What changed in this filing

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Item 1A. Risk Factors

2021-03-30 compared with 2020-04-14 · 227 added, 205 removed, 43 unchanged (91% of the section changed)

Item 1A Risk Factors.

In addition to all other information set out in this Report,

including our consolidated financial statements and the related notes included elsewhere in this Report, our business is subject

to a number of risks that are uniquely applicable to the cannabis business generally and specifically in the cannabis business

Other risks and uncertainties that we do not presently consider material, or of which we are not presently aware, may

become important factors that affect our future financial condition and results of operations.

Some of these risks include but

are not limited to the developing situation globally surrounding COVID-19 and its impacts on the overall global economy.

of the risks discussed below actually occur, our business, financial condition, results of operations and prospects could be materially

Risks Related to Our Cannabis Business and the

Cannabis Industry in the United States

Our proposed business is dependent on laws pertaining

to the marijuana industry

Continued development of the marijuana industry is

dependent upon continued legislative authorization and/or voter approved referenda at the state level.

Any number of factors could

slow or halt progress in this area.

In addition to all other information set

out in this Report, including our consolidated financial statements and the related notes included elsewhere in this Report, our

business is subject to a number of risks that are uniquely applicable to the cannabis business generally and specifically in the

cannabis business in Canada.

Other risks and uncertainties that we do not presently consider material, or of which we are not presently

aware, may become important factors that affect our future financial condition and results of operations.

Some of these risks include

but are not limited to the developing situation globally surrounding COVID-19 and its impacts on the overall global economy.

any of the risks discussed below actually occur, our business, financial condition, results of operations and prospects could be

materially affected.

Risks Related to Our Cannabis Business

and the Cannabis Industry in the United States

Our proposed business is dependent

on laws pertaining to the marijuana industry

Continued development of the marijuana

industry is dependent upon continued legislative authorization and/or voter approved referenda at the state level.

Any number of

factors could slow or halt progress in this area.

In addition, progress for the industry, while encouraging, is not assured.

While there may

be ample public support for legislative action, numerous factors impact the legislative process, any one of which could slow or

halt the use of marijuana, which could negatively impact our business.

there may be ample public support for legislative action, numerous factors impact the legislative process, any one of which could

slow or halt the use of marijuana, which could negatively impact our business.

Cannabis remains illegal under U.S.

The possession and use of marijuana is illegal under

The possession and use of marijuana are

illegal under U.S.

federal and certain states’

laws, which may negatively impact our business.

Use of marijuana is regulated by both the

Use of marijuana is regulated

by both the U.S.

federal government and state governments and state and U.S.

federal laws regarding marijuana are often in conflict.

law criminalizing the use of marijuana pre-empts state laws that legalize the possession and use of marijuana for medical and recreational

The Trump Administration has made statements indicating that the Trump Administration intends to take a harsher stance

on federal marijuana laws.

Any such changes in the federal government’s enforcement of current federal laws could adversely

affect our ability to possess or cultivate marijuana.

Marijuana is a Schedule 1 controlled substance under the Controlled Substance

Act (“CSA”) meaning that it has a high potential for abuse, has no currently “accepted medical use”

the United States, lacks accepted safety for use under medical supervision, and may not be prescribed, marketed or sold in the

United States.

No drug product containing natural cannabis or naturally-derived cannabis extracts have been approved by the U.S.

Federal law criminalizing the use of marijuana pre-empts state laws that legalize the possession and use of marijuana for medical

and recreational purposes.

The Trump Administration has made statements indicating that the Trump Administration intends to take

a harsher stance on federal marijuana laws.

Any such changes in the federal government’s enforcement of current federal laws

could adversely affect our ability to possess or cultivate marijuana.

Marijuana is a Schedule 1 controlled substance under the

Controlled Substance Act (“CSA”) meaning that it has a high potential for abuse, has not currently “accepted medical

in the United States, lacks accepted safety for use under medical supervision, and may not be prescribed, marketed or

sold in the United States.

No drug product containing natural cannabis or naturally-derived cannabis extracts have been approved

Food and Drug Administration for use in the U.S.

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actively enforce all federal laws applicable to cannabis.

