties as follows:

· As at December 31, 2025, $894,~~392~~283,706 (was payable to Formosa for outstanding lease payments. As at December 31, ~~2023~~2025, -accrued ~~$797)~~interest toon ~~Invictus~~unpaid ~~Accounting~~lease ~~Group~~payments ~~LLP~~on ~~(“Invictus”)~~the Formosa lease was $1,037,180. a· ~~company~~As toat ~~which~~December ~~Oliver~~31, ~~Foeste~~2025, is$146,306 ~~Managing~~(December ~~Partner~~31, ~~which~~2024 ~~provides~~- $89,392) was payable to Invictus for part-time CFO, financial reporting, and bookkeeping services provided to the Company. ~~During~~· ~~the~~As ~~year~~at ~~ended~~ December 31, ~~2024~~2025, ~~the Company incurred professional expenses with Invictus of~~ $~~180,899 (2023 - $22,683). · $~~319,279 (December 31, ~~2023~~2024 - $319,279) was payable to Mr. Orman, ~~chairman of the Company’s board of directors,~~ for unpaid directors’ fees for 2021 through 2023. · $1As at December 31,~~661~~ 2025,~~386~~ $551,953 (December 31, ~~2023~~2024 - $1525,~~707,617~~754) was payable to Dominic Colvin, a director of the Company, for unpaid salary and expense reimbursement amounts during Mr. Colvin’s employment with the Company as its CEO during the years 2019 through 2022. Mr. Colvin has disputed this amount and is asserting a claim for $1,679,060. As of December 31, 2025, the Company is in the process of reviewing the claim and remains in ongoing discussions with Mr. Colvin. No resolution has been reached with respect to this matter. · As at December 31, 2025, $115,645 (December 31, 2024 - $104,538) was payable to Fabian Vancott in respect of unpaid legal fees.

~~Loan~~Loans payable -to related ~~party~~parties

As at December 31, ~~2024~~2025, the ~~loan~~loans payable -to related ~~party~~parties isconsists asof ~~follows~~the following:

	·	A $12,818 interest-free loan from PLC International Investments Inc., a Company owned by Dominic Colvin, who currently serves as a director of the Company;
	·	A $450,000 promissory note entered into on November 22, 2023 with Mr. Tal, a shareholder of the Company with a “principal owner” designation as defined by the US Securities and Exchange Commission, as part of the LTB transaction (Note 6). The promissory note bears interest at 13% per annum and matures on November 22, 2024. During the year ended December 31, 2024, the Company recorded interest payable of $50,047 (2023 - $6,251) on the promissory note.

PLC International Investments Inc. (“PLC”)

~~Convertible~~· ~~notes~~A $13,430 interest-free loan from PLC, a company owned by Dominic Colvin, a director of the Company;

AsLoans atpayable ~~December 31, 2024, $212,555 (December 31, 2023 - $231,250) of the Company’s convertible notes balance was attributable~~ to amounts owed to Mr. Tal. During the year ended December 31, 2023, Mr. Tal did not convert any of the convertible notes into shares of common stock of the Company. During the year ended December 31, 2024, Mr. Tal converted $18,695 (2023 - $nil) of the convertible notes into 23,368,212 (2023 - nil) shares of common stock of the Company. Koze

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Koze LTB:

Koze A:

On May 25, 2023, the Company entered into a promissory note with Koze, bearing interest at 24% compounded monthly, to fund for certain documented expenses.

Koze B:

On May 25, 2023, the Company entered into another promissory note with Koze, bearing interest at 24% compounded monthly, to fund certain documented expenses.

Koze C:

On February 8, 2024, the Company entered into another promissory note with Koze, bearing interest at 24% compounded monthly.

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Koze convertible note (“Koze CN”):

The Company has a convertible note with Koze, bearing interest at 24%.

During the year ended December 31, 2025, Koze made payments of $2,086,675 directly to the Company’s suppliers. In addition, $819,867 was received directly by Koze, as collections from customers.

Loans payable to Mr. Tal

Mr. Tal LTB:

Mr. Tal convertible note (“Mr. Tal CN”):

The Company has a convertible note with Mr. Tal, bearing interest at 24%.

Promissory note with Formosa

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A summary of the Company’s loans payable to related parties as at December 31, 2025 and 2024 is as follows:

	2025		2024
PLC	$	13,430	$	23,510
Koze LTB		3,093,478		-
Koze A		1,400,243		-
Koze B		5,529,686		-
Koze C		343,701		-
Koze CN		131,298		-
Mr. Tal LTB		447,647		439,308
Mr. Tal CN		306,571		-
Promissory note with Formosa		1,850,431		-
	$	13,116,485	$	462,818

A summary of the accrued interest of the Company’s loans payable to related parties as at December 31, 2025 and 2024 is as follows:

	2025		2024
Koze LTB	$	76,062	$	-
Koze A		31,070		-
Koze B		132,215		-
Koze C		8,394		-
Koze CN		3,207		-
Mr. Tal LTB		11,887		56,298
Mr. Tal CN		7,488		-
Promissory note with Formosa		45,396		-
	$	315,719	$	56,298

Royalty payable

Pursuant to the Royalty Agreement, as of December 31, 2025, the royalty amount payable to Koze was $305,492 (CAD $418,707) (2024 - $nil).

Obligation to issue shares

As at December 31, ~~2024~~2025, the Company has an obligation to issue an additional ~~150~~166,~~799~~668 ~~(December~~preferred ~~31,~~shares ~~2023~~Series ~~- 48,052) Class~~ C ~~preferred~~to ~~shares~~each toof Mr. Tal and Koze (December 31, 2024 - 150,799 each) as part of the LTB transaction ~~(Note 6)~~, valued at $1,~~827~~083,~~005~~341 for each party (December 31, ~~2023~~2024 - $~~102~~1,~~110~~827,005 each).

~~Rent~~46 Table of Contents

Effective February 1, 2023, the Company entered into a lease agreement to lease an office at Suite 3600, 888 5th Avenue SW, Calgary, Alberta, Canada, T2P 3R7. The rent is $500 CAD per month. This space was provided by a company to which Mr. Orman, the chairman of the Company’s board of directors, is related. During the year ended December 31, 2024, the Company incurred rent expense of $4,381 (2023 - $2,599).

The related party liabilities as at December 31, 2023 also comprised of promissory notes from Koze, a company partially owned by Elliot Zemel, who is a shareholder of the Company and a separate note from Mr. Zemel himself. The Company also has lease liabilities from a lease agreement with Formosa Mountain Ltd., a company managed by Mr. Zemel. The shareholder was previously not considered to be a related party of the Company.

Subsequent events

On March 31, 2025, Elliot Zemel was appointed as a director of the Company (Note 13). The Company has $68,555 in convertible debt and $2,825,000 in promissory notes with Koze Investments LLC, a company partially owned by Mr. Zemel, and a lease with Formosa Mountain Ltd., a company managed by Mr. Zemel. The Company has not made any lease payments since lease inception and the unpaid lease balance as at year ended December 31, 2024 was $3,037,910 (December 31, 2023 - $2,479,586). Additionally, Mr. Zemel pays for certain of the Company’s operating expenses on an ongoing basis. As at December 31, 2024, amounts payable to Mr. Zemel were $3,382,380 towards advances for ongoing operating expenses.

38 Table of Contents

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

On November 15, 2024, Green Growth Certified Public Accountants, resigned from its role as the Company’s independent auditor. On November 15, 2024, Barzily Co., were appointed as our independent ~~auditor~~auditors.

The following table summarizes the aggregate fees for professional audit and other services rendered during the fiscal ~~year~~years ended December 31, ~~2024~~2025 and ~~2023~~2024:

	Fiscal 2024		Fiscal 2023
	Fiscal 2025		Fiscal 2024
Audit fees (1)	$	~~116~~140,~~316~~500	$	75116,~~000~~316
Audit-related fees		-		-
		116,316		75,000
		140,500		116,316
Tax fees		-		-
All other fees		-		-
	$	~~116~~140,~~316~~500	$	75116,~~000~~316

(1) Audit fees represent fees for professional services for the year ended December 31, ~~2024~~2025 provided by ~~Green~~Barzily ~~Growth~~& ~~CPAs~~Co. of $66137,~~350~~500 (December 31, ~~2023:~~2024 - $7549,~~000~~966) and ~~Barzily~~Green &Growth ~~Co.~~CPAs of $493,~~966~~000 (December 31, ~~2023:~~2024 - $~~nil~~66,350) in connection with the quarterly review and audit of our financial statements.

Audit fees consist of fees billed for services rendered for the audit of our financial statements and review of our financial statements included in our quarterly reports on Form 10-Q and services provided in connection with other statutory or regulatory filings.

Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and not reported under Audit fees. No such fees were billed in fiscal ~~2024~~2025 or ~~2023~~2024.

Tax fees consist of fees billed for professional services related to the preparation of our federal and provincial income tax returns and tax advice. No such fees were billed in fiscal ~~2024~~2025 or ~~2023~~2024.

The Board of Directors has reviewed and discussed with the Company's management and Barzily & Co., its independent registered public accounting firm, the audited financial statements of the Company contained in ~~the~~this ~~Company's~~ Annual Report on Form 10-K ~~for the Company's 2024 fiscal year~~. The Board has also discussed with the auditors the matters required to be discussed pursuant to SAS No. 61 (Codification of Statements on Auditing Standards, AU Section 380), which includes, among other items, matters related to the conduct of the audit of the Company's financial statements.

The Board has also received and reviewed the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and has discussed with its auditors its independence from the Company.

Based on the review and discussions referred to above, the Board approved the inclusion of the audited financial statements be included in the Company’s Annual Report on Form 10-K for its ~~2024~~2025 fiscal year ~~for filing with the SEC~~.

Pre-approval policies

The Board's policy is to pre-approve all audit services and all permitted non-audit services (including the fees and terms thereof) to be provided by the Company’s independent registered public accounting firm; provided, however, pre-approval requirements for non-audit services are not required if all such services (1) do not aggregate to more than five percent of total revenues paid by the Company to its accountant in the fiscal year when services are provided; (2) were not recognized as non-audit services at the time of the engagement; and (3) are promptly brought to the attention of the Board and approved prior to the completion of the audit.

3947 Table of Contents

PART IV

ITEM 15 - EXHIBITS, FINANCIAL STATEMENTS SCHEDULES

The following exhibits are included with this Report:

2.1	~~Amended and Restated Membership Interest Purchase Agreement, dated November 22, 2023~~	Amended and Restated Membership Interest Purchase Agreement, dated November 22, 2023
3.1	~~Bylaws adopted 12/31/10~~	Bylaws adopted 12/31/10
3.2	~~Certificate of Amendment of Certificate of Incorporation dated 10/22/14~~	Certificate of Amendment of Certificate of Incorporation dated 10/22/14
3.3	~~Certificate of Designation of Preferences, Rights and Limitation of Series C Convertible Preferred Stock~~	Certificate of Designation of Preferences, Rights and Limitation of Series C Convertible Preferred Shares
4.1	~~Description of Common Stock~~	Description of Common Shares
10.1	Employment Agreement between CannaPharmaRX, Inc. and 1082900 BC Ltd. (Dean Medwid) dated May 22, 2023
4.2		Letter Agreement between the Company and Koze Investments, LLC and Amir Tal regarding Allocation of Revenue from IMC Cannabis Transaction dated March 17, 2025
10.2	Supply agreement between CannaPharmaRX, Inc. and D.N.S. Cantek 2019 Ltd dated February 12, 2024
4.3		Security And Royalty Agreement between the Company and Koze Investments, LLC dated March 17, 2025
10.3	Amended and Restated Membership Interest Purchase Agreement, dated November 22, 2023
4.4		Amended and Restated Lease dated January 1, 2025
10.4	Lease agreement between CannaPharmaRX, Inc. and Formosa Mountain Ltd. dated January 1, 2022.
4.5		Amendment No. 1 to Amended and Restated Secured Promissory Note; entered into with Koze Investments LLC and Amir Tal
19.1	Insider Trading Policy (Code of Ethics)
4.6		Amendment No. 1 to Amended and Restated Senior Secured Promissory Note; entered into with Koze Investments
31.1	Certification of Chief Executive Officer required by Rule 13a-14(a) under the Exchange Act (filed herewith).
4.7		Secured Promissory Note dated February 26, 2025
31.2	Certification of Chief Financial Officer required by Rule 13a-14(a) under the Exchange Act (filed herewith).
4.8		Transfer of 2323414 Alberta Ltd. to Elliot Zemel dated March 17, 2025
32	Certification of Principal Executive, Financial and Accounting Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (filed herewith).
4.9		Forbearance Agreement 2323414 Alberta (CPMD) - Formosa (June 2025)
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
4.10		Letter Agreement (Payment Schedule) - A. Tal
101.SCH	Inline XBRL Taxonomy Extension Schema Document
4.11		Payment Schedule (Payment Schedule) - Koze Investments
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
10.1		Employment Agreement between CannaPharmaRX, Inc. and 1082900 BC Ltd. (Dean Medwid) dated May 22, 2023
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
10.2		Supply agreement between CannaPharmaRX, Inc. and D.N.S. Cantek 2019 Ltd dated February 12, 2024
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
10.3		Amended and Restated Membership Interest Purchase Agreement, dated November 22, 2023
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
10.4		Lease agreement between CannaPharmaRX, Inc. and Formosa Mountain Ltd. dated January 1, 2022.
104	Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101)
19.1		Insider Trading Policy (Code of Ethics)
31.1		Certification of Chief Executive Officer required by Rule 13a-14(a) under the Exchange Act (filed herewith).
31.2		Certification of Chief Financial Officer required by Rule 13a-14(a) under the Exchange Act (filed herewith).
32		Certification of Principal Executive, Financial and Accounting Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (filed herewith).
101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101)

The following exhibits have previously been filed or furnished with the on the date indicated:

ITEM 16 - FORM 10-K SUMMARY

None.

4048 Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned thereunder duly authorized.