Laws and regulations affecting the cannabis industry

are constantly changing, which could detrimentally effect are business.

Local, state and federal marijuana laws and regulations

are broad in scope and subject to evolving interpretations, which require us to incur potentially substantial costs associated

with compliance and could alter our business plans.

In addition, violations of these laws or allegations of such violations could

disrupt our business and materially affect our operations.

In addition, it is possible that regulations may be enacted in the future

that will be directly applicable to our business.

We cannot predict the nature of any such future laws, regulations, interpretations

or applications, nor can we determine what effect governmental regulations or administrative policies and procedures, when and

if promulgated, could have on our business.

Any potential growth in the cannabis industry

continues to be subject to new and changing state and local laws and regulations.

Continued development of the cannabis industry is dependent

upon continue legalization of cannabis at the state level and a number of factors could curtail or halt progress in this area,

even where there is public support for legislative action.

Any delay or halt in the passing or implementation of legislation legalizing

cannabis use, or its sale and distribution, or the re-criminalization or restrictions on cannabis use at the state level could

negatively impact our business.

We cannot predict the nature of any future laws and regulations or their interpretations or applications.

Laws and regulations affecting the

cannabis industry are constantly changing, which could detrimentally effect are business.

Local, state and federal marijuana laws

and regulations are broad in scope and subject to evolving interpretations, which require us to incur potentially substantial costs

associated with compliance and could alter our business plans.

In addition, violations of these laws or allegations of such violations

could disrupt our business and materially affect our operations.

In addition, it is possible that regulations may be enacted in

the future that will be directly applicable to our business.

We cannot predict the nature of any such future laws, regulations,

interpretations or applications, nor can we determine what effect governmental regulations or administrative policies and procedures,

when and if promulgated, could have on our business.

Any potential growth in the cannabis

industry continues to be subject to new and changing state and local laws and regulations.

Continued development of the cannabis industry

is dependent upon continue legalization of cannabis at the state level and a number of factors could curtail or halt progress in

this area, even where there is public support for legislative action.

Any delay or halt in the passing or implementation of legislation

legalizing cannabis use, or its sale and distribution, or the re-criminalization or restrictions on cannabis use at the state level

could negatively impact our business.

We cannot predict the nature of any future laws and regulations or their interpretations

or applications.

It is possible that regulations may be enacted in the future that will be materially adverse to our business.

Our potential customers, clients and companies

with which we may elect to invest directly may have difficulty accessing the services of U.S.

banks which may make it difficult

for them to operate.

Our potential customers, clients

and companies with which we may elect to invest directly may have difficulty accessing the services of U.S.

banks which may make

it difficult for them to operate.

On February 14, 2014, the U.S.

Financial Crimes Enforcement

Network (“FinCen”) issued rules allowing banks to legally provide financial services to state-licensed cannabis businesses

consistent with the Bank Secrecy Act obligations.

Crimes Enforcement Network (“FinCen”) issued rules allowing banks to legally provide financial services to state-licensed

cannabis businesses consistent with the Bank Secrecy Act obligations.

A memorandum issued by the U.S.

Justice Department to federal prosecutors reiterated

the guidance previously given, this time to the financial industry that banks can do business with legal marijuana businesses and

“may not”

Justice Department to federal

prosecutors reiterated the guidance previously given, this time to the financial industry that banks can do business with legal

marijuana businesses and “may not”

be prosecuted.

However, the FinCen guidelines fall short of the explicit legal authorization that the banking

industry had requested the government provide.

To date, it is not clear if any banks have relied on the FinCen guidelines to take

on legal cannabis companies as clients.

Because the use, sale and distribution of cannabis remains illegal under U.S.

many banks will not accept deposits from or provide other bank services to business involved with cannabis.

The inability to open

bank accounts may make it difficult for our existing and potential customers to operate.

Operational risks of the cannabis industry.

Companies involved in the cannabis industry face intense

competition, may have limited access to services of banks, may have substantial burdens on company resources due to litigation,

complaints or enforcement actions and are heavily dependent on receiving necessary permits and authorization to engage in the cultivation,

possession or distribution of cannabis.

Many of our current and potential competitors have longer operational histories, significantly

greater financial, marketing and other resources and larger client bases than us and there can be no assurances that we will be

able to successfully compete against these or other companies.

Risks Related to Our Cannabis Business and the

Cannabis Industry in Canada

The effects of the legalization of recreational

cannabis in Canada is unknown at this time.

The Government of Canada approved the Cannabis Act

(Bill C-45) which went into effect on October 17, 2018.

The Cannabis Act allows for regulated and restricted access to cannabis

for recreational adult-use in Canada.

Under the Cannabis Act, there are significant restrictions on the marketing, branding, product

formats and distribution channels allowed under the law.

However, the FinCen guidelines fall short of the explicit legal authorization

that the banking industry had requested the government provide.

To date, it is not clear if any banks have relied on the FinCen

guidelines to take on legal cannabis companies as clients.

Because the use, sale and distribution of cannabis remains illegal under

federal law, many banks will not accept deposits from or provide other bank services to business involved with cannabis.

inability to open bank accounts may make it difficult for our existing and potential customers to operate.

Operational risks of the cannabis

Companies involved in the cannabis industry

face intense competition, may have limited access to services of banks, may have substantial burdens on company resources due to

litigation, complaints or enforcement actions and are heavily dependent on receiving necessary permits and authorization to engage

in the cultivation, possession or distribution of cannabis.

Many of our current and potential competitors have longer operational

histories, significantly greater financial, marketing and other resources and larger client bases than us and there can be no assurances

that we will be able to successfully compete against these or other companies.

Risks Related to Our Cannabis Business

and the Cannabis Industry in Canada

The effects of the legalization of

recreational cannabis in Canada is unknown at this time.

The Government of Canada approved the Cannabis

Act (Bill C-45) which went into effect on October 17, 2018.

The Cannabis Act allows for regulated and restricted access to

cannabis for recreational adult-use in Canada.

Under the Cannabis Act, there are significant restrictions on the marketing, branding,

product formats and distribution channels allowed under the law.

Additional restrictions may be imposed at the provincial level.

by us to comply with the applicable regulatory requirements at the federal and provincial level could require changes to our proposed

result in regulatory or agency proceedings or investigations, increase compliance costs, fines, penalties or restrictions

on our operations or revocation of our licenses and other permits.

The recreational adult-use cannabis market in

Canada may become over supplied following the implementation of the Cannabis Act.

As a result in the surge of demand for cannabis as

a result of the implementation of the Cannabis Act, we and other cannabis producers in Canada may produce more cannabis that is

needed to satisfy the market and we may not be able to export that oversupply into other markets where cannabis use is fully legal

under all federal, state and provincial laws The available supply of cannabis could exceed demand, resulting in a decline in the

market price for cannabis.

If this were to occur, there is no assurance that we would be able to generate sufficient revenue to

result in profitability.

We are required to comply with federal, state

or provincial and local laws in each jurisdiction where we conduct our business

Various federal, state or provincial and local laws

and regulations govern our business in the jurisdictions in which we operate and propose to operate.

These laws and regulations

include those relating to health and safety and the production, management, transportation and storage of cannabis.

with these laws and regulations requires concurrent compliance with complex federal, state, provincial and local laws and regulations.

Any failure by us to comply with the applicable regulatory requirements at the federal and provincial level could require changes

to our proposed operations;

result in regulatory or agency proceedings or investigations, increase compliance costs, fines, penalties

or restrictions on our operations or revocation of our licenses and other permits.

The recreational adult-use cannabis

market in Canada may become over supplied following the implementation of the Cannabis Act.

As a result, in the surge of demand for cannabis

as a result of the implementation of the Cannabis Act, we and other cannabis producers in Canada may produce more cannabis that is needed

to satisfy the market and we may not be able to export that oversupply into other markets where cannabis use is fully legal under all

federal, state and provincial laws thus the available supply of cannabis could exceed demand, resulting in a decline in the market price

for cannabis.

If this were to occur, there is no assurance that we would be able to generate sufficient revenue to result in profitability.

We are required to comply with federal,

state or provincial and local laws in each jurisdiction where we conduct our business

Various federal, state or provincial and

local laws and regulations govern our business in the jurisdictions in which we operate and propose to operate.