	~~CANNAPHARMARX, INC.~~	CANNAPHARMARX, INC.
Dated: April 8, 2025	By:	/s/ Constantine Nkafu
Dated: March 31, 2026	By:	/s/ Constantine Nkafu
		Constantine Nkafu
		Interim Chief Executive Officer
		Chief Executive Officer
	By:	s/ Oliver Foeste
		Oliver Foeste
		Chief Financial Officer

In accordance with the Exchange Act, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on ~~April~~March 831, ~~2025~~2026.

s/49 ~~Constantine~~Table ~~Nkafu~~of ~~Constantine Nkafu Interim Chief Executive Officer s/ Oliver Foeste Oliver Foeste Chief Financial Officer~~Contents

41 Table of Contents

INDEX TO FINANCIAL STATEMENTS

	~~Page~~	Page
Report of the Independent Registered Accounting Firm PCAOB ID 2015	F-2
Report of the Independent Registered Accounting Firm ID 2015		F-2
Report of the previous Independent Registered Accounting Firm	F-4
Audited Financial Statements:
Audited Financial Statements:
Consolidated Balance Sheets as of December 31, 2025 and 2024		F-4
Consolidated Balance Sheets as of December 31, 2024 and 2023	F-5
Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2025, and 2024		F-5
Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years ended December 31, 2024, and 2023	F-6
Consolidated Statements of Cash Flows for the Years ended December 31, 2025, and 2024		F-6
Consolidated Statements of Cash Flows for the Years ended December 31, 2024, and 2023	F-7
Consolidated Statement of Changes in Shareholders’ Deficit for the Years ended December 31, 2025, and 2024		F-7
Consolidated Statement of Changes in Stockholders’ Deficit for the Years ended December 31, 2024, and 2023	F-8
Notes to the Consolidated Financial Statements		F-8
Notes to the Consolidated Financial Statements	F-9

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the board of directors of CannaPharmaRx, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of CannaPharmaRx, Inc. and its subsidiaries (“the Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income, changes in stockholders’ deficit and cash flows, for the ~~year~~years inthen ~~the period~~ ended ~~December 31~~,~~2024,~~ and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations, and its cash flows for the ~~year~~years inthen ~~the period~~ ended ~~December 31~~,~~2024,~~ in conformity with accounting principles generally accepted in the United States of America.

Going concern

The accompanying financial statements are presented on a going-concern basis. As discussed in Note 2 to the consolidated financial statements, the Company does not have sufficient existing cash resources to fund its current limited operations. The Company has suffered losses from operations, has a working capital deficiency and cash used in operating activities. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan regarding to these matters are also described in Note 2. The financial statements do not include any adjustments for the values of assets and liabilities and their classification that may be necessary in the event that the Company is no longer able to continue its operations as a going concern.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

F-2 Table of Contents

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Inventory

As described in Note 34 to the financial statements, the Company’s inventory is $~~996.3 thousand (net of an impairment in the amount of $~~1,~~316~~115 thousand) as of December 31, ~~2024~~2025, consists of work in process and finished goods. As discussed in Note 1, The Company valuated its inventory at the lower of cost and net realizable value. Cannabis plants at various stages of growth, is a material asset and the core component of its business operations. The valuation of inventory directly impacts the Company’s reported financial results for the current and future periods and involves significant management judgment and estimates:

	·	Estimates regarding the duration of inventory growth – Assumptions about the growth cycle of cannabis plants and associated costs.

	·	Costs allocation to inventory – Allocation of direct and indirect costs, including labor, raw materials, consumables, packaging supplies, utilities, facility costs, quality and testing costs, production related depreciation, and other overhead costs, using a weighted average cost method.

	·	Estimates of inventory quantities – Work in Process inventory quantities are estimated according to management's information and experience.

	·	Estimates regarding net realizable value (NRV) – Considerations of selling prices and future market demand.

	·	Variability in inventory value due to THC content – Market pricing depends on the potency of cannabis products, influencing inventory valuation.

F-2

Table of Contents

We identified the valuation of inventory as a critical audit matter due to the complexity and subjectivity involved in management’s estimates and the significant impact on the financial statements. Auditing these assumptions required a high degree of auditor judgment and the application of specialized procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of inventory included, among others, the following:

	·	We assessed the planning and examined the effectiveness of internal controls related to the existence and valuation of inventory

	·	We obtained an understanding and evaluated the design of the internal controls over management’s valuation of inventory.

	·	We physically sampled the inventory count to assess the accuracy of inventory quantities and verify existence.

	·	We tested the costs allocated to inventory and compared them to accumulated costs recorded in the Company’s books.

	·	We performed an independent test using an alternative cost allocation model and compared the results to management’s calculations.

	·	We evaluated key assumptions, including expected yields and cumulative stage of completion.

	·	We reviewed actual sales transactions for the current year to validate assumptions about realizable values.

	·	We performed a completeness and accuracy check of the data used by the company in determining the provision for impairment of inventory.

We have served as the Company’s auditors since 2024.

/s/ Barzily and Co. CPA's

BARZILY AND CO., CPA’s

Jerusalem, Israel

~~April~~March 831, ~~2025~~2026

F-3

Table of Contents

~~Report~~CANNAPHARMARX, ofINC.CONSOLIDATED ~~Independent~~BALANCE ~~Registered~~SHEETS(in ~~Public~~United ~~Accounting~~States ~~Firm~~dollars)

To the Board of Directors and

	Note		December 31, 2025			December 31, 2024

ASSETS

Current assets
Cash			$	1,804		$	2,156
Goods and services tax receivable				29,832			18,707
Accounts receivable		3		164,430			1,747
Inventory		4		1,115,322			996,250
Total current assets				1,311,388			1,018,860

Non-current assets
Equipment, net				127,029			137,237
Right-of-use building, net		5		5,579,987			5,161,473
Investment		6		-			4,518,127
Total assets			$	7,018,404		$	10,835,697

LIABILITIES AND SHAREHOLDERS’ DEFICIT

Current liabilities
Accounts payable and accrued liabilities		7	$	10,059,415		$	9,276,299
Accrued interest		8		1,720,278			2,495,337
Deferred revenue				260,561			-
Notes payable		9		482,661			6,678,389
Convertible notes		10		1,017,004			1,298,114
Derivative conversion feature		11		2,009,476			1,159,324
Loans payable to related parties, current portion		12		12,567,911			462,818
Royalty payable		12		305,492			-
Liability for right-of-use building, current portion		13		1,000,479			728,206
Obligation to issue shares		6		2,166,681			3,654,009
Total current liabilities				31,589,958			25,752,496

Non-current liability
Loans payable to related parties		12		548,574			-
Liability for right-of-use building		13		5,033,601			4,892,838
Total liabilities			$	37,172,133		$	30,645,334

SHAREHOLDERS’ DEFICIT
Preferred shares series A, $1.00 par value, 100,000 shares authorized, 74,416 issued and outstanding as at December 31, 2025 and 2024		14	$	74,416		$	74,416
Preferred shares series B, $1.00 par value, 3,000,000 shares authorized, 455,000 shares issued and outstanding as at December 31, 2025 and 2024		14		455,000			455,000
Preferred shares series C, $1.00 par value, 100,000 shares authorized, 100,000 shares issued and outstanding as at December 31, 2025 and 2024		14		100,000			100,000
Common shares, $0.0001 par value; 5,000,000,000 shares authorized, 662,501,405 issued and outstanding as at December 31, 2025 and 2024		14		66,250			66,250
Shares to be issued		14		1,600			-
Treasury shares, $0.0001 par value 6,230,761 shares as at December 31, 2025 and 2024		14		623			623
Additional paid-in capital				81,520,643			80,122,590
Accumulated deficit				(112,315,590	)		(101,184,142	)
Accumulated other comprehensive (loss) income				(56,671	)		555,626
Total shareholders’ deficit				(30,153,729	)		(19,809,637	)
Total liabilities and shareholders’ deficit			$	7,018,404		$	10,835,697

~~Stockholders~~The accompanying notes are an integral part of ~~CannaPharmaRx,~~these ~~Inc~~consolidated financial statements.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of CannaPharmaRx, Inc. (the Company) as of December 31, 2023, and the related statements of income, stockholders’ equity, and cash flows for the year then and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The consolidated financial statements of the Company as of December 31, 2022, were audited by other auditors whose report dated September 1, 2023, expressed an unqualified opinion on those statements.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

May 16, 2024

Los Angeles, California

We have served as the Company’s auditor since 2023

PCAOB ID Number 6580

F-4

Table of Contents

CANNAPHARMARX, INC.CONSOLIDATED ~~BALANCE~~STATEMENTS ~~SHEETS~~OF OPERATIONS AND COMPREHENSIVE LOSSFor the years ended December 31, 2025 and 2024(in United States dollars)

	December 31,2024			December 31,2023
	Note			2025			2024
ASSETS
Revenue		15		$	1,362,163		$	820,137
Current assets
Cost of goods sold		16			3,447,071			3,755,064
Cash	$	2,156		$	650
Gross loss					(2,084,908	)		(2,934,927	)
Goods and services tax receivable		18,707			61,524
Operating expenses
Accounts receivable		1,747			-
General and administrative					489,641			145,713
Inventory		996,250			1,133,668
Payroll and consulting fees					-			114,798
Total current assets		1,018,860			1,195,842
Professional fees					469,690			435,511
Non-current assets
Royalty expense		12			303,525			-
Equipment, net		137,237			161,540
Total operating expenses					1,262,856			696,022
Right-of-use building, net		5,161,473			5,870,141
Loss from operations					(3,347,764	)		(3,630,949	)
Investments		4,518,127			4,518,127
Other income (expenses)
Total assets	$	10,835,697		$	11,745,650
Change in the fair value of derivative conversion feature		11			(850,152	)		105,064
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Change in the fair value of obligation to issue shares		6			1,487,328			(3,449,789	)
Current liabilities
Foreign exchange gain					66,252			24,692
Accounts payable and accrued liabilities	$	9,086,299		$	8,781,169
Interest expense		9,10,12			(1,958,785	)		(2,264,095	)
Accrued interest		2,495,337			523,680
Imputed interest expense		12			(490,630	)		-
Accrued legal settlement		190,000			190,000
Loss on the extinguishment of debt		10			-			(690,712	)
Notes payable		6,678,389			3,333,925
Loss on impairment of investment		6			(4,518,127	)		-
Convertible notes - net of discount		1,298,114			1,520,858
Gain on write-off of accounts payable and accrued liabilities		7			410,430			-
Derivative conversion feature		1,159,324			1,264,388
Other expense		18			(1,930,000	)		-
Loan payable - related party		462,818			2,155,484
Total other expenses					(7,783,684	)		(6,274,840	)
Liability for right-of-use building, current portion		728,206			754,608
Net loss					(11,131,448	)		(9,905,789	)
Obligation to issue shares		3,654,009			204,220
Foreign currency translation adjustment					(612,297	)		591,243
Total current liabilities		25,752,496			18,728,332
Net comprehensive loss				$	(11,743,745	)	$	(9,314,546	)
Non-current liability
Basic and diluted loss per share of common shares				$	(0.02	)	$	(0.02	)
Liability for right-of-use building		4,892,838			5,170,531
Weighted average number of shares outstanding					662,501,405			625,276,406
Total liabilities	$	30,645,334		$	23,898,863
STOCKHOLDERS’ DEFICIT
Preferred stock series A, $1.00 par value, 100,000 shares authorized, 74,416 and 84,416 issued and outstanding as at December 31, 2024 and December 31, 2023, respectively	$	74,416		$	84,416
Preferred stock series B, $1.00 par value, 3,000,000 shares authorized, 455,000 and 2,455,000 shares issued and outstanding as at December 31, 2024 and December 31, 2023, respectively		455,000			2,455,000
Preferred stock series C, $1.00 par value, 100,000 shares authorized, 100,000 shares issued and outstanding as at December 31, 2024 and December 31, 2023		100,000			100,000
Common stock, $0.0001 par value; 5,000,000,000 shares authorized, 662,501,405 and 440,752,302 issued and outstanding as at December 31, 2024 and December 31, 2023, respectively		66,250			44,075
Treasury stock, $0.0001 par value 6,230,761 shares as at December 31, 2024 and December 31, 2023		623			623
Additional paid-in capital		80,122,590			76,476,643
Accumulated deficit		(101,184,142	)		(91,278,353	)
Accumulated other comprehensive income (loss)		555,626			(35,617	)
Total stockholders’ deficit		(19,809,637	)		(12,153,213	)
Total liabilities and stockholders’ deficit	$	10,835,697		$	11,745,650

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Table of Contents

CANNAPHARMARX, INC.CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~CASH ~~AND~~FLOWSFor ~~COMPREHENSIVE (LOSS) INCOMEFor~~ the years ended December 31, ~~2024~~2025 and ~~2023~~2024(in United States dollars)

	2024			2023
	2025			2024
Revenue	$	820,137		$	-
Operating activities
Cost of goods sold		3,755,064			-
Net loss	$	(11,131,448	)	$	(9,905,789	)
Gross loss		(2,934,927	)		-
Adjustments for non-cash items:
Operating expenses
Loss on impairment of inventory included in cost of goods sold		1,984,359			1,884,864
Amortization and depreciation		-			127,847
Shares to be issued for services included in general and administrative		142,800			-
General and administrative		116,640			703,596
Change in the fair value of derivative conversion feature		850,152			(105,064	)
Payroll and consulting fees		114,798			412,083
Change in the fair value of obligation to issue shares		(1,487,328	)		3,449,789
Professional fees		435,511			334,979
Foreign exchange gain		(66,252	)		-
Rent		4,381			2,599
Interest expense		1,958,785			2,264,095
Total operating expenses		671,330			1,581,104
Imputed interest expense		490,630			-
Loss from operations		(3,606,257	)		(1,581,104	)
Loss on the extinguishment of debt		-			690,712
Other income (expenses)
Loss on impairment of investment		4,518,127			-
Change in the fair value of derivative conversion feature		105,064			(255,520	)
Gain on write-off of accounts payable and accrued liabilities		(410,430	)
Change in the fair value of obligation to issue shares		(3,449,789	)		401,778
Other expense		1,930,000			-
Gain on loan dissolution		-			7,547,905
Changes in operating assets and liabilities:
Interest expense		(2,264,095	)		(1,690,924	)
Goods and services tax receivable		(11,125	)		42,817
Loss on the extinguishment of debt		(690,712	)		(654,919	)
Accounts receivable		(1,011,297	)		(1,747	)
Loss on impairment of investment		-			(78,760	)
Inventory		(1,988,051	)		(508,050	)
Total other income (expenses), net		(6,299,532	)		5,269,560
Royalty payable		303,525			-
Net (loss) income		(9,905,789	)		3,688,456
Accounts payable and accrued liabilities		2,877,890			763,567
Foreign currency translation adjustment		591,243			(276,043	)
Deferred revenue		260,561			-
Net comprehensive (loss) income	$	(9,314,546	)	$	3,412,413
Accrued interest		-			(272,426	)
Basic and diluted (loss) earnings per common share	$	(0.02	)	$	0.01
Cash used in operating activities		(789,102	)		(1,697,232	)
Weighted average number of shares outstanding		625,276,406			308,937,710
Investing activities
Purchase of equipment		(5,519	)		-
Cash used in investing activities		(5,519	)		-
Financing activities
Proceeds from notes payable		-			1,548,738
Proceeds from loans payable to related parties		794,269			-
Proceeds from convertible notes		-			150,000
Cash provided by financing activities		794,269			1,698,738
Net change in cash		(352	)		1,506
Cash, beginning of year		2,156			650
Cash, end of year	$	1,804		$	2,156
Supplemental disclosure of cash flow information:
Cancellation of preferred shares Series B	$	-		$	2,000,000
Conversion of convertible loans into common shares	$	-		$	20,436
Conversion of preferred shares Series A into common shares	$	-		$	1,250
Cash received by related parties directly from customers	$	819,869		$	-
Cash paid by related parties directly to suppliers	$	2,086,675		$	-
Reclassification of notes payable to loans payable to related parties	$	6,809,386		$	-
Reclassification of convertible notes to loans payable to related parties	$	281,110		$	-
Adjustment for related party loan modification included in additional paid-in capital	$	1,256,853		$	-

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Table of Contents

CANNAPHARMARX, INC.CONSOLIDATED STATEMENTS OF ~~CASH~~CHANGES ~~FLOWSFor~~IN ~~the~~SHAREHOLDERS’ ~~years~~DEFICIT(in ~~ended~~United ~~December~~States ~~31, 2024 and 2023~~dollars)

	2024			2023
	Preferred SharesSeries A						Preferred SharesSeries B						Preferred SharesSeries C				Common Shares				Shares to be issued				Treasury Shares				Additional						Accumulated Other			Total
Operating activities
	Number						Number						Number				Number				Number				Number				Paid-in			Accumulated			Comprehensive			Shareholders’
Net (loss) income for the year	$	(9,905,789	)	$	3,688,456
	of shares			Value			of shares			Value			of shares		Value		of shares		Value		of shares		Value		of shares		Value		Capital			Deficit			(Loss) Income			Deficit
Adjustments for non-cash items:
Balance, December 31, 2023		84,416		$	84,416			2,455,000		$	2,455,000			100,000	$	100,000		440,752,302	$	44,075		-	$	-		6,230,761	$	623	$	76,476,643		$	(91,278,353	)	$	(35,617	)	$	(12,153,213	)
Amortization and depreciation		-			127,847
Exercise of share purchase warrants on cashless basis		-			-			-			-			-		-		4,895,849		489		-		-		-		-		(489	)		-			-			-
Change in the fair value of derivative conversion feature		(105,064	)		255,520
Conversion of preferred shares Series A to common shares		(10,000	)		(10,000	)		-			-			-		-		12,500,000		1,250		-		-		-		-		8,750			-			-			-
Change in the fair value of obligation to issue shares		3,449,789			(401,778	)
Cancellation of preferred shares Series B		-			-			(2,000,000	)		(2,000,000	)		-		-		-		-		-		-		-		-		2,000,000			-			-			-
Gain on loan dissolution		-			(7,547,905	)
Conversion of convertible notes to common shares		-			-			-			-			-		-		204,353,254		20,436		-		-		-		-		1,549,918			-			-			1,570,354
Interest expense		2,264,095			1,690,924
Issuance of share purchase warrants for convertible notes		-			-			-			-			-		-		-		-		-		-		-		-		87,768			-			-			87,768
Loss on extinguishment of debt		690,712			654,919
Change in foreign currency translation		-			-			-			-			-		-		-		-		-		-		-		-		-			-			591,243			591,243
Loss on impairment of investment		-			78,760
Net loss		-			-			-			-			-		-		-		-		-		-		-		-		-			(9,905,789	)		-			(9,905,789	)
Loss on impairment of inventory included in cost of goods sold		1,884,864			-
Balance, December 31, 2024		74,416		$	74,416			455,000		$	455,000			100,000	$	100,000		662,501,405	$	66,250		-		-		6,230,761	$	623	$	80,122,590		$	(101,184,142	)	$	555,626		$	(19,809,637	)
Changes in operating assets and liabilities:
Related party loan modification, adjustment		-			-			-			-			-		-		-		-		-		-		-		-		1,256,853			-			-			1,256,853
Goods and services tax receivable		42,817			(38,273	)
Shares to be issued		-			-			-			-			-		-		-		-		16,000,000		1,600						141,200			-			-			142,800
Accounts receivable		(1,747	)		-
Change in foreign currency translation		-			-			-			-			-		-		-		-		-		-		-		-		-			-			(612,297	)		(612,297	)
Prepaid expenses		-			68,539
Net loss		-			-			-			-			-		-		-		-		-		-		-		-		-			(11,131,448	)		-			(11,131,448	)
Inventory		(508,050	)		(1,133,668	)
Balance, December 31, 2025		74,416		$	74,416			455,000		$	455,000			100,000	$	100,000		662,501,405	$	66,250		16,000,000		1,600		6,230,761	$	623	$	81,520,643		$	(112,315,590	)	$	(56,671	)	$	(30,153,729	)
Other assets		-			5,907
Accounts payable and accrued liabilities		763,567			129,984
Accrued interest		(272,426	)		146,316
Cash used in operating activities		(1,697,232	)		(2,274,452	)
Investing activity
Purchases of equipment		-			(80,634	)
Cash used in investing activity		-			(80,634	)
Financing activities
Proceeds from notes payable		1,548,738			-
Proceeds from related party loans		-			1,947,309
Proceeds from convertible notes		150,000			406,110
Cash provided by financing activities		1,698,738			2,353,419
Effects of exchange rates on cash		-			-
Net change in cash		1,506			(1,667	)
Cash, beginning of the year		650			2,317
Cash, end of the year	$	2,156		$	650
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	-		$	-
Cash paid for interest expense	$	-		$	-
Supplemental disclosure of non-cash flow investing and financing activities:
Cancellation of Series B preferred stock	$	2,000,000		$	-
Common stock issued to convert convertible notes and accrued interest into equity	$	-		$	866,701
Common stock issued to convert to Series A preferred stock	$	1,250		$	19,998
Conversion of convertible loans into common stock	$	20,436		$	-
Preferred stock and warrants issued for an investment	$	-		$	912,129
Promissory notes issued for an investment	$	-		$	3,000,000
Issuance of warrants for convertible notes	$	87,768		$	-

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED ~~STATEMENTS~~FINANCIAL OFSTATEMENTSFOR ~~CHANGES~~THE INYEARS ~~STOCKHOLDERS’~~ENDED ~~DEFICIT~~DECEMBER 31, 2025 AND 2024(in United States dollars)

	Preferred StockSeries A						Preferred StockSeries B						Preferred StockSeries C					Common Stock						Treasury Stock					Additional						Accumulated Other			Total
	Number						Number						Number					Number						Number					Paid-in			Accumulated			Comprehensive			Stockholders’
	of shares			Value			of shares			Value			of shares		Value			of shares			Value			of shares		Value			Capital			Deficit			Loss (Income)			Deficit
Balance, December 31, 2022		84,416		$	84,416			2,475,000		$	2,475,000			-	$	-			274,124,622		$	27,412			133,200	$	(13	)	$	74,795,112		$	(94,966,809	)	$	240,426		$	(17,344,456	)
Issuance of warrants for LTB investment		-			-			-			-			-		-			-			-			-		-			162,129			-			-			162,129
Conversion of Series B to common stock		-			-			(20,000	)		(20,000	)		-		-			20,000			2			-		-			19,998			-			-			-
Conversion of convertible notes to common shares		-			-			-			-			-		-			172,705,241			17,271			-		-			849,430			-			-			866,701
Common stock returned to treasury		-			-			-			-			-		-			(6,097,561	)		(610	)		6,097,561		610			-			-			-			-
Issuance of Series C Preferred for LTB investment		-			-			-			-			100,000		750,000			-			-			-		-			-			-			-			750,000
Adjustment to issuance of Series C for LTB investment		-			-			-			-			-		(650,000	)		-			-			-		-			650,000			-			-			-
Adjustment of treasury stock to par value		-			-			-			-			-		-			-			-			-		26			(26	)		-			-			-
Change in foreign currency translation		-			-			-			-			-		-			-			-			-		-			-			-			(276,043	)		(276,043	)
Net income		-			-			-			-			-		-			-			-			-		-			-			3,688,456			-			3,688,456
Balance, December 31, 2023		84,416		$	84,416			2,455,000		$	2,455,000			100,000	$	100,000			440,752,302		$	44,075			6,230,761	$	623		$	76,476,643		$	(91,278,353	)	$	(35,617	)	$	(12,153,213	)
Exercise of warrants on cashless basis		-			-			-			-			-		-			4,895,849			489			-		-			(489	)		-			-			-
Conversion of Series A to common stock		(10,000	)		(10,000	)		-			-			-		-			12,500,000			1,250			-		-			8,750			-			-			-
Cancellation of Series B		-			-			(2,000,000	)		(2,000,000	)		-		-			-			-			-		-			2,000,000			-			-			-
Conversion of convertible notes to common stock		-			-			-			-			-		-			204,353,254			20,436			-		-			1,549,918			-			-			1,570,354
Issuance of warrants for convertible notes		-			-			-			-			-		-			-			-			-		-			87,768			-			-			87,768
Change in foreign currency translation		-			-			-			-			-		-			-			-			-		-			-			-			591,243			591,243
Net loss		-			-			-			-			-		-			-			-			-		-			-			(9,905,789	)		-			(9,905,789	)
Balance, December 31, 2024		74,416		$	74,416			455,000		$	455,000			100,000	$	100,000			662,501,405		$	66,250			6,230,761	$	623		$	80,122,590		$	(101,184,142	)	$	555,626		$	(19,809,637	)

The accompanying notes are an integral part of these consolidated financial statements.

F-8 Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

CannaPharmaRx, Inc. ~~(hereinafter “CPMD”, or the “Company”)~~was originally incorporated in the state of Colorado in August 1998 as Network Acquisitions, Inc. The Company ~~focuses~~underwent ~~its~~several ~~business~~name ~~efforts~~changes onover ~~evaluation~~the years and, ~~negotiation~~in October 2014, ~~acquisition~~changed its legal name to CannaPharmaRx, ~~and~~Inc. ~~development~~(hereinafter the “Company”). The Company focuses its business efforts on the operation of cannabis cultivation ~~projects~~facilities in Canada.

On January 6, 2022, the Company entered into a 20-year operating lease with Formosa Mountain Ltd. (“Formosa”) for the use of a ~~leased~~ facility located in Cremona, Alberta, Canada. ~~CPMD~~During 2022, the Company recommissioned the 55,000 square foot facility ~~into~~(the a“Facility”) ~~new~~into an indoor cannabis farm with 1110 growing rooms and 1one drying and packing room. ~~during~~During ~~2022~~2025, the Company added one additional growing room to its operations. The Facility ~~currently~~now ~~operates~~has 5six ~~of these~~ growing rooms and ~~the~~one drying and packing room in operation and plans to increase capacity over the next one to two years to open a second drying and packing room and to operate ~~the~~all ~~full~~10 11 growing rooms.

The Company received an operating license from Health Canada on December 9, 2022, and a cannabis license from the Canada Revenue Agency on December 22, 2022~~. Under the new license~~, ~~the~~and ~~Company~~ commenced cannabis production during the year ended December 31, 2023.

Potential liability exposure and insurance coverage

The Company has not paid any insurance premiums since early 2024. As a result, its current insurance coverage has lapsed. The Company may be subject to claims for damages and other expenses that are not covered by insurance. The Company’s business, profitability, and growth prospects could be adversely affected in the event it is required to pay damages and incur defense costs in connection with a liability claim. There can be no assurance that the Company will be able to reinstate or obtain insurance coverage in the future in amounts, or at a cost, that would provide adequate protection.

Cease Trade Order (“CTO”)

In 2023, the British Columbia Securities Commission (“BCSC”) issued a Cease Trade Order (“CTO”) against the Company due to the Company’s failure to file certain continuous disclosure documents under Canadian securities laws. The CTO restricted the trading in the Company’s securities in Canada, including share issuances and conversions of convertible instruments. The Company filed an application to the BCSC to revoke the CTO, and on December 12, 2025, the BCSC rescinded the CTO in full.

Basis of presentation

a) Principles of presentation

The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles ~~(“US GAAP”)~~ in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission.

All figures are in USD unless indicated otherwise.

b) Principles of consolidation

These financial statements include accounts of CannaPharmaRx, Inc. and its wholly owned subsidiaries, including CannaPharmaRX Canada Corp., Alternative Medical Solutions Inc. and 2323414 Alberta Ltd. Subsidiaries are consolidated from the date of acquisition and control and continue to be consolidated until the date that such control ceases. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect these returns through its power over the investee. All intercompany balances, income, expenses, and unrealized gains and losses resulting from intercompany transactions are eliminated on consolidation.

c) Reclassification of prior period presentation

~~Certain~~Rent ~~prior~~expense ~~period~~for ~~amounts~~the ~~have~~year ended December 31, 2024 of $4,381 has been reclassified ~~for~~to ~~consistency~~general ~~with~~and ~~the~~administrative ~~current~~expenses, ~~period~~and ~~presentation.~~foreign ~~These~~exchange ~~reclassifications~~gain ~~had~~for nothe ~~effect~~year onended ~~the~~December ~~reported~~31, ~~results~~2024 of ~~operations~~$24,692 has been reclassified from general and administrative expenses and presented within other income. AnAccrued ~~adjustment~~legal settlement of $190,000 as at December 31, 2024 has been ~~made~~reclassified to ~~the~~accounts ~~consolidated~~payable ~~balance~~and ~~sheets~~accrued toliabilities. ~~reclassify~~These ~~$564,431~~reclassifications ofhad ~~liability~~no ~~for~~impact ~~right-of~~on ~~use~~the ~~building~~Company’s ~~from~~operating ~~non-current~~loss ~~liability~~or tocomprehensive ~~current~~loss ~~liability~~for any period presented.

InF-8 ~~March~~Table 2024, the Company noted a historical accounting treatment error whereby the 100,000 Series C Stock, issued in March 2023 shares had been recorded at the stated value rather than the par value. As a result, during the year ended December 31, 2024 the Company adjusted the value of the Series C stock to their par value of $1 per share, for a total par value of $100,000, with the remaining $650,000 of stated value being reclassified to additional paid in capital. This change was also made to the final results for the year ended December 31, 2023.Contents

~~As at December 31~~CANNAPHARMARX, ~~2024, the Company noted a historical accounting treatment error whereby 6,230,761 treasury shares had been recorded at the stated value rather than the par value~~INC.NOTES AsTO aTHE ~~result,~~CONSOLIDATED ~~during~~FINANCIAL ~~the~~STATEMENTSFOR ~~year~~THE ~~ended~~YEARS ~~December~~ENDED DECEMBER 31, ~~2024,~~2025 ~~the~~AND ~~Company adjusted the value of the treasury shares to their par value of $0.0001 per share, for a total par value of $623, with the remaining $26 of stated value being reclassified to additional paid~~ 2024(in ~~capital.~~United ~~This~~States ~~change was also made to the final results for the year ended December 31, 2023.~~dollars)

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates relate to the purchase price allocation of acquired businesses, the impairment of long-lived assets, the valuation of financial instruments, the valuation of inventory, the provision of income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as at the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

Cash

The Company ~~considers~~holds all its cash in bank accounts ~~and its highly liquid temporary cash investments with an original maturity of three months or less to be cash and cash equivalents~~. On December 31, ~~2024~~2025, the Company had cash of $21,~~156~~804 (December 31, ~~2023~~2024 - $~~650~~2,156).

F-9 Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments

The Company invests in equity securities, which are accounted for in accordance with ASC 321, Investments –- Equity Securities. Equity securities are measured at fair value, with changes in fair value recognized in net income. For equity securities without readily determinable fair values, the Company has elected the measurement alternative, recording these investments at cost minus impairment, adjusted for observable price changes.