These laws and

regulations include those relating to health and safety and the production, management, transportation and storage of cannabis.

Compliance with these laws and regulations requires concurrent compliance with complex federal, state, provincial and local laws

and regulations.

Compliance with these laws and regulations requires significant financial and managerial resources.

A determination that we are

not in compliance with these laws and regulations could harm our business.

It is impossible to predict the cost or effect of such

laws and regulations on our current and future business.

We may seek to enter into strategic alliances

or acquisitions with third parties that we believe will have a beneficial impact on our business and there are risks that such

alliances or acquisitions will not enhance our business in the desired manner.

We may expand, or in the future enter into, alliances

or acquisitions with third parties that we believe will complement or enhance our existing business.

Our ability to take advantage

of existing or new alliances or acquisitions is dependent upon a number of factors such as the availability of suitable candidates

and working capital.

Future strategic alliances or acquisitions could result in the incurrence of debt, costs and contingent liabilities.

In addition, there can be no assurances that future alliances or acquisitions will achieve the expected benefits to our business

or that we will be able to consummate future strategic alliances or acquisitions on satisfactory terms, or at all.

We may not be able to identify and execute future

acquisitions or to successfully manage the impact of such transactions on our business.

Acquisitions and/or other strategic business combinations

involve many risks including (i) disruption of our existing business;

(ii) the distraction of management away from the ongoing

oversight of our existing business operations;

A determination

that we are not in compliance with these laws and regulations could harm our business.

It is impossible to predict the cost or

effect of such laws and regulations on our current and future business.

We may seek to enter into strategic

alliances or acquisitions with third parties that we believe will have a beneficial impact on our business and there are risks

that such alliances or acquisitions will not enhance our business in the desired manner.

We may expand, or in the future enter into,

alliances or acquisitions with third parties that we believe will complement or enhance our existing business.

Our ability to take

advantage of existing or new alliances or acquisitions is dependent upon a number of factors such as the availability of suitable

candidates and working capital.

Future strategic alliances or acquisitions could result in the incurrence of debt, costs and contingent

In addition, there can be no assurances that future alliances or acquisitions will achieve the expected benefits to

our business or that we will be able to consummate future strategic alliances or acquisitions on satisfactory terms, or at all.

We may not be able to identify and

execute future acquisitions or to successfully manage the impact of such transactions on our business.

Acquisitions and/or other strategic business

combinations involve many risks including (i) disruption of our existing business;

(ii) the distraction of management

away from the ongoing oversight of our existing business operations;

(iii) incurring additional indebtedness;

and (iv) increasing the scope and complexity

of our operations.

A strategic transaction may result in unforeseen obstacles or costs in implementing the transaction or integrating

any acquired business into our existing operations.

Our cannabis cultivation business is subject

to risks associated with an agricultural business.

One of the major aspects of our business operations

is cultivating cannabis which is an agricultural process.

As such, that part of our business is subject to the risks associated

with the agricultural business, including crop failure presented by weather, plant diseases, and similar agricultural risks.

we will grow our cannabis products indoors under climate-controlled conditions, there can be no assurances that natural elements,

such as insects and plant diseases, will not disrupt our production activities or have an adverse effect on our business.

We may not be able to attract or retain key personnel

with sufficient experience in the cannabis industry and we may not be able to attract, develop and retain additional employees

required for our development and future success.

Our success is dependent to a great extent on the performance

of our management team and certain key employees and our ability to attract, develop, motivate and retain highly qualified and

skilled employees who are in high demand.

The loss of the services of any key personnel, or an inability to attract other suitably

qualified persons when needed, could prevent us from executing our business plan and we may not be able to find adequate replacements

on a timely basis, if at all.

Currently, we do not maintain any key-person insurance on the lives of any of our key personnel.

Furthermore, each director and officer of a company that holds a license is subject to the requirement to obtain and maintain a

security clearance from Canada Health under the Cannabis Act.

A security clearance is valid for not more than five years and must

be renewed before the expiration of a current security clearance.

There is no assurance that any of our existing personnel who

presently or may in the future require a security clearance will be able to obtain or renew such clearance or that new personnel

who require a security clearance be able to obtain one.