The Company performs a qualitative assessment for impairment of equity securities without readily determinable fair values. If impairment is indicated, the investment is written down to fair value through earnings.

Revenue recognition

The Company’s revenue is comprised of sales of cannabis products.

The Company’s revenue-generating activities have a single performance obligation and revenue is recognized at the point in time when control of the product transfers and the Company’s obligations have been fulfilled. This generally occurs when the product is shipped ~~or delivered~~ to the customer, depending upon the method of distribution and shipping terms set forth in the customer contract. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of the Company’s product.

Sales of products are for cash or otherwise agreed-upon credit terms. The Company’s payment terms vary by location and customer; however, the time period between when revenue is recognized and when payment is due is not significant.

Accounts Receivable

The Company has adopted standardized credit policies and performs assessments in an effort to minimize credit losses. Accounts receivable are recorded at their net realizable value, which is management’s best estimate of the cash that will ultimately be received from customers and third parties, respectively. The Company reviews the balances regularly and when management determines they may not be fully collectible, the balances are reduced to their expected net realizable value in accordance with ASC 326 Financial Instruments - Credit Losses.

The provision for credit losses on accounts receivable is recorded in general and administrative expense. If current or expected future economic trends, events, or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible.

F-9

Table of Contents

CANNAPHARMARX, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(in United States dollars)

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Equipment

Equipment is recorded at cost, net of accumulated depreciation and impairment losses. Depreciation is calculated on a straight-line basis over the assets’ estimated useful lives, which are as follows:

Category		Useful life
Computer equipment		3 years
Office equipment		3 years
Plant equipment		10 years
Plant improvements		20 years

Inventory

Inventory is valued at the lower of cost and net realizable value, with cost determined using the weighted average cost method. Net realizable value is calculated as the estimated selling price in the ordinary course of business, less any estimated costs to complete and sell the goods. Costs are capitalized to inventory, until substantially ready for sale. Costs include direct and indirect labor, raw materials, consumables, packaging supplies, utilities, facility costs, quality and testing costs, production related depreciation, and other overhead costs.

Cost of goods sold

Cost of goods sold (“COGS”) represents the direct costs attributable to the production of goods sold by the Company during the reporting period. These costs primarily include raw materials, direct labor, and manufacturing overhead incurred in the production process. Manufacturing overhead consists of indirect costs such as depreciation of production equipment, facility rent, utilities, and maintenance expenses allocated to production activities.

The Company values its inventory at the lower of cost or net realizable value, with cost determined using the weighted average cost method. Costs are expensed to COGS as inventory is sold. Adjustments to inventory valuation, including write-downs for excess or obsolete inventory, are also included in COGS when applicable.

Leases

At the start of a contract containing a lease, the Company classifies leases other than short-term leases as either operating or finance leases, following the criteria outlined in ASU 2016-02 Leases. Lease classification is only reassessed when: (a) the contract is modified and not treated as a separate contract, or (b) there is a change in the lease term or a reassessment of whether the lessee is likely to exercise a purchase option for the underlying asset. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases with terms of 12 months or less.

For ~~both finance and~~ operating leases, right-of-use assets and lease liabilities are initially measured as the present value of future lease payments plus initial direct costs, discounted at the lease's implicit interest rate, or, if not available, the Company’s incremental borrowing rate.

Subsequent measurements for operating lease liabilities are measured at the present value of unpaid lease payments, discounted at the original discount rate. Right-of-use assets are adjusted by accumulated amortization, calculated as the difference between the straight-line lease cost (including amortization of initial direct costs) and the periodic accretion of the lease liability.

As at December 31, 2025, the Company has one lease which is classified as an operating lease.

F-10

Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, ~~2024~~2025 AND ~~2023~~2024 (in United States dollars)

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Subsequent measurements differ by lease type:

· For finance leases, lease liabilities are measured at amortized cost using the effective interest rate method, and right-of-use assets are measured at cost less accumulated amortization, depreciated on a straight-line basis over the lease term. · For operating leases, lease liabilities are measured at the present value of unpaid lease payments, discounted at the original discount rate. Right-of-use assets are adjusted by accumulated amortization, calculated as the difference between the straight-line lease cost (including amortization of initial direct costs) and the periodic accretion of the lease liability.

As at December 31, 2024, the Company has one lease which is classified as an operating lease.

Derivative financial instruments

Terms of convertible and other promissory notes are reviewed to determine whether they contain embedded derivative instruments that are required to be accounted for separately from the host contract and recorded on the balance sheet at fair value. The fair value of derivative instruments is required to be revalued at each reporting date, with corresponding changes in fair value recorded in the current period operating results. Derivative conversion feature arose due to the issuance of variably priced convertible notes. For the year ended December 31, ~~2024~~2025, the Company had derivative conversion features valued at $12,~~159~~009,~~324~~476 (December 31, ~~2023~~2024 - $1,~~264~~159,~~388~~324).

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risk.

Foreign currency translation

The functional currency and the reporting currency of the Company’s United States (“US”) operations is ~~the~~United States dollars (“USD”). The functional currency of the Company’s Canadian operations is ~~the~~Canadian dollars (“CAD”). Management adopted ASC 830 Foreign Currency Matters for transactions that occur in foreign currencies. Monetary assets denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Average monthly rates are used to translate revenues and expenses.

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

Assets and liabilities of the Company’s operations are translated into USD, the reporting currency, at the exchange rate in effect at the balance sheet dates. Revenue and expenses are translated at average rates in effect during the reporting periods. Equity transactions are recorded at the historical rate when the transaction occurred. The resulting translation adjustment is reflected as accumulated other comprehensive income, a separate component of ~~stockholders~~shareholders' deficit in the ~~statement~~consolidated statements of ~~stockholders~~changes in shareholders' deficit.

As at December 31, 2025, the official spot exchange rate for translation of CAD to USD was 0.7296 (December 31, 2024 - 0.6950). During the year ended December 31, 2025, the official average exchange rate for translation of CAD to USD was 0.~~695~~7154 (~~2023~~2024 - 0.~~756~~7300).

Harmonized sales tax

The Company's revenues from Canadian operations include applicable Goods and Services Tax (“GST”) or Harmonized Sales Tax (“HST”), depending on the province of sale. GST is a 5% consumption tax applied to taxable goods and services at the point of sale. In certain provinces, GST is combined with Provincial Sales Tax and referred to as HST. The tax is collected by vendors from consumers and subsequently remitted, net of eligible input tax credits, to the Canada Revenue Agency (“CRA”), which distributes the applicable portions to the respective provinces.

F-11

Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, ~~2024~~2025 AND ~~2023~~2024 (in United States dollars)

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

~~Stock-~~The fair value of equity instruments issued as consideration for services is based ~~compensation~~on the quoted market price of the Company’s common shares as on the grant date.

The Company has adopted ASC Topic 718 Compensation - Stock Compensation, which establishes a fair value method of accounting for stock-based compensation plans. In accordance with guidance now incorporated in ASC Topic 718, the fair value of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on a straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The fair value of share purchase warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The Company had no stock options outstanding as at December 31, 2024 or 2023.

Long-lived assets

The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances have indicated that an asset may not be recoverable. The long-lived asset is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value.

Fair values of assets and liabilities

The Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value.

Level 1:		Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2:		Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. For example, Level 2 assets and liabilities may include debt securities with quoted prices that are traded less frequently than exchange-traded instruments.

Level 3:		Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain private equity investments and long-term derivative contracts.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s financial ~~instruments~~assets and liabilities comprise of cash, accounts receivable, ~~investments~~investment, accounts payable and accrued liabilities, accrued interest, notes payable, convertible notes, derivative conversion feature, ~~loan~~loans payable -to related ~~party~~parties, ~~liability~~royalty ~~for~~payable ~~right-of-use building~~ and obligation to issue shares.

The Company measures the fair value of its convertible notes, derivative conversion feature and obligation to issue shares based on Level 2 3 hierarchy.

There are no other financial assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet. As ofat December 31, ~~2024~~2025, the carrying values of the Company’s financial instruments approximate their fair values.

Financial instruments

The estimated fair value for financial instruments was determined at discrete points in time based on relevant market information. These estimates involve uncertainties and could not be determined with exact precision. The fair value of the Company’s financial instruments, which include cash, accounts receivable, investment, accounts payable and accrued liabilities, accrued interest, notes payable, convertible notes, derivative conversion feature, loans payable to related parties, royalty payable and obligation to issue shares each approximate their carrying value due either to their short length to maturity or interest rates that approximate prevailing market rates.

F-12

Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, ~~2024~~2025 AND ~~2023~~2024 (in United States dollars)

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments

The estimated fair value for financial instruments was determined at discrete points in time based on relevant market information. These estimates involve uncertainties and could not be determined with exact precision. The fair value of the Company’s financial instruments, which include cash, prepaid expenses, accounts payable, and the related party loan, each approximate their carrying value due either to their short length to maturity or interest rates that approximate prevailing market rates.

Income taxes

The Company accounts for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.The Company does not recognize any deferred taxes as it does not anticipate taxable income in the foreseeable future.

(Loss) earnings per share

(Loss) earnings per share is presented in accordance with Accounting Standards Update, Earnings per Share (Topic 260), which requires the presentation of both basic and diluted earnings per share (“EPS”) on the income statements.

Basic EPS excludes any dilutive effects of share options, share purchase warrants, and convertible securities but does include the restricted shares of common ~~stock~~shares issued. Basic EPS calculations are determined by dividing net income by the weighted average number of shares of common ~~stock~~shares outstanding during the year.

Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common ~~stock~~shares were exercised using the treasury stock method or converted to common ~~stock~~shares using the if-converted method. Diluted EPS calculations are determined by dividing net income by the weighted average number of shares of common ~~stock~~shares and dilutive common ~~stock~~shares equivalents outstanding. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. ~~For~~As ~~the~~of ~~year ended~~ December 31, ~~2024~~2025, ~~there~~convertible ~~were~~preferred shares outstanding totaled 629,416 shares (~~2023~~December 31, 2024 - 2629,~~639,~~416 shares) ~~convertible~~and ~~preferred~~share ~~stock~~purchase warrants outstanding ~~and~~totaled 39,924,940 (~~2023~~December –31, 282024 - 39,~~722~~924,~~740~~940) ~~warrants outstanding~~. The Company’s convertible notes were all excluded from the calculation of diluted EPS on the basis that they were anti-dilutive.

~~Recently~~Segment ~~issued accounting pronouncements~~Reporting

InThe ~~November~~Company ~~2023,~~operates ~~the~~as ~~Financial~~a ~~Accounting~~single ~~Standards~~operating ~~Board~~segment. ~~issued~~The ~~Accounting~~Company's ~~Standards~~Chief ~~Update~~Operating ~~2023-07~~Decision Maker (“~~ASU 2023-07~~CODM”), ~~Segment~~is ~~Reporting~~its ~~(Topic~~CEO, ~~280):~~who reviews ~~Improvements~~financial toinformation ~~Reportable~~presented ~~Segment~~on ~~Disclosures,~~a ~~requiring~~consolidated ~~public~~basis. ~~entities~~The toCODM ~~disclose~~uses ~~information~~revenue, ~~about~~cost ~~their~~of ~~reportable~~goods ~~segments’~~sold, ~~significant~~consolidated ~~expenses~~operating margin and ~~other~~net ~~segment~~income ~~items~~to onassess anfinancial ~~interim~~performance and ~~annual~~allocate ~~basis~~resources. ~~Public~~These ~~entities~~financial ~~with~~metrics ~~a single reportable segment~~ are ~~required~~used toby ~~apply~~ the ~~disclosure~~CODM ~~requirements~~to inmake ~~ASU~~key ~~2023-07~~operating decisions, such as ~~well~~the asdetermination ~~all~~of ~~existing~~the ~~segment~~rate ~~disclosures~~at ~~and~~which ~~reconciliation~~the ~~requirements~~Company inseeks ~~ASC~~to ~~Topic~~grow ~~280~~its onoperating anprofit ~~interim~~margin and ~~annual~~the ~~basis.~~allocation ~~The~~of ~~Company~~budget ~~adopted~~between ~~ASU~~cost ~~2023-07~~of ~~during~~goods ~~the~~sold, ~~year~~professional ~~ended December 31~~fees, ~~2024.~~and ~~See~~general ~~Note~~and 18administrative ~~in the accompanying notes to the consolidated financial statements for further detail~~expenses.

Debt Modifications and Extinguishments

The Company accounts for modifications and extinguishments of its debt instruments in accordance with ASC Topic 470-50, Debt—Modifications and Extinguishments. Amendments to debt instruments are evaluated to determine whether they qualify as a modification or an extinguishment, including a quantitative assessment of whether the present value of the future cash flows of the modified debt instrument differs by at least 10% from the original debt instrument (the "10% test"). The present value is calculated using the original effective interest rate, incorporating fees paid to or received from lenders. Qualitative factors, such as changes in embedded conversion features, significant economic change in the debt structure and alterations to the risk and cost profile of the debt instruments are also considered.

·	Extinguishment Accounting: If the 10% test or other criteria indicate a substantial difference, the original debt is derecognized, and the modified debt is recognized at fair value (or the present value of future cash flows discounted at the original effective interest rate). Any difference between the carrying amount of the original debt (including unamortized discounts, premiums, and issuance costs) and the new debt's initial carrying amount is recognized as a gain or loss in the consolidated statements of operations. For extinguishments with related parties that are in substance capital transactions, the gain or loss is recorded directly in additional paid-in capital.

·	Modification Accounting: If the 10% test indicates no substantial difference, the modification is accounted for prospectively by adjusting the carrying amount of the original debt for any fees paid or received to the lender(s). These fees are amortized as an adjustment to the effective interest rate over the remaining term using the effective interest method. Unamortized discounts, premiums, and issuance costs from the original debt continue to be amortized over the modified term.

F-13

Table of Contents

CANNAPHARMARX, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(in United States dollars)

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

New accounting standards adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. The Company adopted ASU 2023-09 beginning January 1, 2025. The adoption did not have any significant impact on the Company’s financial statement disclosures.

New accounting standards not yet adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires an entity to disclose the amounts of inventory purchases, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. It also requires an entity to include certain amounts that are already required to be disclosed under current GAAP in the same disclosure. Additionally, it requires an entity to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and to disclose the total amount of selling expenses. The ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software. This standard modernizes the accounting for costs related to internal-use software by removing references to project stages and by clarifying the thresholds entities apply to begin capitalizing costs. The amendments in this update are effective for interim and annual periods beginning after December 15, 2027, and early adoption is permitted.

Management is currently evaluating the potential effect that these updated standards will have on our financial statement disclosures.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 2 - GOING CONCERN AND LIQUIDITY

AsThese atfinancial ~~December~~statements ~~31,~~have ~~2024,~~been ~~the~~prepared ~~Company~~on ~~had~~a ~~cash~~going ofconcern $2basis,~~156~~ ~~(December~~which ~~31,~~contemplates ~~2023~~the -realization ~~$650).~~of ~~Additionally,~~assets asand ~~at December 31, 2024,~~ the ~~Company~~settlement ~~had~~of aliabilities ~~working~~and ~~capital~~commitments ~~deficiency totaling $24,733,636 (December 31, 2023 - $17,532,490), cash used~~ in ~~operating~~the ~~activities~~normal ofcourse ~~$1,697,232 (December 31, 2023 - $2,274,452) and an accumulated deficit~~ of ~~$101,184,142 (December 31, 2023 - $91,278,353)~~business.

~~These~~As ~~financial~~at ~~statements~~December ~~have~~31, ~~been~~2025, ~~prepared~~the onCompany ahad ~~going~~cash ~~concern~~of ~~basis~~$1,804 ~~which~~(December ~~contemplates~~31, ~~the~~2024 ~~realization~~- of$2,156), ~~assets~~a ~~and~~working ~~the~~capital ~~settlement~~deficiency of ~~liabilities~~$30,278,570 ~~and~~(December ~~commitments~~31, in2024 ~~the~~- ~~normal~~$24,733,636) ~~course~~and an accumulated deficit of ~~business.~~$112,315,590 ~~Based~~(December on31, ~~current~~2024 ~~financial~~- ~~projections~~$101,184,142). ~~the~~Additionally, ~~Company~~for ~~does~~the ~~not~~year ~~have~~ended ~~sufficient~~December ~~existing~~31, ~~cash~~2025, ~~resources~~the toCompany ~~fund~~incurred ~~its~~a ~~current~~net ~~limited~~loss ~~operations.~~of ~~Accordingly~~$11,131,448 ~~there~~(2024 is- ~~substantial~~$9,905,789) ~~doubt~~and ~~about~~cash ~~the~~used ~~Company’s~~in ~~ability~~operating toactivities ~~continue~~was as$789,102 a(2024 ~~going~~- ~~concern~~$1,697,232).

ItBased on current financial projections, the Company does not have sufficient existing cash resources to fund its current operations. Accordingly, there is substantial doubt about the Company’s ~~intention~~ability to ~~incur~~continue as a going concern. Management intends to address these liquidity challenges through debt financings and/or raise additional funding through equity financing to ~~fund~~support ongoing operating expenses and working capital needs. There is no assurance that these events will be satisfactorily completed or at terms acceptable to the Company. ~~Any~~and ~~issuance of equity securities~~therefore, ifthe ~~accomplished,~~Company ~~could~~is ~~cause~~heavily ~~substantial~~reliant ~~dilution~~on tofunding ~~existing~~from ~~stockholders~~related parties. ~~Any~~If ~~failure by~~ the Company is unable to secure adequate financing or otherwise successfully implement ~~these~~its plans, ~~would~~it ~~have~~may abe ~~material~~required ~~adverse~~to ~~effect~~significantly onreduce or curtail its ~~business~~operations, ~~including~~or ~~the~~cease ~~possible~~operations ~~inability~~entirely. Any issuance of equity securities to ~~continue~~raise ~~operations~~capital could result in substantial dilution to existing shareholders. These consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

F-1314 Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, ~~2024~~2025 AND ~~2023~~2024 (in United States dollars)

NOTE 32 - ~~INVENTORY~~GOING CONCERN AND LIQUIDITY (continued)

AOn ~~summary~~March of17, 2025, the Company and its subsidiary, 2323414 Alberta Ltd. (“Alberta Ltd.”), which operates the Company’s ~~inventory~~principal business activities, including the cultivation, processing, and distribution of cannabis, entered into a security and royalty agreement with Koze Investments LLC (“Koze”), a California-based limited liability company engaged in providing financing and investment services. Koze has been considered a related party since March 11, 2025, the date on which its manager, Elliot Zemel, was appointed as ata director of the Company. Pursuant to the agreement, the Company is required to pay a royalty on cannabis product sales from the prior month as an additional consideration for the lease with Formosa. If royalty payments are not made on time, the applicable rate increases. The agreement stipulates that a default occurs if Alberta Ltd. fails to make royalty or lease payments for three consecutive months, or for any four months within a rolling six-month period. As collateral, the Company granted Koze a security interest in its entire ownership interest in Alberta Ltd., which will remain in place until all obligations are fully satisfied. As of December 31, ~~2024~~2025, Alberta Ltd. was in default of its payment obligations, and ~~2023~~Koze isagreed to forbear from exercising its rights over the ownership interest until May 31, 2026. The Company also incurred royalty expense under the agreement and recorded a related royalty payable liability as ~~follows:~~of December 31, 2025.

	2024			2023
Finished goods	$	752,134		$	472,361
Work in process		1,560,137			661,307
Less: impairment of finished goods inventory included in cost of goods sold		(337,402	)		-
Less: impairment of work in process inventory included in cost of goods sold		(978,619	)		-
	$	996,250		$	1,133,668

NOTE 3 - ACCOUNTS RECEIVABLE

~~NOTE~~A 4summary -of ~~EQUIPMENT~~the Company’s accounts receivable as at December 31, 2025 and 2024 is as follows:

A summary of the Company’s equipment as at December 31, 2024 is as follows:

	2025			2024

Accounts receivables	$	185,616		$	1,747
Less: allowance for credit losses		(21,186	)		-
	$	164,430		$	1,747

		Gross Carrying Amount				Accumulated Depreciation				Net Book Value
Computers, office and plant equipment		$	210,851			$	(73,614	)		$	137,237

As at December 31, 2025, $157,368 (December 31, 2024 - $nil) was receivable from a pharmaceutical company based in Germany. This customer also accounted for the majority of revenues generated during the year ended December 31, 2025.

ANOTE ~~summary~~4 of- ~~the Company’s equipment as at December 31, 2023 is as follows:~~INVENTORY

		Gross Carrying Amount				Accumulated Depreciation				Net Book Value
Computers, office and plant equipment		$	209,449			$	(47,909	)		$	161,540

A summary of the Company’s inventory as at December 31, 2025 and 2024 is as follows:

For the years ended December 31, 2024 and 2023, the Company recorded depreciation expense of $31,237 and $28,879 respectively, related to these fixed assets.

	2025			2024

Finished goods	$	827,537		$	752,134
Work in process		774,265			1,560,137
Less: impairment of finished goods inventory included in cost of goods sold		-			(337,402	)
Less: impairment of work in process inventory included in cost of goods sold		(486,480	)		(978,619	)
	$	1,115,322		$	996,250

For the years ended December 31, 2024 and 2023, equipment depreciation expense allocated to inventory was $31,237 and $nil.

NOTE 5 - RIGHT-OF-USE BUILDING

On January 1, 2022, the Company entered into a 20-year lease agreement commencing January 1, 2022 with Formosa ~~Mountain Ltd.~~ for the ~~buildings~~Facility ~~from~~in which ~~2323414~~it grows its cannabis products in Cremona, Alberta.

A discount rate of 16.9% per annum is used to calculate the present value of minimum lease payments to determine the fair value of lease liability and right-of-use asset on initial recognition.

~~F-14~~On ~~Table~~January 1 2025, the Company amended the lease agreement whereby the lease payments were changed from CAD $90,979 to CAD $125,000 per month for the remainder of ~~Contents~~the lease term.

~~CANNAPHARMARX,~~F-15 ~~INC.NOTES~~Table TOof ~~THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023~~Contents

CANNAPHARMARX, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(in United States dollars)

NOTE 5 - RIGHT-OF-USE BUILDING (continued)

A summary of the Company’s right-of-use building asset at December 31, ~~2024~~2025 and ~~2023~~2024 is as follows:

	2024			2023
	2025			2024
Gross carrying amount	$	56,~~949~~449,~~483~~962		$	65,~~472~~949,~~637~~483
Accumulated depreciation		(~~788~~869,~~010~~975	)		(~~602~~788,~~496~~010	)
Net book value	$	5,~~161~~579,~~473~~987		$	5,~~870~~161,~~141~~473

~~For~~During the ~~years~~year ended December 31, ~~2024 and 2023~~2025, the Company recorded and allocated to inventory depreciation expense on ~~the~~its right-of-use building of $~~247~~41,~~480~~866 ~~and~~(2024 - $~~319~~247,~~579, respectively~~480).

~~For~~NOTE ~~the~~6 ~~years ended December 31, 2024 and 2023, right~~-~~of-use~~ ~~building depreciation expense allocated to inventory was $278,717 and $220,611, respectively.~~INVESTMENT

~~NOTE~~On 6November 22, 2023, the Company closed a transaction with Lucky Tackle Box Management, LLC (“LTB”) to acquire 100 Class B units of LTB as an investment in the right to utilize certain intellectual property developed by LTB. The intellectual property includes algorithms related to e-commerce ~~INVESTMENTS~~ sales platform and a marketing database that the Company intended to use as a platform to promote and sell its cannabis-related products

OnThe ~~November~~total 22purchase consideration for the investment was $4,518,127, ~~2023~~which consisted of the following: (i) 27,224,962 share purchase warrants with a fair value of $162,129, each entitling the holder to purchase one share of common shares of the Company ~~closed~~at a$0.02 ~~deal~~per ~~with~~share ~~LTB~~until ~~Management~~November 22, ~~LLC~~2028; (~~“LTB”~~ii) $3,000,000 in promissory notes payable to ~~acquire~~Mr. Amir Tal and Koze Investments LLC (Note 12); (iii) 100,000 ~~Class~~preferred Bshares ~~units~~Series C with a fair value of ~~LTB~~$750,000, each convertible into 1,250 shares of common shares; and (iv) contingent consideration recorded as an obligation to issue preferred shares Series C with a fair value of $605,998. The fair value of the share purchase warrants was determined using an option pricing model and the fair value of the preferred shares Series C was determined based on the shares price of the Company’s common shares on November 22, 2023.

The ~~total~~contingent ~~purchase~~ consideration ~~for~~includes ~~the~~a ~~investment~~quarterly ~~was~~true ~~$4,518,127,~~up ~~comprised~~ of the ~~following:~~sellers ~~(i) 27,224,962 warrants with a fair value~~ of ~~$162,129,~~LTB’s ~~each~~preferred ~~entitling~~share ~~the~~proportional ~~holder~~ownership to ~~purchase~~33% ~~one share~~ of ~~common~~the ~~stock~~outstanding shares of the Company’s atcommon ~~$0.02~~shares, ~~per~~and ~~share~~an ~~until~~earn ~~November~~out ~~22,~~whereby ~~2028;~~the ~~(ii)~~sellers ~~$3,000,000~~of inLTB ~~promissory~~can ~~notes~~earn ~~payable~~up to ~~Mr.~~ ~~Amir~~an ~~Tal~~additional ~~and~~12% ~~Koze~~pro-rata ~~Investments~~preferred ~~LLC (Note~~share ~~8);~~proportional ~~(iii)~~ownership ~~100~~(which,~~000~~ ~~Class~~if Cearned, ~~preferred~~will ~~shares~~result ~~with~~in athe ~~fair~~true ~~value~~up ofincreasing ~~$750,000,~~by ~~each~~the ~~convertible~~pro-rata ~~into~~preferred ~~1,250~~share ~~shares~~proportional ofownership ~~common stock; and (iv~~earned) ~~contingent~~based ~~consideration~~on ~~recorded~~the asCompany anreaching ~~obligation~~a tocalculated ~~issue~~$2,500,000 ~~class~~of Ccumulative ~~preferred~~revenue ~~shares with~~at aany ~~fair~~time ~~value~~until ofNovember ~~$605~~22,~~998~~ 2025. ~~The~~As ~~fair~~at ~~value~~December of31, 2025, the ~~warrants~~true ~~was~~up ~~determined~~period ~~using~~had anexpired ~~option pricing model~~ and the ~~fair~~Company ~~value~~has ofa ~~the~~final ~~Class~~obligation Cto issue 333,336 preferred shares ~~was~~Series ~~determined~~C ~~based~~valued onat ~~the~~$2,166,681 ~~stock~~(December ~~price~~31, of2024 ~~the~~- ~~Company’s~~301,597 ~~stock~~shares onvalued ~~November~~at 22$3, ~~2023~~654,009).

~~The~~As ~~contingent~~of ~~consideration~~December ~~includes~~31, a2025, ~~quarterly~~management ~~true~~evaluated ~~up of~~ the ~~sellers of LTB~~investment’s ~~preferred~~fair ~~share~~value ~~proportional~~using ~~ownership~~a todiscounted ~~33%~~cash offlow ~~the~~analysis ~~outstanding shares~~ of ~~the~~LTB ~~Company’s~~and ~~common~~concluded ~~stock,~~that ~~and~~projected ancash ~~earn~~flows ~~out~~available ~~whereby~~to ~~the~~Class ~~sellers~~B ofunitholders ~~LTB~~were ~~can~~negative ~~earn~~in upall toperiods. anManagement ~~additional~~concluded ~~12%~~that ~~pro-rata~~a ~~preferred~~full ~~share~~impairment ~~proportional~~was ~~ownership~~appropriate. ~~(which~~Accordingly, ifmanagement ~~earned,~~determined ~~will result in~~ the ~~true~~fair upvalue ~~increasing~~of by the ~~pro-rata~~investment ~~preferred~~to ~~share~~be ~~proportional~~negligible ~~ownership~~and ~~earned)~~fully ~~based~~impaired on the ~~Company~~carrying ~~reaching~~amount ~~a threshold~~ of $24,~~500~~518,~~000 annual revenue at any time until November 22~~127, ~~2025.~~recognizing ~~As at December 31, 2024, the Company has~~ an ~~estimated~~impairment ~~obligation~~loss ~~to issue an additional 301,597 (December 31, 2023 - 96,104) Class C preferred shares to the sellers~~ of ~~LTB under~~ the ~~earn~~same ~~out~~amount ~~and~~for the ~~true~~year ~~up,~~ended ~~valued at $3,654,009 (~~December 31, ~~2023 - $204,220)~~2025. ~~The estimation is according to management assessment of the company reaching the threshold of $2,500,000 or part of it.~~

F-16

Table of Contents

CANNAPHARMARX, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(in United States dollars)

NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

A summary of the Company’s accounts payable and accrued liabilities as at December 31, ~~2024~~2025 and ~~2023~~2024 is as follows:

	2024		2023
	2025		2024
Accounts payable	$	4,783,656	$	4,929,416
Accounts payable (a)	$	5,470,190	$	4,783,656
Accrued liabilities		4,~~302~~399,~~643~~225		34,~~851~~302,~~753~~643
Accrued interest		2,495,337		523,680
Accrued legal settlement (b)		190,000		190,000
Accrued legal settlement (a)		190,000		190,000
Total accounts payable and accrued liabilities	$	10,059,415	$	9,276,299
Total accounts payable and accrued liabilities	$	11,771,636	$	9,494,849

(a) The Company had previously been a party to an action filed by Gary M. Cohen, a former officer and director of the Company in 2014. In March 2015, the Company entered into a settlement agreement with Mr. Cohen wherein the Company agreed to repurchase 2,250,000 shares of its common stock from Mr. Cohen in consideration for $350,000. Mr. Cohen passed away while there was a remaining balance of $190,000 remaining to be paid in accordance with the settlement agreement. The Company has taken the position that his death has discharged any obligation the Company might have to make the balance of the payments. The Company has not received any demand for payment or otherwise been involved in any attempt to collect this balance for a period of greater than two years prior to the date of these financial statements.

(a)

During the year ended December 31, 2025, the Company evaluated its outstanding accounts payable originating prior to December 31, 2022. Based on this review and applicable statutes of limitations, the Company determined that certain obligations were no longer legally enforceable. Accordingly, the Company recorded a write-off of $410,430, representing approximately 50% of the total historical accounts payable outstanding prior to December 31, 2022. This amount was recognized as a gain on write-off of accounts payable and accrued liabilities in the consolidated statements of operations and comprehensive loss.

(b)

The Company was previously a defendant in an action filed in 2014 by Gary M. Cohen, a former officer and director of the Company. In March 2015, the Company entered into a settlement agreement with Mr. Cohen wherein the Company agreed to repurchase 2,250,000 of its common shares from Mr. Cohen in consideration for $350,000. Mr. Cohen passed away while there was a balance of $190,000 remaining to be paid in accordance with the settlement agreement. The Company has taken the position that his death has discharged any obligation the Company might have to make the balance of the payments. The Company has not received any demand for payment or otherwise been involved in any attempt to collect this balance for a period of greater than two years prior to the date of these financial statements.

~~F-15~~NOTE ~~Table~~8 of- ~~Contents~~ACCRUED INTEREST

~~CANNAPHARMARX,~~A ~~INC.NOTES~~summary TOof ~~THE~~the ~~CONSOLIDATED~~Company’s ~~FINANCIAL~~accrued ~~STATEMENTSFOR~~interest ~~THE~~as ~~YEARS~~at ~~ENDED~~December ~~DECEMBER~~ 31, 2025 and 2024 ~~AND~~is ~~2023~~as follows:

NOTE 8 - NOTES PAYABLE

	2025		2024

Notes payable	$	48,580	$	1,433,652
Loans payable to related parties		315,719		56,298
Convertible notes		318,799		407,515
Rent in default on Formosa lease		1,037,180		597,872
	$	1,720,278	$	2,495,337

ANOTE ~~summary~~9 of- ~~the~~NOTES ~~Company’s notes payable as at December 31, 2024 and 2023 is as follows:~~PAYABLE

	2024		2023
Notes payable	$	160,311	$	-
CEBA Loan		41,699		45,365
Secured promissory notes		269,000		288,560
Other promissory notes		3,657,379		-
Promissory notes (LTB Transaction)		2,550,000		3,000,000
	$	6,678,389	$	3,333,925

A summary of the Company’s notes payable as at December 31, 2025 and 2024 is as follows:

	2025		2024
Notes payable	$	170,002	$	160,311
Canada Emergency Business Account (“CEBA”) loan		43,777		41,699
Secured promissory notes		268,882		269,000
Other promissory notes		-		3,657,379
Promissory notes (LTB Transaction)		-		2,550,000
	$	482,661	$	6,678,389

F-17

Table of Contents

CANNAPHARMARX, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(in United States dollars)

NOTE 9 - NOTES PAYABLE (continued)

Notes payable

On May 10, 2024 and May 31, 2024, the Company entered into notes payable agreements (“Note A” and “Note B”, respectively) bearing interest at 10% per annum and maturing within 12 months from the date of issuance with a ~~second~~third ~~individual~~party in the amounts of $50,~~000~~001 and $70,~~000~~001, respectively. ~~During~~If the ~~year~~notes ~~ended~~are ~~December~~not ~~31,~~repaid ~~2024~~at maturity, the ~~Company~~outstanding ~~recorded~~balances ~~$3,219~~accrue ~~(2023 - $nil) in~~ interest ~~expense~~at ona ~~Note~~default A,rate ~~and~~of ~~$4,104~~25% ~~(2023~~per ~~- $nil) in interest expense on Note B~~annum.

~~Pursuant~~During to the ~~terms~~year ofended ~~a securities purchase agreement with Alternative Medical Solutions Inc. (“AMS”) entered into on~~ December 31, ~~2018 in the province of Ontario~~2025, the Company ~~issued~~recorded ~~a non-interest-bearing~~ $79,~~330,000~~850 (2024 - $103,~~000,000 CAD~~219) ~~promissory~~in ~~note.~~interest ~~The~~expense ~~promissory note matured~~ on ~~December~~Note 24A, ~~2021~~and $13,185 ~~and~~(2024 ~~was~~- ~~past~~$4,104) ~~due.~~in Ininterest ~~2023,~~expense ~~the~~on ~~promissory~~Note ~~note~~B. ~~did~~As ~~not~~at ~~represent~~December a31, ~~current~~2025, ~~obligation~~Note ~~due~~A toand ~~the~~Note ~~statute~~B ofare ~~limitations~~past due in ~~which~~ the ~~lender~~principal ~~could~~amounts ~~have~~of ~~entered~~$50,001 aand ~~claim~~$70,001, ~~being~~respectively, ~~reached~~ in ~~the~~addition ~~province~~to ofaccrued ~~Ontario~~interest on these notes. As ~~such,~~ at December 31, ~~2023~~2025, the ~~Company~~accrued ~~recognized~~interest ~~a gain~~ on ~~debt~~Note ~~dissolution~~A ~~for~~was ~~the~~$13,069 ~~full~~(December ~~amount~~31, ~~owing~~2024 to- ~~AMS of~~ $73,~~477,554~~219) ~~representing~~and ~~the~~Note ~~full~~B ~~balance of the promissory note. NB such gain on loan dissolution~~ was ~~recognized~~$17,289 ~~for the year ended~~ (December 31, 2024 - $4,104).

On August 13, 2024, the Company entered into ~~notes~~a note payable ~~agreements~~agreement (“Note C”) with a third individual in the ~~amounts~~amount of $50,000. Note C ~~matures~~was to mature within 8 months from the date of issuance and bears interest at 15% per annum. ~~During~~If the ~~year~~notes ~~ended~~are ~~December~~not ~~31,~~repaid ~~2024~~at maturity, the ~~Company~~outstanding ~~recorded~~balances ~~$2,826~~accrue ~~(2023~~interest -at ~~$nil)~~a indefault ~~interest~~rate ~~expense~~of on25% ~~Note~~per Cannum.

During the year ended December 31, 2025, the Company recorded $11,075 (2024 - $2,826) in interest expense on Note C. As at December 31, 2025, Note C is past due and owing in the principal amount of $50,000 and accrued interest on Note C was $13,952 (December 31, 2024 - $2,877).

CEBA loan

Due to the global COVID 19 outbreak, the Government of Canada introduced the ~~Canada Emergency Business Account (“~~CEBA”) program. The Company participated in this program and received a CAD $60,000 ~~CAD~~ loan. The loan was interest-free until January 18, 2024 at which time it was converted to a non-amortizing term loan with an interest rate of 5% per annum and the full principal repayment is due on December 31, 2026. As at December 31, 2024 and December 31, 2023 the Company’s CEBA Loan balance was $41,699 ($60,000 CAD) and $45,365 ($60,000 CAD), respectively. During the year ended December 31, 2024, the Company recorded $2,081 (2023 - $nil), in interest expense on the CEBA loan.

During the year ended December 31, 2025, the Company recorded $2,165 (2024 - $2,081) in interest expense on the CEBA loan. As at December 31, 2025, the CEBA loan balance was $43,777 (CAD $60,000) (December 31, 2024 - $41,699 (CAD $60,000)) and accrued interest on the CEBA loan was $4,270 (December 31, 2024 - $1,971).

Secured promissory notes

During the year ended December 31, 2021, the Company entered into secured non-interest-bearing promissory note agreements with investors for ~~non-interest-bearing~~$50,000 ~~notes~~and CAD $300,000 maturing within 12 months ~~with a total value of $269,000~~. These notes are secured by a general security agreement over all of the Company’s present and after acquired property, assets, and undertakings. As at December 31, ~~2024~~2025, the notes are past due and owing in the ~~amount~~amounts of $~~269~~50,000 ~~(December~~and 31$218,882 ~~2023~~(CAD - $~~288~~300,~~560~~000). ~~The~~(December ~~difference~~31, in2024 ~~the~~- ~~note~~$50,000 ~~balance~~and is$219,000 ~~due to currency fluctuations between~~ (CAD ~~and USD~~$300,000)).

~~F-16~~Promissory ~~Table~~notes of(LTB ~~Contents~~transaction) reclassified to loans payable to related parties

~~CANNAPHARMARX~~On November 22, ~~INC~~2023, the Company entered into promissory notes of $3,000,000 bearing interest of 13% per annum, as part of the LTB transaction (Note 6), of which $450,000 was with Mr.~~NOTES~~ TOAmir ~~THE~~Tal ~~CONSOLIDATED~~(“Mr. ~~FINANCIAL~~Tal”), ~~STATEMENTSFOR~~a ~~THE~~“control ~~YEARS~~person” ~~ENDED~~of ~~DECEMBER~~the Company as defined under the Securities Act of 1933. During the year ended December 31, 2024, ~~AND~~the ~~2023~~Company recorded interest expense of $58,660 on the note. The outstanding principal was reclassified to loans payable to related parties during 2024 (Note 12).

~~NOTE~~The 8remaining -$2,550,000 ~~NOTES~~of ~~PAYABLE~~the November 22, 2023 note was with Koze and the outstanding principal balance on the promissory note was reclassified to loans payable to related parties during the three months ended March 31, 2025 after Koze became a related party on March 11, 2025 (~~continued~~Note 12). During the year ended December 31, 2024, the Company recorded interest expense of $332,408 on the note.

~~Promissory~~The original maturity date of the two promissory notes ~~(LTB~~was ~~Transaction)~~November 22, 2024. On November 22, 2024, the Company entered into an agreement with Mr. Tal and Koze to extend the maturity date of the promissory notes to December 31, 2025. Management assessed that the modification did not result in an extinguishment of debt and has continued to accrue interest on the notes through to the revised maturity date. On March 18, 2026, Mr. Tal and Koze agreed to extend the maturity date of the promissory notes to December 31, 2026.

On November 22, 2023, the Company entered into promissory notes of $3,000,000 as part of the LTB transaction (Note 6), of which $450,000 was with a related party of the Company (Note 10) and $2,550,000 was with a second investor. The $450,000 promissory note was with Mr. Amir Tal (“Mr. Tal”), a shareholder of the Company with a “principal owner” designation as defined by the US Securities and Exchange Commission, as part of the LTB transaction (Note 6), and was reclassified to Loan payable - related party in the current year (Note 10). The promissory notes bear interest at 13% per annum and mature on November 22, 2024 and the interest rate will increase to 18% subsequent December 31, 2024. During the year ended December 31, 2024, the Company recorded interest of $391,068 (2023 - $41,671), respectively on the promissory notes.

Other promissory notes

The Company has a promissory note with a shareholder of the Company, which bears interest at 24% compounded monthly. As at December 31, 2024, the principal balance owed on the promissory note was $916,496 (December 31, 2023 - $545,912) and accrued interest was $360,356 (December 31, 2023 - $160,366).

On May 25, 2023, the Company entered into a promissory note with Koze Investments LLC (“Koze”) whereby it was agreed that up to $2,000,000 in funding would be advanced to the Company to pay for certain documented Company expenses. The promissory note bears interest at 24% compounded quarterly. As at December 31, 2024, the balance owing on the promissory note is $2,740,883 (December 31, 2023 - $1,731,555), and accrued interest was $741,825 (December 31, 2023 - $135,901) (Note 10).

NOTE 9 - CONVERTIBLE NOTES AND DERIVATIVE CONVERSION FEATURE

A summary of the Company’s convertible notes is as follows:

Balance, December 31, 2022	$	1,141,060
Additions		439,501
Value of conversion of notes into 166,607,680 shares of common stock		(222,096	)
Note discount		162,393
Balance, December 31, 2023		1,520,858
Additions		363,448
Value of conversion of notes into 204,353,254 shares of common stock		(134,910	)
Settlements		(451,282	)
Balance, December 31, 2024	$	1,298,114

During the year ended December 31, 2024, the Company issued convertible notes of $363,448, with interest rate ranging from 10% to 24%.

During the year ended December 31, 2023, the Company issued convertible notes of $439,501 with interest rate ranging from 10% to 12%.

During the years ended December 31, 2024 and 2023, the Company converted convertible notes of $134,910 into 204,353,254 common shares and convertible notes of $222,096 into 166,607,680 common shares, respectively.

During years ended December 31, 2024 and 2023, the Company recorded a loss on extinguishment of debt of $690,712 and $654,919, respectively, and interest expense of $145,934 and $191,030, respectively.

F-17 Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

NOTE 9 - CONVERTIBLE NOTES AND DERIVATIVE CONVERSION FEATURE (continued)

A summary of the terms and conditions of the convertible notes outstanding which have a derivative conversion feature as at December 31, 2024 is as follows:

Maturity Date	Interest Rate		Conversion price	Principal at inception		Principal outstanding
				$		$
Jan. 7, 2021		8%	75% of the lowest 20-day share price before the conversion date		100,000		100,000
Dec. 11, 2022		24%	Lowest of the 60-day share price before the conversion date		231,250		212,555
Dec. 11, 2022		24%	Lowest of the 60-day share price before the conversion date		231,250		68,555
Apr. 11, 2024		12%	$0.010 on the conversion date		100,000		100,000
May 5, 2024		12%	Lesser of $0.0025 or 70% of lowest 5-day share price before the conversion date		60,000		60,000
Sep. 25, 2024		22%	$0.005 on the conversion date		50,000		50,000
					772,500		591,110

As at December 31, 2024, the Company had $377,901 (December 31, 2023 - $231,967) in accrued interest on these notes, recorded in accounts payable and accrued liabilities.

As at the date of these financial statements, all convertible notes were past their maturity date. Additionally, because of the late filing of previous annual reports, and the loss of the Company’s active listing in the OTC market, the penalty provisions of all convertible notes outstanding became effective. During the year ended December 31, 2022, the Company estimated that the maximum penalty provisions amounted to one times the face value of all the convertible notes outstanding and recorded an accrued liability for penalties amounting to $1,303,452, which was recorded in accounts payable and accrued liabilities. As at December 31, 2024, the accrued liability for penalties was reduced to $735,002 due to the settlement of certain convertible notes.

The convertible notes were determined to be compound instruments, comprising separate financial instruments, being the debt obligation and the conversion option, which were bifurcated and are presented separately on the consolidated balance sheets. As the number of common shares to be issued on exercise of the conversion option is contingent on a variable share price, the conversion option has been classified as derivative conversion feature.

A summary of Company’s derivative conversion feature as at December 31, 2024 is as follows:

Balance, December 31, 2022	$	1,008,868
Changes in fair value of derivative conversion feature		255,520
Balance, December 31, 2023		1,264,388
Changes in fair value of derivative conversion feature		(105,064	)
Balance, December 31, 2024	$	1,159,324

As at December 31, 2024 the Company had derivative conversion feature of $1,159,324 (December 31, 2023 - $1,264,388).

The Company used an option pricing model to calculate the derivative conversion feature. A summary of the Company’s weighted average inputs used in the model is as follows:

	2024			2023
Stock Price	$	0.008		$	0.002
Exercise Price	$	0.004		$	0.004
Risk-free interest rate		3.00	%		3.91	%
Expected volatility		285.60	%		240.65	%
Expected life	1.00 years			1.00 years
Expected dividend yield		0.00	%		0.00	%

F-18

Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, ~~2024~~2025 AND ~~2023~~2024 (in United States dollars)

NOTE 9 - ~~CONVERTIBLE~~ NOTES ~~AND DERIVATIVE CONVERSION FEATURE~~ PAYABLE (continued)

~~The~~Other ~~risk-free~~promissory ~~interest~~notes ~~rate~~reclassified ~~was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock~~ to ~~estimate~~loans ~~the~~payable future volatility of its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to ~~pay~~related ~~dividends in the future.~~parties

~~NOTE~~On 10May -25, ~~RELATED~~2023, ~~PARTY~~the ~~TRANSACTIONS~~ Company entered into two promissory notes with Koze, bearing interest of 24% compounded monthly, to fund for certain documented expenses. During the year ended December 31, 2024, the Company recorded interest expense of $703,223 on these notes.

~~Key~~On ~~management~~February ~~personnel~~8, ~~include~~2024, ~~those~~the ~~persons~~Company ~~having~~entered ~~the~~into ~~authority~~another ~~and~~promissory ~~responsibility~~note ofwith ~~planning~~Koze, ~~directing~~bearing ~~and~~interest ~~executing~~at ~~the~~24% ~~activities~~compounded ofmonthly. During the ~~Company.~~year ~~The~~ended ~~Company~~December ~~has~~31, ~~determined~~2024, ~~that~~the ~~its~~Company ~~key~~recorded ~~management~~interest ~~personnel~~expense ~~consist~~ of ~~directors~~$59,129 ~~and~~on ~~executive officers of~~ the ~~Company~~note.

AAs ~~summary~~a result of ~~the~~Koze ~~Company’s~~becoming a related party ~~liabilities~~in asMarch at2025, ~~December~~the ~~31,~~balance ~~2024~~owing ~~and~~on ~~2023~~these ispromissory asnotes ~~follows:~~ was reclassified from notes payable to loans payable to related parties during the three months ended March 31, 2025 (Note 12).

	2024		2023
Accounts payable and accrued liabilities	$	2,070,057	$	2,027,693
Accrued interest		56,298		-
Loan payable - related party		462,818		2,155,484
Convertible notes		212,555		231,250
Liability for right-of-use building, current portion		-		754,608
Liability for right-of-use building		-		5,170,531
Obligation to issue shares of common stock		1,827,005		102,110
Total loan payable, related parties	$	4,628,733	$	10,441,676

On January 1, 2025, the Company entered into a promissory note with Formosa in the amount of $1,930,000, bearing interest at 5% per annum, with respect to a one-time adjustment made to lease-related rent expense due to a clarification in the interpretation of the lease terms for the Facility. The principal amount, accrued interest and all other sums due under this note are payable quarterly over a 3-year period. Additionally, it was agreed that the Company will pay (i) 25% of any capital raised by the Company and (ii) 50% of all profits of the Company until the principal amount and any interest accrued thereon has been paid in full to Formosa. As a result of Formosa being considered a related party since March 11, 2025, the balance owing on the promissory note was classified under loans payable to related parties (Note 12).

~~Accounts~~Debt ~~payable~~modification ~~and~~of ~~accrued~~debt ~~liabilities~~instruments held by Mr. Tal and Koze

AsOn atAugust ~~December 31~~7, ~~2024~~2025, ~~accounts~~the ~~payable~~Company entered into an agreement (the “Debt Modification”) with Mr. Tal and ~~accrued~~Koze ~~liabilities~~to ~~include~~amend ~~balances~~the ~~owing~~annual interest rates on all outstanding promissory and convertible notes held by them to ~~related~~6%, ~~parties~~compounding annually. This was deemed to be a substantial modification of the terms of the agreements and was accounted for as ~~follows:~~an extinguishment of the promissory and convertible notes and recognition of new notes at the new 6% rate. The term to maturity was unchanged (Note 12). In connection with the issuance of the new notes resulting from the Debt Modification, the Company determined that the market interest rate for similar instruments was 15%. Accordingly, the debt was recorded at a discount to reflect this effective interest rate, with the discount amortized to imputed interest expense over the term of the debt using the effective interest method.

·A ~~$89,392~~summary ~~(December~~of ~~31, 2023 - $797) payable to Invictus, a company to which Oliver Foeste is Managing Partner, which provides part-time CFO, financial reporting, and bookkeeping services to~~ the ~~Company.~~accrued ~~During~~interest ~~the year ended December 31, 2024, the Company incurred professional expenses with Invictus~~ of ~~$180,899 (2023 - $22,683). · $319,279 (December 31, 2023 - $319,279) to Mr. Orman, chairman of~~ the Company’s ~~board~~notes ofpayable ~~directors,~~(Note ~~for~~8) ~~unpaid~~as ~~directors’~~at ~~fees for 2021 through 2023. · $1,661,386 (~~December 31, ~~2023~~2025 ~~- $1,707,617) to Dominic Colvin, a director of the Company, for unpaid salary~~ and ~~expense~~2024 ~~reimbursement~~is ~~amounts during Mr. Colvin’s employment with the Company~~ as ~~its CEO during the years 2019 through 2022.~~follows:

Loan payable - related party

	2025		2024
CEBA loan	$	4,270	$	1,971
Note A		13,069		3,219
Note B		17,289		4,104
Note C		13,952		2,877
Reclassified to loans payable to related parties:
Koze LTB		-		362,864
Koze A		-		301,227
Koze B		-		698,261
Koze C		-		59,129
	$	48,580	$	1,433,652

As at December 31, 2024, the loan payable - related party is as follows:

	·	$12,818 interest-free loan from PLC International Investments Inc., a Company owned by Dominic Colvin, who currently serves as a director of the Company;
	·	A $450,000 promissory note entered into on November 22, 2023 with Mr. Tal, a shareholder of the Company with a “principal owner” designation as defined by the US Securities and Exchange Commission, as part of the LTB transaction (Note 6). The promissory note bears interest at 13% per annum and matures on November 22, 2024. During the year ended December 31, 2024, the Company recorded interest expense of $58,660 (2023 - $6,251) on the promissory note.

Convertible notes

As at December 31, 2024, $212,555 (December 31, 2023 - $231,250) of the Company’s convertible notes balance was attributable to amounts owed to Mr. Tal. During the year ended December 31, 2023, Mr. Tal did not convert any of the convertible notes into shares of common stock of the Company. During the year ended December 31, 2024, Mr. Tal converted $18,695 (2023 - $nil) of the convertible notes into 23,368,212 (2023 - nil) shares of common stock of the Company.

F-19

Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, ~~2024~~2025 AND ~~2023~~2024 (in United States dollars)

NOTE 10 - ~~RELATED~~CONVERTIBLE ~~PARTY TRANSACTIONS (continued)~~NOTES

~~Obligation~~A tosummary ~~issue~~of ~~shares~~the Company’s convertible notes is as follows:

As at December 31, 2024, the Company has an obligation to issue an additional 150,799 (December 31, 2023 - 48,052) Class C preferred shares to Mr. Tal as part of the LTB transaction (Note 6), valued at $1,827,005 (December 31, 2023 - $102,110).

Balance, December 31, 2023	$	1,520,858
Additions		363,448
Value of conversion of notes into 204,353,254 common shares		(134,910	)
Settlements		(451,282	)
Balance, December 31, 2024		1,298,114
Reclassification of convertible notes to loan payable to related parties		(281,110	)
Balance, December 31, 2025	$	1,017,004

~~Rent~~During the year ended December 31, 2025, there were no conversions of convertible notes and accordingly, no loss on conversion (2024 - $690,712). During the year ended December 31, 2025, interest expense was $132,414 (2024 - $145,934).

~~Effective~~A ~~February~~summary 1,of ~~2023,~~ the ~~Company~~terms ~~entered~~and ~~into~~conditions a lease agreement to lease an office at Suite 3600, 888 5th Avenue SW, Calgary, Alberta, Canada, T2P 3R7. The rent is $500 CAD per month. This space was provided by a company to which Mr. Orman, the chairman of the ~~Company’s~~convertible ~~board~~notes ofoutstanding ~~directors,~~which ishave ~~related.~~a ~~During~~derivative ~~the~~conversion ~~year~~feature ~~ended~~as at December 31, ~~2024,~~2025 ~~the~~is ~~Company~~as ~~incurred rent expense of $4,381 (2023 - $2,599).~~follows:

The related party liabilities as at December 31, 2023 also comprised promissory notes from Koze and from a shareholder of the Company who is the principal of Koze; and lease liabilities from a lease agreement with Formosa Mountain Ltd., a shareholder of the Company which is the principal shareholder of Koze. The shareholder was previously considered to be a related party of the Company.

Maturity Date	Interest Rate			Conversion price	Principal at inception		Principal outstanding
Jan. 7, 2021		8	%	75% of the lowest 20-day share price before the conversion date	$	100,000	$	100,000
Dec. 11, 2022		6	%	Lowest of the 60-day share price before the conversion date		231,250		212,555
Dec. 11, 2022		6	%	Lowest of the 60-day share price before the conversion date.		159,250		68,555
Dec. 11, 2022		24	%	Lowest of the 60-day share price before the conversion date.		72,000		72,000
May 5, 2024		24	%	Lesser of $0.0025 or 70% of lowest 5-day share price before the conversion date		60,000		60,000
					$	622,500	$	513,110

~~Revenue~~Convertible notes included in loans payable to related parties

~~During~~On ~~the~~August ~~year~~7, ~~ended~~2025, ~~December~~as ~~31,~~a ~~2024,~~result of the ~~Company~~Debt ~~recognized~~Modification ~~revenue~~ (Note 139), the convertible notes held by Mr. Tal and Koze with outstanding principal of $~~770~~212,~~265~~555 and $68,555, respectively (December 31, ~~2023~~2024 - $~~nil~~212,555 and $68,555, respectively), ~~from~~were Dextinguished and new convertible notes were recognized at the 6% rate, compounding annually.N These notes were included in loans payable to related parties.S The term to maturity remains unchanged (Note 12). ~~CANTEK~~As ~~2019~~at ~~LTD~~December 31, an2025, ~~Israeli~~the ~~limited~~accrued ~~corporation~~interest on the remaining convertible notes was $318,799 (~~“Cantek”)~~December ~~managed~~31, by2024 ~~Mr.~~- ~~Tal~~$407,515) (Note 8).

~~NOTE~~As 11at -the ~~LIABILITY~~date ~~FOR~~of ~~RIGHT~~these financial statements, all convertible notes were past their maturity date, but they retained the terms and conditions as per their respective agreements. Additionally, because of the late filing of previous annual reports, and the loss of the Company’s active listing in the OTC market, the penalty provisions of all convertible notes outstanding became effective. The Company estimated that the maximum penalty provisions amounted to one times the face value of all the convertible notes outstanding on the date the conversion feature became exercisable. As at December 31, 2025, the accrued liability for penalties was $735,002 (December 31, 2024 -~~OF-USE~~ ~~BUILDING~~$735,002).

AThe ~~summary~~convertible ofnotes ~~the~~were ~~Company’s~~determined ~~weighted~~to ~~average~~be ~~discount~~compound ~~rate~~instruments, ~~used~~comprising inseparate ~~calculating~~financial ~~lease~~instruments, ~~liabilities~~being the debt obligation and ~~weighted~~the ~~average~~conversion ~~remaining~~option, ~~lease~~which ~~term~~were ~~for~~bifurcated and are presented separately on the ~~years~~consolidated ~~ended~~balance ~~December~~sheets. 31As the number of common shares to be issued on exercise of the conversion option is contingent on a variable share price, ~~2024~~the ~~and~~conversion ~~2023~~option ~~are~~has been classified as ~~follows:~~ derivative conversion feature.

	2024			2023
Weighted average discount rate		16.9	%		16.9	%
Weighted average remaining lease term	16.9 years			17.9 years

Supplementary information on the Company’s operating lease liabilities for the years ended December 31, 2024 and 2023 included the following:

	2024		2023
Interest	$	980,698	$	963,149
Amortization and depreciation	$	247,480	$	98,968
Finance lease related expenses	$	758,738	$	770,189

A summary of the maturity of contractual undiscounted liabilities associated with the Company’s operating leases as at December 31, 2024 is as follows:

2025	$	796,575
2026		836,406
2027		876,236
2028		919,886
2029		965,879
Thereafter		16,142,741
Total undiscounted cashflows		20,537,723
Less: imputed interest		(14,916,679	)
Liability for right-of-use building, total		5,621,044
Liability for right-of-use building, current portion		728,206
Liability for right-of-use building, non-current portion	$	4,892,838

As at December 31, 2024, the Company has not made any payments on its lease liabilities. The unpaid lease payments for the year ended December 31, 2024 of $1,091,748 (December 31, 2023 - $1,039,500) were recorded in accounts payable.

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Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, ~~2024~~2025 AND ~~2023~~2024 (in United States dollars)

NOTE 11 - ~~LIABILITY~~DERIVATIVE ~~FOR~~CONVERSION ~~RIGHT-OF-USE BUILDING (continued)~~FEATURE

~~For~~A ~~the~~summary ~~year~~of ~~ended~~Company’s ~~December~~derivative ~~31,~~conversion ~~2024,~~feature ~~the~~as ~~Company~~at ~~recognized~~December ~~interest expense of $597~~31,~~872~~ ~~associated~~2025 ~~with~~is ~~these~~as ~~unpaid lease payments.~~follows:

Effective January 1, 2025, the Company amended its lease agreement. As per the new agreement, the basic rent, additional payment and security interest were amended.

Balance, December 31, 2023	$	1,264,388
Change in the fair value of derivative conversion feature		(105,064	)
Balance, December 31, 2024		1,159,324
Change in the fair value of derivative conversion feature		850,152
Balance, December 31, 2025	$	2,009,476

~~NOTE~~The 12Company -used ~~STOCKHOLDERS~~an option pricing model to calculate the derivative conversion feature. A summary of the Company’s ~~DEFICIT~~weighted average inputs used in the model for the year ended December 31, 2025 and the year ended December 31, 2024 is as follows:

Preferred stock

	2025			2024
Share price	$	0.005		$	0.008
Exercise price	$	0.002		$	0.004
Risk-free interest rate		2.90	%		3.00	%
Expected volatility		348.80	%		285.60	%
Expected life	1.00 year			1.00 year
Expected dividend yield		0.00	%		0.00	%

The ~~Company~~risk-free isinterest ~~authorized~~rate towas ~~issue~~based upon torates 3established by the Federal Reserve Bank. Beginning with the year ended December 31,~~200~~ 2025,~~000~~ ~~shares~~the ofCompany ~~one~~estimated orexpected ~~more~~volatility ~~series~~using ofa ~~preferred~~peer‑based ~~stock~~approach atrather athan ~~par~~the ~~value~~historical volatility of ~~$1.00~~its ~~per~~own ~~share~~common shares. The ~~Board~~Company’s ofcommon ~~Directors~~shares ~~may,~~trade ~~without~~infrequently ~~stockholder~~on ~~approval~~the OTC Markets, ~~determine~~and management determined that historical volatility derived solely from Company‑specific trading data was not reflective of market‑participant assumptions. As at the ~~dividend~~date ~~rates,~~of ~~redemption~~these ~~prices~~financial statements, ~~preferences~~all onconvertible ~~liquidation~~notes orwere ~~dissolution~~past their maturity date and accordingly, the expected term of the conversion ~~rights,~~feature ~~voting~~of ~~rights,~~the notes was assumed to be 1 year from the date of these financial statements. The expected annual dividend yield was based on the fact that the Company has not customarily paid dividends in the past and ~~any~~does ~~other~~not ~~preferences~~expect to pay dividends in the future.

~~Series~~NOTE A12 ~~preferred~~- ~~stock~~RELATED PARTY TRANSACTIONS

~~In April 2018, the Company issued 60,000 shares of its series~~ A ~~convertible~~related ~~preferred~~party ~~stock~~is ~~(“Series~~any Aindividual ~~Stock”)~~or ~~for~~entity ~~$1.00~~that ~~per~~can ~~share~~exercise tosignificant ~~certain~~influence ~~investors~~over ~~who~~the ~~then~~Company, ~~became~~or ~~members~~over ofwhich ~~management~~the ~~and~~Company ~~the~~can ~~Board~~exercise ofsignificant ~~Directors~~influence. ~~Each~~Related ~~share~~parties ofinclude ~~Series A Stock is non-redeemable~~affiliates, ~~entitles~~principal ~~the holder to 1~~owners,~~250~~ ~~votes on all matters submitted to a vote of the shareholders; is convertible into 1~~directors,~~250~~ ~~shares~~executive ~~of common stock and each vote is on an as-converted basis. In addition~~management, ~~the~~their ~~holders~~immediate offamily ~~outstanding Series A Stock will only be entitled to receive dividends upon declaration by the Board of Directors of a dividend payable on the Company’s common stock~~members, ~~whereupon~~and ~~the~~entities ~~holders~~under ~~of the Series A Stock will receive a dividend on the number of shares of~~ common ~~stock into which each share of Series A Stock is convertible~~control.

~~The beneficial conversion feature (“BCF”~~c) ~~attributed~~Key to the purchase of series A convertible preferred stock (“Series A Stock”) was deemed to have no value on the date of purchase because there was no public trading market for the Series A Stock, and none is expected to develop in the future. Therefore, the BCF related toparty ~~the Series A Stock was considered to have no value on the date of issuance.~~transactions

OnA ~~March~~summary ~~5, 2024, 10,000 shares~~ of ~~Series~~the ACompany’s ~~Stock~~related ~~were~~party ~~converted~~transactions ~~into~~is ~~common~~as ~~stock. There were no conversions during the year ended December 31, 2023.~~follows:

As at December 31, 2024 and 2023, 74,416 and 84,416 shares, respectively, of Series A Stock were issued and outstanding.

	2025		2024
Revenue	$	394,633	$	770,265
Lease expense payable to Formosa included in cost of goods sold		1,073,328		-
Rent expense included in general and administrative expense		2,124		4,381
Marketing expense included in general and administrative expense		71,287		-
Professional fees		259,834		225,794
Royalty expense		303,525		-
Interest expense		1,850,868		110,795
Imputed interest expense		490,630		-
Other expense		1,930,000		-
Total related party transactions	$	6,376,229	$	1,111,235

Series B preferred stock

In August 2019, the Company closed an offering of up to $3 million of units at a price of $1.00 per unit. Each unit consisted of one share of series B convertible preferred stock (“Series B Stock”) and one common stock purchase warrant (“Common Warrant”) with no expiry date. Each Series B Stock is convertible into one share of the Company’s common stock at the election of the holder.

Each Common Warrant is exercisable to purchase one share of common stock at the election of the holder at an exercise price of $2.00 per share, which offering is to be offered only to “accredited investors,” as that term is defined in Rule 501 of Regulation D of the Securities and Exchange Commission regulations.

During the year ended December 31, 2022, the Company issued 2,000,000 shares of Series B Preferred Stock valued at $52,594 as a deposit on the acquisition of LTB.

On March 22, 2023, 20,000 shares of series B convertible preferred stock (“Series B Stock”) were converted into shares of common stock at $0.0001 per share. On March 28, 2024, the Company cancelled 2,000,000 shares of Series B Stock originally issued during the year ended December 31, 2022 as a deposit on the acquisition of LTB.

As at December 31, 2024, 455,000 (December 31, 2023 - 2,455,000) shares of Series B Stock were issued and outstanding.

F-21

Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, ~~2024~~2025 AND ~~2023~~2024 (in United States dollars)

NOTE 12 - ~~STOCKHOLDERS’~~RELATED ~~DEFICIT~~PARTY TRANSACTIONS (continued)

~~Series C preferred stock~~Revenue

InDuring ~~March~~the ~~2023,~~year ~~the~~ended ~~Company~~December ~~issued~~31, ~~100~~2025,~~000~~ ~~shares~~the ofCompany ~~its~~recognized ~~Series~~revenue Cof ~~preferred~~$394,633 ~~stock~~ (~~“Series~~2024 C- ~~Stock”~~$770,265) infrom ~~connection~~D.N.S. ~~with~~CANTEK ~~the~~2019 ~~investment~~LTD in(“Cantek”), ~~LTB~~an ~~(Note~~Israeli ~~6).~~limited ~~Each~~corporation ~~share~~owned of100% ~~Series~~by CKoze, ~~Stock~~and isfor ~~convertible~~which ~~into~~Mr. ~~1,250~~Tal ~~shares~~serves ofas ~~the~~a ~~Company’s~~financial ~~common~~advisor ~~stock~~(Note 15).

~~Each~~Lease share of Series C Stock entitles the holder to 1,250 votes on all matters submitted to a vote of the shareholders; is convertible into 1,250 shares of common stock. In addition, the holders of outstanding Series C Stock will only be entitled to receive dividends upon declaration by the Board of Directors of a dividend payable on the Company’s common stock, whereupon the holders of the Series C Stock will receive a dividend on the number of shares of common stock into which each share of Series C Stock is convertible.expense

InThe ~~March 2024, the~~ Company ~~noted~~has a ~~historical~~lease ~~accounting~~with ~~treatment error whereby the 100~~Formosa,~~000~~ ~~Series~~which Cbecame ~~Stock,~~a ~~issued~~related inparty ~~March~~upon ~~2023~~the ~~shares~~appointment ~~had~~of ~~been~~its ~~recorded~~manager, atElliot ~~the~~Zemel, ~~stated~~as ~~value~~a ~~rather~~director ~~than~~of the ~~par~~Company ~~value.~~on AsMarch ~~a result~~11, ~~during~~2025. During the year ended December 31, ~~2024~~2025, the Company ~~adjusted~~incurred ~~the~~lease ~~value~~expense of ~~the Series C stock to their par value of~~ $1 ~~per share~~, ~~for a total par value of $100~~073,~~000,~~328 associated with the ~~remaining~~Formosa ~~$650~~lease,~~000~~ ofwhich ~~stated~~is ~~value~~included ~~being~~in ~~reclassified~~cost toof ~~additional~~goods ~~paid in capital~~sold.

~~As at December 31, 2024 and 2023, 100,000 shares of Series C Stock were issued and outstanding.~~Rent

~~Common~~Effective ~~stock~~February 1, 2023, the Company entered into a rental agreement granting it the right to use office space located at Suite 3600, 888 5th Avenue SW, Calgary, Alberta, Canada, T2P 3R7 for a monthly rent of CAD $500 per month. This space was provided by a company affiliated with Richard Orman (“Mr. Orman”), chairman of the Company’s board of directors. The Company ceased using the office space and accordingly stopped accruing rent expense after June 30, 2025. During the year ended December 31, 2025, the Company incurred rent expense of $2,124 (2024 - $4,381) for this space which is recorded as a general and administrative expense.

~~The~~Marketing Company is authorized to issue 5,000,000,000 shares of common stock at a par value $0.0001 per share. As at December 31, 2024, 662,501,405 (December 31, 2023 - 440,752,302) shares of common stock were issued and outstanding.expense

~~Share~~During ~~capital transactions during~~ the year ended December 31, 2025, the Company incurred marketing expense of $71,287 (2024: - $nil) with Sky Home Services LLC, a company managed by Mr. Tal, which is recorded as a general and administrative expense.

OnProfessional ~~March 5, 2024, 10,000 shares of Series A Stock were converted into 12,500,000 shares of the Company’s common stock.~~fees

On March 8, 2024, the Company issued 4,895,849 shares of common stock upon the cashless exercise of 5,000,000 Common Warrants.

	·	During the year ended December 31, 2025, the Company incurred professional expenses of $203,727 (2024 - $180,899) related to accounting fees payable to Invictus Accounting Group LLP (“Invictus”), a company which provides part-time CFO, financial reporting, and bookkeeping services to the Company. Mr. Oliver Foeste is the Managing Partner of Invictus.
	·	During the year ended December 31, 2025, the Company incurred professional expenses of $56,107 payable to Fabian Vancott (2024 - $44,895) related to legal fees. Anthony Panek who is a partner in Fabian Vancott, is also a director of the Company.

~~The~~Royalty ~~Company issued 204,353,254 of common stock from the conversion of $134,910 of convertible notes.~~expense

~~Share~~On ~~capital~~March ~~transactions~~17, ~~during~~2025, the Company and Alberta Ltd., entered into a security and royalty agreement with Koze (the “Royalty Agreement”) (Note 2), pursuant to which the Company is required to pay a monthly royalty of CAD $0.20 per gram on cannabis product sales, payable at the beginning of the month for the previous month, as additional consideration related to the lease with Formosa. Immediately upon failure to pay the royalty when due, the royalty rate increases to CAD $0.40 per gram sold for the applicable month. As of December 31, 2025, Alberta Ltd. was in default of its payment obligations, and Koze agreed to forbear from exercising its rights over the ownership interest until May 31, 2026. During the year ended December 31, ~~2023:~~2025, the Company sold 1,046,769 grams of cannabis products and incurred a royalty expense of $303,525 (2024 - $nil).

On March 22, 2023, 20,000 shares of Series B Stock were converted into 20,000 shares of the Company’s common stock.

The Company issued 166,607,680 of common stock from the conversion of convertible $222,096 notes.

F-22

Table of Contents

CANNAPHARMARX, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, ~~2024~~2025 AND ~~2023~~2024 (in United States dollars)

NOTE 12 - ~~STOCKHOLDERS’~~RELATED ~~DEFICIT~~PARTY TRANSACTIONS (continued)

~~Stock~~Interest ~~purchase warrants~~expense

A· ~~summary~~During the year ended December 31, 2025, the Company incurred interest expense on promissory and convertible notes with Mr. Tal of $82,602 (2024 - $110,795). · During the year ended December 31, 2025, the Company’s ~~stock~~incurred ~~purchase~~interest ~~warrant~~expense ~~activity~~on ispromissory asand ~~follow:~~convertible notes with Koze of $1,264,887. · During the year ended December 31, 2025, the Company incurred interest expense on promissory note with Formosa of $102,648. · During the year ended December 31, 2025, the Company incurred interest expense on rent in default with Formosa of $400,731.

	Number of stock purchase warrants			Weighted average exercise price
Stock purchase warrants outstanding December 31, 2022	#	1,497,778		$	0.79
Stock purchase warrants issued		27,224,962			0.02
Stock purchase warrants outstanding December 31, 2023	#	28,722,740		$	0.06
Stock purchase warrants issued		17,222,200			0.01
Stock purchase warrants redeemed		(5,000,000	)		0.03
Stock purchase warrants expired		(1,020,000	)		1.02
Stock purchase warrants outstanding December 31, 2024	#	39,924,940		$	0.05

Imputed interest expense

A· ~~summary~~During ofthe year ended December 31, 2025, the ~~number~~Company incurred imputed interest expense on promissory and convertible notes with Mr. Tal of $29,675 (2024 - $nil). · During the year ended December 31, 2025, the Company’s ~~stock~~incurred ~~purchase~~imputed ~~warrants~~interest ~~outstanding~~expense on promissory and ~~exercisable~~convertible ~~during~~notes with Koze of $386,231. · During the year ended December 31, ~~2024~~2025, isthe asCompany ~~follows:~~incurred imputed interest expense on promissory note with Formosa of $74,724.

Expiration date	Number of stock purchase warrants		Weighted average exercise price		Weighted average remaining life (Years)
May 10, 2026	#	477,778	$	0.30		1.35
February 15, 2028	#	12,222,200	$	0.01		3.13
November 22, 2028	#	27,224,962	$	0.02		3.89
	#	39,924,940	$	0.05

Other expense

During the year ended December 31, ~~2024~~2025, ~~17,222,200~~the ~~stock~~Company ~~purchase~~made ~~warrants~~a ~~were~~one-time ~~issued~~adjustment ~~in connection with the issuance~~ of $171,~~222 promissory notes~~930,000 ~~each~~to ~~entitling~~lease-related ~~the~~rent ~~holder~~expense due to ~~purchase~~a ~~one~~clarification ~~share~~in ofthe ~~common~~interpretation ~~stock~~ of the ~~Company~~lease atterms ~~$0.01~~for ~~per~~the ~~share~~Facility, ~~with~~which anis ~~expiration~~recorded ~~date~~as ofother ~~February~~expense ~~15,~~(Note ~~2028~~18).

~~During~~d) ~~the~~Amounts ~~year~~due ~~ended December 31, 2023, 27,224,962 stock purchase warrants, each entitling the holder~~ to ~~purchase~~related ~~one share common stock of the Company at $0.02 per share, with an expiration date of November 22, 2028, were issued in respect of the LTB transaction (Note 6).~~parties

~~During~~A ~~the~~summary ~~year~~of ~~ended December 31, 2023,~~ the Company’s ~~corrected~~related anparty ~~error~~liabilities inas ~~the~~at ~~accounting treatment associated with the stock purchase warrants that were issued during the year ended~~ December 31, ~~2019~~2025 ~~as origination fees associated with a promissory note~~ and ~~loan granted during that year. The value of the stock purchase warrants should have been expensed upon issuance. The correction of the error resulted in a $271~~2024,~~470~~ ~~increase~~is toas ~~additional paid-in capital and an equivalent decrease to opening accumulated deficit for the year ended December 31, 2023.~~follows:

NOTE 13 - REVENUE

2025

2024

Filing Compare · CANNAPHARMARX, INC.