A failure by an individual in a key operational position to maintain or

renew a security clearance could result in a reduction or complete suspension of our operations.

As at December 31, 2019, we had three employees

Rubin Schindermann, our Chief Executive Officer, Azmatali Mehrali, our Chief Financial Officer and Saul Niddam, Chief Innovation

Officer, and also serves as our subsidiary, CannaKorp’s Chief Executive Officer.

On January 9, 2020, Anthony Zarcone was

named co-Chief Executive Officer to serve with Mr.

and (iv) increasing

the scope and complexity of our operations.

A strategic transaction may result in unforeseen obstacles or costs in implementing

the transaction or integrating any acquired business into our existing operations.

Our cannabis cultivation business

is subject to risks associated with an agricultural business.

One of the major aspects of our business

operations is cultivating cannabis which is an agricultural process.

As such, that part of our business is subject to the risks

associated with the agricultural business, including crop failure presented by weather, plant diseases, and similar agricultural

Although we will grow our cannabis products indoors under climate-controlled conditions, there can be no assurances that

natural elements, such as insects and plant diseases, will not disrupt our production activities or have an adverse effect on our

We may not be able to attract or

retain key personnel with sufficient experience in the cannabis industry and we may not be able to attract, develop and retain

additional employees required for our development and future success.

Our success is dependent to a great extent

on the performance of our management team and certain key employees and our ability to attract, develop, motivate and retain highly

qualified and skilled employees who are in high demand.

The loss of the services of any key personnel, or an inability to attract

other suitably qualified persons when needed, could prevent us from executing our business plan and we may not be able to find

adequate replacements on a timely basis, if at all.

Currently, we do not maintain any key-person insurance on the lives of any

of our key personnel.

Furthermore, each director and officer of a company that holds a license is subject to the requirement to

obtain and maintain a security clearance from Canada Health under the Cannabis Act.

A security clearance is valid for not more

than five years and must be renewed before the expiration of a current security clearance.

There is no assurance that any of our

existing personnel who presently or may in the future require a security clearance will be able to obtain or renew such clearance

or that new personnel who require a security clearance be able to obtain one.

A failure by an individual in a key operational position

to maintain or renew a security clearance could result in a reduction or complete suspension of our operations.

As at December 31, 2020, we had three employee

which include Anthony Zarcone, Chief Executive Officer.

On January 9, 2020, Anthony Zarcone

was named co-Chief Executive Officer to serve with Mr.

Schindermann.

On January 24, 2020, Mr.

Schindermann submitted his resignation

as co- Chief Executive Officer;

however, he remains a director of the Company.

On February 14, 2020, the Company terminated the

employment of Azmatali Mehrali as Chief Financial Officer.

At the present time, the Company has not appointed a new Chief Financial

Schindermann submitted

his resignation as co- Chief Executive Officer;

however, he remained a director of the Company.

Further to the explanation in Note

14 in the consolidated financial statements, effective August 14, 2020, Mr.

Schindermann resigned as a director of the

Company and from any and all administrative and executive positions with the Company’s subsidiaries.

On February 14, 2020, the Company

terminated the employment of Azmatali Mehrali as Chief Financial Officer.

At the present time, the Company has not appointed a

new Chief Financial Officer.

Alexander Starr, our former president, terminated his employment agreement effective February 22,

We have contracted with a number of independent contractors

and consultants to provide a range of information technology and marketing services who do not receive cash compensation, but receive

shares of our common stock as compensation.

We have contracted with a number of independent

contractors and consultants to provide a range of information technology and marketing services who do not receive cash compensation

but receive shares of our common stock as compensation.

This mitigates any need for full or part-time employees for these services.

1 unchanged sentence

Our subsidiary CannaKorp Inc.

holds the following patents:

following patents:

International Patent Application No.

PCT/US20115/013778

METHODS AND APPARATUS FOR PRODUCING HERBAL VAPO

METHODS AND APPARATUS FOR PRODUCING HERBAL

January 30, 2015

4 unchanged sentences

B1411.70000US00

In addition, CannaKorp has proprietary rights to certain

trade names, trademarks and service marks which include WISP POD™;

In addition, CannaKorp has proprietary

rights to certain trade names, trademarks and service marks which include WISP POD™;

CANNACUP™;

and WISP™.

also has certain proprietary formulas and processes involving herbal formulas and flavors, proprietary herbal production processes

and an herbal base developed to suspend active ingredients for optimal vaporization.

CannaKorp also has certain proprietary formulas and processes involving herbal formulas and flavors, proprietary herbal production

processes and an herbal base developed to suspend active ingredients for optimal vaporization.

At the present time, CannaKorp has failed to meet its annuity payments

as well as maintenance fees on the 2 referenced patents.

Although, there has been a lapse and these patents remain unmaintained, there

still remains the possibility of CannaKorp reinstating these patents if done so in a reasonable amount of time.

At this time, management

is determining the value maintaining these patents will provide the company.

Once management has completed their assessment, the company

will proceed accordingly.

advance in that determined direction moving forward.

Additionally, CannaKorp is actively seeking a JV Partner

joint venture partner and/ or licensor to assist in both marketing and launching the Wisp Vaporizer and Wisp Pods in both the US and Canadian

Legal Cannabis/ HEMP markets.

Corporate Facilities

We lease our administrative and

executive offices at a minimum monthly rent of $876 plus applicable taxes located at 55 Administration Road, Unit 13,

Vaughan, Ontario, Canada.

We lease our administrative

and executive offices located at 20 Hempstead Drive, Hamilton, Ontario, Canada.

Emerging Growth Company

We are an “emerging growth company”

as defined in the Jumpstart Our Business Startups Act 0f 2012 (“JOBS Act”) and may take advantage of certain exemptions

from certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging

growth companies”

included but not limited to, not being required to comply with auditor attestation requirements of Section

404(b) of the Sarbanes-Oxley Act and exemptions from the requirements of holding a nonbinding advisory vote of shareholders on

executive compensation and any golden parachute payments not previously approved.

We will remain an “emerging growth

company”

until the earliest of (i) the last day of the fiscal year during which our revenues exceed $1 billion;

date on which we issue more than $1 billion of non-convertible debt in a three year period;

(iii) the last day of the fiscal year

following the fifth anniversary of the date of our first sale of our common equity securities pursuant to an effective registration

statement filed pursuant to the Securities Act of 1933,as amended;

or (iv) when the market value of our common stock that is held

by non-affiliated exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.

To the extent we continue to qualify

as a “smaller reporting company”, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, after

we cease to qualify as an “emerging growth company”, certain of the exemptions available to us as an “emerging

We are an “emerging

growth company”

as defined in the Jumpstart Our Business Startups Act 0f 2012 (“JOBS Act”) and may take advantage

of certain exemptions from certain exemptions from various reporting requirements that are applicable to other public companies

that are not “emerging growth companies”

included but not limited to, not being required to comply with auditor attestation

requirements of Section 404(b) of the Sarbanes-Oxley Act and exemptions from the requirements of holding a nonbinding

advisory vote of shareholders on executive compensation and any golden parachute payments not previously approved.

We will remain an “emerging

growth company”

until the earliest of (i) the last day of the fiscal year during which our revenues exceed $1 billion;

(ii) the date on which we issue more than $1 billion of non-convertible debt in a three year period;

(iii) the last day

of the fiscal year following the fifth anniversary of the date of our first sale of our common equity securities pursuant to an

effective registration statement filed pursuant to the Securities Act of 1933,as amended;

or (iv) when the market value of

our common stock that is held by non-affiliated exceeds $700 million as of the last business day of our most recently completed

second fiscal quarter.

To the extent we continue

to qualify as a “smaller reporting company”, as defined in Rule 12b-2 under the Securities Exchange Act of 1934,

as amended, after we cease to qualify as an “emerging growth company”, certain of the exemptions available to us as

an “emerging growth company”

may continue to be available to us as “smaller reporting company”

including (i) not being required

to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act;

and (ii) scaled executive compensation

and (iii) the requirement to provide only two years of audited consolidated financial statements instead of three.

(i) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley

and (ii) scaled executive compensation disclosures;

and (iii) the requirement to provide only two years of audited

consolidated financial statements instead of three.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors