What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2021-03-30 compared with 2020-04-14 · 1716 added, 1245 removed, 482 unchanged (86% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder

Matters and Issuer Purchases of Equity Securities

Our common stock is currently quoted on the OTCQB inter-dealer

quotation service maintained by OTC Markets Group Inc.

Market for Registrant’s Common Equity, Related

Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is currently quoted on

the OTCQB inter-dealer quotation service maintained by OTC Markets Group Inc.

under the symbol “

The following table sets forth

the quarterly high and low sales prices of our common stock for the last two fiscal years.

Such prices are inter-dealer quotations

without retail mark-ups, mark-downs or commissions, and may not represent actual transactions.

The following

table sets forth the quarterly high and low sales prices of our common stock for the last two fiscal years.

Such prices are inter-dealer

quotations without retail mark-ups, mark-downs or commissions, and may not represent actual transactions.

Quarter ended

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Fiscal year 2019

Our common stock is subject to Rule 15g-9 of the

Exchange Act, known as the Penny Stock Rule which imposes requirements on broker/dealers who sell securities subject to the rule

to persons other than established customers and accredited investors.

For transactions covered by the rule, brokers/dealers must

make a special suitability determination for purchasers of the securities and receive the purchaser’s written agreement to

the transaction prior to sale.

The Securities and Exchange Commission (“SEC”) also has rules that regulate broker/dealer

practices in connection with transactions in “penny stocks.”

Penny stocks generally are equity securities with a price

of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided

that current price and volume information with respect to transactions in that security is provided by the exchange or system.

The Penny Stock Rules requires a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to

deliver a standardized risk disclosure document prepared by the SEC that 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.

These disclosure requirements have

the effect of reducing the level of trading activity in the secondary market for our common stock.

As a result of these rules,

investors may find it difficult to sell their shares.

Our common stock is subject to Rule 15g-9

of the Exchange Act, known as the Penny Stock Rule, which imposes requirements on broker/dealers who sell securities subject

to the rule to persons other than established customers and accredited investors.

For transactions covered by the rule, brokers/dealers

must make a special suitability determination for purchasers of the securities and receive the purchaser’s written agreement

to the transaction prior to sale.

The Securities and Exchange Commission (“SEC”) also has rules that regulate

broker/dealer practices in connection with transactions in “penny stocks.”

Penny stocks generally are equity securities

with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ

system, provided that current price and volume information with respect to transactions in that security is provided by the exchange

The Penny Stock Rules requires a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from

the rules, to deliver a standardized risk disclosure document prepared by the SEC that 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.

These disclosure

requirements have the effect of reducing the level of trading activity in the secondary market for our common stock.

of these rules, investors may find it difficult to sell their shares.

As of the date of this report, we have

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Dividend Policy

To date, we have not declared or paid any dividends

on our common stock.

We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock.

is anticipated that our future earnings will be retained to finance our continuing development.

Although we intend to retain our

earnings, if any, to finance the exploration and growth of our business, our Board of Directors has the discretion to declare and

pay dividends in the future.

Payment of dividends in the future will depend upon our earnings, capital requirements, and any other

factors that our Board of Directors deems relevant.

To date, we have not declared or paid any

dividends on our common stock.

We currently do not anticipate paying any cash dividends in the foreseeable future on our common

It is anticipated that our future earnings will be retained to finance our continuing development.

Although we intend to

retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors has the discretion to

declare and pay dividends in the future.

Payment of dividends in the future will depend upon our earnings, capital requirements,

and any other factors that our Board of Directors deems relevant.

Recent Sales of Unregistered Securities

During the quarter ended December 31, 2019, we sold the following

securities without registration under the Securities Act of 1933, as amended.

In November, we issued 454,545 shares of common stock

at prices of $0.022 per share to one (1) private investor.

In December, we issued 1,243,107 shares at a price

of $0.0151 per share, respectively, upon the partial conversion of outstanding convertible promissory notes held by two note holders.

The foregoing issuances of unregistered securities

were undertaken in reliance on the exemption from registration at Section 4(a)(2) of the Securities Act of 1933, as amended, for

transactions not involving a public offering and in some instances in reliance on Regulation S under the Securities Act of 1933,

as amended, for transactions with non-US residents residing abroad.

During the quarter ended December 31, 2020, we issued no

shares of common or preferred stock.

Selected Financial Data.

There is no selected financial data required to be

filed for a smaller reporting company.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

There is no selected financial data required

to be filed for a smaller reporting company.

Management’s Discussion

and Analysis of Financial Condition and Results of Operations

As of December 31, 2020, the Company had

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had sustained net loss of $7,073,871, and had an accumulated deficit of $26,536,495.

The Company’s independent auditors have issued

a report raising substantial doubt about the Company’s ability to continue as a going concern.

At present, the Company has

no operations and the continuation of the Company as a going concern is dependent upon financial support from its stockholders,

its ability to obtain necessary equity financing to continue operations and/or to successfully locate and negotiate with a business

entity for the combination of the target company with the Company.

Balance sheet as at December 31, 2019 and 2018

At December 31, 2019 we had cash of $10,487 compared

to $303,438 as at December 31, 2018.

The decrease is primarily due to payment of capital work in progress, software development,

consulting expenses and professional and legal expenses offset by proceeds received from private placements, note issuances and

loan during the year.

Prepaid asset

At December 31, 2019 we had prepaid expenses of 37,702

The Company’s independent auditors have issued a report raising

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

At present, the Company has begun its operations

at its Simcoe Facility cultivating Premium Cannabis and started generating revenue within the Canadian wholesale cannabis market.

However, the continuation of the Company as a going concern is dependent upon these operations successfully generating cashflow

for the Company, financial support from its stockholders, its ability to obtain necessary equity financing to continue operations

and/or to successfully locate and negotiate with a business entity for the combination of the target company with the Company.

Balance sheet as at December 31,

2020 and 2019

At December 31, 2020 we had cash of

$172,597 compared to $10,487 as at December 31, 2019.

The balance represents the retainer fees paid to our lawyer and security deposit for

the leased land for the facility to produce Medical Marijuana .

The increase is primarily due to proceeds received from loans during

the year offset by payment of capital work in progress, salary and wages, consulting expenses and professional expenses.

Prepaid asset

At December 31, 2020 we had prepaid

expenses of $46,775 compared to $37,702 as at December 31, 2019.

The balance represents the security deposit for the leased

land for the facility to produce Medical Marijuana .

Sales tax recoverable

At December 31, 2019, we had $48,744 of gross

sales tax recoverable compared to $294,033 as at December 31, 2018.

This is due to sales tax paid by the subsidiary on

expenses incurred during the year which are recoverable from the government.

We recorded an allowance of 25% of the sales tax recoverable

of $12,186 (2018 - $75,902) stemming from the potential uncollectible balances within the outstanding sales tax recoverable amount.

At December 31, 2020, the Company

had $95,386 of gross sales tax recoverable compared to $48,744 as at December 31, 2019.

This is due to sales tax paid by the

subsidiary on expenses incurred during the year which are recoverable from the government.

The Company has recorded an allowance in

the amount of $19,924 (2019:

$12,186) stemming from the potential uncollectible balances within the outstanding sales tax recoverable

Goodwill and intangible assets

Goodwill represents the excess of the cost of an acquisition

over the fair value of the Company’s share of the net identifiable assets of our subsidiaries at the date of acquisition.

In addition, intangible assets represent the Exclusive

License Agreement entered with cGreen.

The value of the license is based on 10 million common stock valued at the market rate of

the stock prevailing on August 8, 2019 and the royalty payments in the amount of $2,243,000.

The asset is amortized over the terms

of license i.e.

During the quarter ended December 31, 2019, the intangible asset was written off based on our management’s

review and evaluation of the intangible asset’s recoverability.

Goodwill represents the excess of the cost

of an acquisition over the fair value of the Company’s share of the net identifiable assets of our subsidiaries at the date

of acquisition.

In addition, intangible assets represent

the Exclusive License Agreement entered with cGreen.

The value of the license is based on 10 million common stock valued at the

market rate of the stock prevailing on August 8, 2019 and the royalty payments in the amount of $2,243,000.

The asset is amortized

over the terms of license i.e., 10 years.

During the quarter ended December 31, 2019, the intangible asset was written off

based on our management’s review and evaluation of the intangible asset’s recoverability.

Fixed assets and capital work in progress

The Company initiated construction on its

44,000 square foot cannabis cultivation facility in September of 2017.

Since then, extensive demolition and structural upgrades

have been carried out at the site.

As at December 31, 2019, the Company has capitalized $7,713,444 in payments to multiple vendors

for the construction of the facility.

On May 1, 2019, the Company completed the construction

of its 44,000 square foot cannabis cultivation facility and on May 14, 2019, the Company submitted a Site Evidence Package to Health

Canada as part of the steps to obtain the license to cultivate cannabis at the Company’s facility.

On October 8, 2019, the

Company was granted licenses to cultivate, process and sell cannabis pursuant to the Cannabis Act (Bill C-45).

For additional detail for breakdown in asset class,

refer to Note 10 in consolidated financial statements.

The Company’s subsidiary, Canary,

initiated construction on its 44,000 square foot cannabis cultivation facility in September of 2017.

Since then, extensive

demolition and structural upgrades have been carried out at the site.

During the year ended December 31, 2020, the Company

has capitalized $42,505 (2019:

$3,510,401) in payments to multiple vendors for the upgrade and renovation of the facility.

On May 1, 2019, the Company completed

the construction of its 44,000 square foot cannabis cultivation facility and on May 14, 2019, the Company submitted a Site

Evidence Package to Health Canada as part of the steps to obtain the license to cultivate cannabis at the Company’s facility.

On October 8, 2019, the Company was granted licenses to cultivate, process and sell cannabis pursuant to the Cannabis

Act (Bill C-45).

For additional detail for breakdown in

asset class, refer to Note 10 in consolidated financial statements.

Accounts payable and accrued liabilities

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as at December 31, 2020, primarily represents consulting and construction services related to capital work in progress amounting

to $1,079,498, interest on promissory notes and loan amounting to $53,945, marketing services cost amounting to $18,115, valuation

fee accrual of $3,500, accounting fee accrual of $2,500 and review fee accrual of $3,000, and outstanding professional fees of

Accounts payable amounting to $1,739,765 as at December

31, 2018, primarily represents consulting and construction services related to capital work in progress amounting to $ 1,330,693,

interest on promissory notes amounting to $133,082, advertising and promotion services amounting to $332, marketing services cost

amounting to $13,650, valuation fee accrual of $3,500, accounting fee accrual of $2,500 and review fee accrual of $3,000, and outstanding

professional fees of $54,391.

to 141,935, interest on promissory notes and loans amounting to $403,865, and outstanding plus accrued professional fees of $1,002,098.

Accounts payable amounting to $2,494,588

as at December 31, 2019, primarily represents consulting and construction services related to capital work in progress amounting

to $1,079,498, interest on promissory notes and loan amounting to $53,945, and outstanding plus accrued professional fees of $951,000.

Payable to related parties

At December 31, 2019 we had $431,660 of amount

payable to related parties as compared to $403,620 as at December 31, 2018.

The balance represents management services fee

outstanding to the managers of the company and non-interest bearing, unsecured loans from our officers including the

outstanding amount of $40,000 to be paid to a former shareholder of CannaKorp as part of the settlement agreement.

The above balance also includes a loan provided

by one of the Company’s shareholder up to $769,900 (CAD $1,000,000).

The loan bears an annual interest rate of 16%, is

secured by all assets owned by the Company and its subsidiaries and matures in one year that is December 20, 2020.

December 31, 2019, the Company was advanced $269,465 (CAD $350,000).

Interest expense charged in amount of $1,279 (CAD

$1,688) is included in interest and bank charges on the consolidated statement of loss and comprehensive loss and accrued

interest is included in accounts payable and accrued liabilities on the consolidated balance sheet.

For additional detail, refer to Note 13 in consolidated

financial statements.

Shareholder advances

Shareholder advances represents expenses

paid by the owners from their personal funds.

The amount of advance as at December 31, 2019 and 2018 was $nil and $209,046, respectively.

The amounts repaid during the years ended December 31, 2019 and 2018 were $203,945 and $281,927, respectively and $133,423 was

settled through issuance of shares of common stock.

Refer to Note 13 for details in the consolidated financial statements.

As at December 31, 2020, we had $9,934,960

of amount payable to related parties as compared to $431,660 as at December 31, 2019.

The balance primarily represents loans

provided by the Company’s shareholders and a related party, CLI, management services fee outstanding to the managers of the

company, and outstanding amount of $65,000 to be paid to a former shareholder of CannaKorp as part of the settlement agreement.

For additional detail, refer to Note 14

in consolidated financial statements.

Shareholder advances and receivable

Shareholder advances represent expenses

paid by the owners from personal funds.

The amount of advance as at December 31, 2020 and 2019 were $nil while the amount

of receivable as at December 31, 2020 and 2019 were $nil and $2,025, respectively.

The amounts repaid during the year ended

December 31, 2020 and 2019 were $nil and $203,945, respectively.

During the year ended December 31, 2020 and 2019, $nil

and $133,423 was settled through issuance of shares of common stock.

Refer to Note 15 for details in the consolidated financial

Convertible promissory notes payable

During quarter ended March 31, 2019, we entered into

an agreement with an investor and issued them a convertible promissory note (Note Q) amounting to $103,000, respectively.

The outstanding

amount under the notes are due on or before August 16, 2020.

During quarter ended December 31, 2019, we entered

into an agreement with an investor and issued them a convertible promissory note (Note R) amounting to $168,300, respectively.

The outstanding amount under the notes are due on or before April 21, 2021.

During the year ended December 31, 2019, we settled

five notes (Note M, N, O, P and Q) with cash payments and recorded a loss of $149,493 as a result of these settlements.

We accrued net interest on promissory notes

during the year ended December 31, 2019 amounting to $75,348 (2018:

During the quarter ended June 30,

2020, the Company settled the outstanding balance of Note R in full with a cash payment and recorded a loss of $43,156 as settlement

of debt in the consolidated statement of operations.

The loss is due to the prepayment penalty as per the note agreement.

the Company converted the outstanding principal and accrued interest balance of Note I during quarter ended June 30, 2020.

Interest amounting to $12,182 was accrued

for the year ended December 31, 2020 (2019:

Principal amount outstanding as at December 31,

was $200,488 of which $32,188 is current portion while $168,300 is the non-current portion (2018:

$479,079 –

all current portion).

Income statement for the years ended December 31,

2020 and 2019 was $3,128 and $200,488, respectively.

As at December 31, 2020, the entire balance was current while in comparison,

as at December 31, 2019, $32,188 is current portion while $168,300 is the non-current portion.

Income statement for the years ended

December 31, 2020 and 2019

Revenues for the years ended December 31,

2020 and 2019

Revenues for the years ended December 31, 2019 and

We generated nil revenue during year ended December

Revenue of 263 during year ended December 31, 2018 which represents membership fee for the Company’s chess gaming

Expenses for the years ended December 31, 2019 and

Expenses amounting to $10,367,670 for the

year ended December 31, 2019 are primarily comprised of advisory and consultancy fee of $639,611, management services fee of $1,481,284,

salaries and wages of $1,333,729, legal and professional fee of $364,421, software development expense of $nil, marketing expenses

of $16,592, rent of $183,105 and expenses related to office of $534,671 together with the fair valuation impact of convertible

notes amounting to $(407,999) of the convertible promissory notes and accretion expense of $367,585.

In addition, due to the number

of settlements during the year, a loss on settlement of debt was $1,428,282 and impairment of intangible asset and goodwill in

the amount of $2,149,613 and $1,485,925, respectively.

Expenses amounting to $1,900,341 for the year ended

December 31, 2018 are primarily comprised of advisory and consultancy fee of $77,159, management services fee of $362,500, salaries

and wages of $332,337, legal and professional fee of $314,482, software development expense of $32,246, website development and

marketing expenses of $91,852, rent of $36,072 and expenses related to office of $34,440 together with the fair valuation impact

of convertible notes amounting to $323,946 of the convertible promissory notes.

We generated revenue of $30,000 during year ended

December 31, 2020 as compared to $nil revenue during year ended December 31, 2019.

The revenue represents the sale of Wisp™

vaporizer and pod units.

In addition, Canary generated revenue of

$108,930 (though its investment in JVCo) during the quarter end of December 31, 2020 and is represented as share of losses

from joint venture on the consolidated statement of operations.

The revenue represents the sale of cannabis product.

revenue was sold to one customer.

Refer to Note 11 for additional details.

Expenses for the years ended December 31,

2020 and 2019

Our expenses are classified primarily into advisory

and consultancy fee, management fees, salaries and wages, legal and professional fees, and amortization and depreciation expense.

significant decrease in operating expenses for the year ended December 31, 2020 compared to 2019 is due to lower amount of activity

compared to prior year, the management’s continuous efforts to control and reduce expenses, and Canary’s investment in the

joint venture which is incurring the operation expenses of Canary.

Expenses for the year ended December 31,

2020 primarily represented consulting fees of $69,466 (2019:

$639,611), management fees of $286,978 (2019:

$1,481,284), salary

and wages amounting in total to $175,509 (2019:

$1,333,729), legal and professional charges of $477,539 (2019:

$364,421) comprising

legal, review, accounting and Edgar agent fee, Amortization and depreciation expense amounting to $292,944 (2019:

$111,081), office

and general expenses amounting to $136,462 (2019:

Other income and expenses comprised, change

in fair value of derivative and warranty liability amounting to ($3,228,622) (2019:

($407,999)), loss on settlement of debt amounting

to $3,347,630 (2019:

$1,428,282), interest and bank charges amounting to $514,028 (2019:

$85,553), accretion expenses of $27,704

$367,585) related to promissory notes and share of loss from joint venture of $595,750 (2019:

In addition, impairment

of intangible asset and goodwill in the amount of $nil (2019:

$2,149,613) and $4,413,742 (2019:

$1,485,925), respectively.

Liquidity and Capital Resources

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requirements.

We have relied on equity financing and personal funds

for our operations.

The proceeds may not be sufficient to effectively develop our business to the fullest extent to allow us to

maximize our revenue potential, in which case, we will need additional capital.

We will need capital to allow us to invest in development.

The Company anticipates that its future operations will generate positive cash flows starting in 2021 provided that it is successful

in obtaining additional financing in the foreseeable future.

Consolidated Financial Statements and Supplementary

We have relied on equity financing and

personal funds for our operations.

The proceeds may not be sufficient to effectively develop our business to the fullest extent

to allow us to maximize our revenue potential, in which case, we will need additional capital.

We will need capital to allow us to invest

in development.

The Company anticipates that its future operations will generate positive cash flows starting in 2021 provided

that it is successful in obtaining additional financing in the foreseeable future.

Consolidated Financial Statements

and Supplementary Data

TARGET GROUP INC.

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Board of Directors and Shareholders

of Target Group Inc.

31, 2020 and 2019

REPORT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

FINANCIAL STATEMENTS

Consolidated Balance

Consolidated Statements

of Operations and Comprehensive Loss

Consolidated Statements

of Stockholders’

Consolidated Statements

of Cash Flows

Notes to the Consolidated

Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

To the Board of Directors and Shareholders of Target Group, Inc.

Opinion on the Financial Statements

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balance sheets of Target Group, Inc.

and Subsidiaries (“the Company”) as of December 31, 2019 and 2018, and the related

consolidated statements of operations and comprehensive loss, changes in stockholder’s equity, and cash flows for each of

the years in the two-year period ended December 31, 2019, 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, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended

December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

(“the Company”) as of December 31, 2020 and 2019, and the related consolidated statements

of operations and comprehensive income loss, changes in stockholders’

equity, and cash flows for each of the years in the two-year

period ended December 31, 2020, 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, 2020 and 2019 and the results

of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting

principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have

been prepared assuming that the Company will continue as a going concern.

As discussed in Note 3 to the financial statements, the

Company has generated minimal revenue since inception and has significant recurring operating losses.

These factors raise substantial

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

Management’s plans in regard to these matters are

also described in Note 3.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As discussed in Note 3 to the financial statements, the Company has

had minimal revenue since inception, has continual sustained operating losses, and significant working capital and accumulated deficits.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard

to these matters are also described in Note 3.

The financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

Basis for Opinion

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of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based

on our audits.

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 audits 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 audits, 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.

Our responsibility is to express an opinion on the Company’s financial statements based on our

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 audits, 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 audits 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 audits provide a reasonable

basis for our opinion.

Our audits 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 financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current period audit of the financial statements that were 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 matters below, providing separate opinions

on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Goodwill

Description of the Critical Audit Matter

As discussed in Note 12 to the consolidated

financial statements, goodwill is tested for impairment annually, or more frequently if impairment indicators arise.

During the year ended

December 31, 2020, the Company recorded a $4.5 million goodwill impairment charge.

Auditing management's goodwill impairment

test was complex and highly judgmental due to the significant estimation required to determine the fair value of the goodwill and underlying

business unit.

In particular, the fair value estimate was sensitive to significant assumptions, such as the Company’s financial

forecast, discount rate, and operating costs, which are impacted by expectations about future market and economic conditions.

How the Critical Audit Matter Was Addressed in the Audit

To test the estimated fair value of

the Company’s goodwill and underlying business unit, we performed audit procedures that included, among other things, assessing

methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

addition, we assessed the current financial forecast in light of management’s current plans, and we assessed the historical basis

of management’s estimates based on its current operating results that would result from changes in the assumptions.

We have served as the Company’s auditor since 2017.

Spokane, Washington

April 14, 2020

March 30, 2021

TARGET GROUP INC.

CONSOLIDATED BALANCE SHEETS

(Restatement - Note 20)

Current assets

Restricted cash

Accounts receivable, no allowance

Inventory [Note 8]

Prepaid asset [Note 6]

Prepaid asset

Sales tax recoverable, net of allowance [Note 7]

Due from shareholders [Note 14]

Shareholder receivable [Note 15]

Receivable from joint venture [Note 11]

Other receivable [Note 14]

Total current assets

1 unchanged sentence

Fixed assets [Note 10]

Capital work in progress [Note 10]

Intangible assets [Note 9]

Goodwill [Note 12]

Investment in joint venture [Note 11]

Operating lease right-of-use assets [Note 16]

Total long term assets

3 unchanged sentences

Accounts payable and accrued liabilities [Note 13]

Payable to related parties [Note 13]

Payable to related parties, net [Note 14]

Royalty payable [Note 9]

1 unchanged sentence

Shares to be issued [Note 18]

Deferred revenue

Deferred revenue [Note 1]

Convertible promissory notes, net [Note 17]

1 unchanged sentence

Deferred rent - Current portion [Note 16]

Operating lease liability - Current portion [Note 16]

Settlement payable - Current portion [Note 9]

Total current liabilities

2 unchanged sentences

Convertible promissory notes, net - Non-current portion [Note 17]

Operating lease liability - Non-current portion [Note 16]

Warrant liability [Notes 18 and 20]

Settlement payable - Non-current portion [Note 9]

Payable to related parties - Non-current portion, net [Note 14]

Total long term liabilities

Total liabilities

Commitments and contingencies [Note 17 & 19]

Stockholders' equity

Contingencies and commitments [Note 19]

Stockholders' (deficiency) equity

Preferred stock, $0.0001 par value, 20,000,000 shares authorized;

6 unchanged sentences

Accumulated comprehensive loss

Total stockholders' equity

Total liabilities and stockholders' equity

The accompanying notes are an integral part of these consolidated financial

Total stockholders' (deficiency) equity

Total liabilities and stockholders' (deficiency) equity

The accompanying notes are an integral part of these consolidated

financial statements.

TARGET GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS

OF OPERATIONS AND COMPREHENSIVE LOSS

December 31, 2020

December 31, 2019

COST OF GOOD SOLD

OPERATING EXPENSES

3 unchanged sentences

Legal and professional fees

Software development expense

Marketing expenses

Rent and utilities

1 unchanged sentence

Amortization and depreciation expense

Operating lease expense [Note 16]

Office and general

Total operating expenses

OTHER INCOME AND EXPENSES

Change in fair value of derivative liability

OTHER EXPENSES (INCOME)

Change in fair value of derivative and warrant liability

Loss on forgiveness/settlement of debt

3 unchanged sentences

Accretion expense

Other (income)

Allowance for sales tax recoverable [Note 7]

Allowance for sales tax recoverable

Impairment of inventory [Note 8]

1 unchanged sentence

Impairment of goodwill [Note 12]

Share of losses from joint venture [Note 11]

Debt issuance cost [Note 14]

Total other expenses

Net loss before income taxes

(10,367,670 )

Income taxes [Note 21]

(10,367,670 )

Foreign currency translation adjustment

Comprehensive loss

(10,870,259 )

Loss per share - basic and diluted

Weighted average shares - basic and diluted

The accompanying notes are an integral part of these consolidated financial

The accompanying notes are an integral part of these consolidated

financial statements.

TARGET GROUP INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’

FOR THE YEARS ENDED DECEMBER 31, 2019 and 2018

CONSOLIDATED STATEMENT

OF CHANGES IN STOCKHOLDERS’

Preferred stock

2 unchanged sentences

As at December 31,

Shares issued as consideration for management services [Note 13]

Shares issued on conversion of convertible promissory notes [Note 16]

Shares issued as consideration for consideration of the intellectual property rights [Note

Shares issued as consideration for consulting services and marketing expenses [Note 16]

Change due to extinguishment of derivative liability on debt conversion

Shares issued on settlement of liability - Black Bridge [Note 16]

Shares issued as consideration for private placement [ Note 16]

Shares and warrants issued for acquisition of subsidiary [Note 11 and 16]

issued as consideration for management and consulting services [Note 18]

issued on conversion of convertible promissory notes [Note 17 and 18]

issued for acquisition of subsidiary [Note 12]

issued as consideration for private placement [Note 18]

(40,875,940 )

of change in functional currency [Note 18]

issued as consideration for consideration of the intellectual property rights [Note 18]

to issue as consideration for intangible assets [Note 9]

of shares [Note 18]

issued on settlement of debt [Note 12 and 18]

Change due to extinguishment

of derivative liability on debt conversion

(10,367,670 )

Foreign currency translation

As at December 31, 2018

Shares issued as consideration for management and consulting services [Note 13]

Shares issued on conversion of convertible promissory notes [Note 16]

Shares issued for acquisition of subsidiary [Note 11]

Shares issued as consideration for private placement [ Note 16]

Effect of change in functional currency [Note 16]

Shares issued as consideration for consideration of the intellectual property rights [Note

Shares to issue as consideration for intangible assets [Note 9]

Cancellation of shares [Note 16]

Shares issued on settlement of debt [Note 13]

Change due to extinguishment of derivative liability on debt conversion

As at December 31, 2019 (Reported)

(19,462,624 )

Reclassification

of warrant liability [Note 20]

As at December 31, 2019 (Restated)

(19,462,624 )

of shares [Note 18]

(11,000,000 )

issued as consideration for consideration of the intellectual property rights [Note 18]

to issue as consideration for intangible assets [Note 9]

issued on conversion of convertible promissory notes [Note 18]

to the amount of shares to be issued for past private placements [Note 18]

and warrants issued pursuant to debt purchase and assignment agreement [Note 14 and 18]

Foreign currency translation

As at December 31, 2020

The accompanying notes are an integral part of these consolidated financial

(26,536,495 )

The accompanying notes are an integral part of these consolidated

financial statements.

TARGET GROUP INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2019 and 2018

CONSOLIDATED STATEMENT

OF CASH FLOWS

December 31, 2020

3 unchanged sentences

Adjustment for non-cash items

Change in fair value of derivative

Loss on forgiveness/settlement of debt

Change in fair value of derivative and warrant liability

Loss on forgiveness

Day one interest expense

Accretion expense

Shares issued/to be issued for advisory and other services

Penalty charged on convertible promissory notes

Shares and warrants issued/to be issued for advisory and other services

Allowance for sales tax recoverable

Depreciation expense

Amortization and depreciation expense

Deferred rent

Operating lease expense

Investment loss from joint venture

Debt issuance cost

Impairment of inventory

2 unchanged sentences

Changes in operating assets and liabilities:

Change in inventory

Change in prepaid asset

1 unchanged sentence

Change in other assets

Change in other receivable

Change in accounts payable and accrued liabilities

Change in operating lease liability, net

Net cash used in operating activities

1 unchanged sentence

Cash acquired upon acquisition

Amount invested on fixed assets/capital work in progress

Purchase of intangible assets

Amount invested on capital work in progress

Investment in joint venture

Net cash used in investing activities

FINANCING ACTIVITIES

Utilization (repayment) of bank overdraft facility

(Repayment) utilization of bank overdraft facility

Proceeds from loans from related parties

Settlement of related party loan

Loan to joint venture

Repayment of shareholder advances

3 unchanged sentences

Proceeds from private placements

Payment for settlement payable

Net cash provided by financing activities

Net (decrease) increase in cash during the period

Net increase (decrease) in cash and restricted cash during the year

Effect of foreign currency translation

Cash, beginning of year

Cash, end of year

Cash and restricted cash, beginning of year

Cash and restricted cash, end of year

NON-CASH INVESTING AND FINANCING ACTIVITIES

2 unchanged sentences

Shares issued as consideration for acquisition

SUPPLEMENTARY CASH FLOW INFORMATION

Cash paid for interest

Cash paid for taxes

The accompanying notes are an integral part of these consolidated financial

The accompanying notes are an integral part of these consolidated

financial statements.

TARGET GROUP INC.

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(“Target Group”

or “the

Company”) was incorporated on July 2, 2013 under the laws of the state of Delaware to engage in any lawful corporate undertaking,

including, but not limited to, selected mergers and acquisitions.

or “the Company”) was incorporated on July 2, 2013 under the laws of the state of Delaware to engage in any lawful

corporate undertaking, including, but not limited to, selected mergers and acquisitions.

Target Group Inc.

is a diversified and vertically integrated,

progressive company with focus on both national and international presence.

The Company owns and operates Canary Rx Inc, a final-stage,

Canadian licensed producer, regulated under The Cannabis Act.

Canary Rx Inc, operates a 44,000 square foot facility located in

Norfolk County, Ontario, and has partnered with Dutch breeder, Serious Seeds, to cultivate exclusive & world class proprietary

The Company has begun structuring multiple international production and distribution platforms and intends to continue

rapidly expanding its global footprint as it focuses on building an iconic brand portfolio whose focus aims at developing cutting

edge Intellectual Property among the medical and recreational cannabis markets.

Target Group is committed to building industry-leading

companies that transform the perception of cannabis and responsibly elevate the overall consumer experience.

The Company’s current business is to produce,

manufacture, distribute, and conduct sales of cannabis products.

As of the current year end, the company has not produced, manufactured,

distributed or sold any cannabis products.

In May, 2014, the Company effected a change in control

by the redemption of the stock held by its original shareholders, the issuance of shares of its common stock to new shareholders,

the resignation of its original officers and directors and the appointment of new officers and directors.

On July 6, 2015, the Company filed its form S-1/A,

to amend its form S-1 previously filed on January 26, 2015 and December 11, 2014.

The prospectus relates to the offer and sale

of 1,500,000 shares of common stock (the “Shares”) of the Company, $0.0001 par value per share, offered by the holders

thereof (the “Selling Shareholder Shares”), who are deemed to be statutory underwriters.

The selling shareholders will

offer their shares at a price of $0.50 per share, until the Company’s common stock is listed on a national securities exchange

or is quoted on the OTC Bulletin Board (or a successor);

after which, the selling shareholders may sell their shares at prevailing

market or privately negotiated prices, including (without limitation) in one or more transactions that may take place by ordinary

broker’s transactions, privately-negotiated transactions or through sales to one or more dealers for resale.

On July 13, 2015, the Company received a notice of

effectiveness from the SEC for the registration of its shares.

On July 3, 2018, the Company filed an amendment in

its Articles of association to change its name to Target Group Inc.

The Company was able to secure an OTC Bulletin Board symbol

CBDY from Financial Industry Regulatory Authority (FINRA).

On June 27, 2018, the Company entered into an Agreement

and Plan of Share Exchange (“Exchange Agreement”) with Visava Inc., a private Ontario, Canada corporation (“Visava”).

Visava owns 100% of Canary Rx Inc., a Canadian corporation that holds a leasehold interest in a parcel of property located in Ontario’s

Garden Norfolk County for the production of cannabis.

The Exchange Agreement provides that, subject to its

terms and conditions, the Company issued to the Visava shareholders an aggregate of 25,500,000 shares of the Company’s Common

Stock in exchange for all of the issued and outstanding common stock held by the Visava shareholders.

In addition of its Common

Stock, the Company issued to the Visava shareholders, prorata Common Stock Purchase Warrants purchasing an aggregate of 25,000,000

shares of the Company’s Common Stock at a price per share of $0.10 for a period of two years following the issuance date

of the Warrants.

Upon the closing of the Exchange Agreement, the Visava shareholders held approximately 46.27% of the issued and

outstanding Common Stock of the Company and Visava will continue its business operations as a wholly-owned subsidiary of the Company.

is a diversified and vertically

integrated, progressive company with focus on both national and international presence.

The Company owns and operates Canary Rx Inc, Canadian

licensed producer, regulated under The Cannabis Act.

Canary Rx Inc, operates a 44,000 square foot facility located in Norfolk County,

Ontario, and has partnered with Dutch breeder, Serious Seeds, to cultivate exclusive & world class proprietary genetics.

Company has begun structuring multiple international production and distribution platforms and intends to continue rapidly expanding its

global footprint as it focuses on building an iconic brand portfolio whose focus aims at developing cutting edge Intellectual Property

among the medical and recreational cannabis markets.

Target Group is committed to building industry-leading companies that transform the

perception of cannabis and responsibly elevate the overall consumer experience.

The Company’s current business is

to produce, manufacture, distribute, and conduct sales of cannabis products.

As of the current year end, the company has produced

and sold cannabis products in the amount of $108,930 through its investment in a joint venture.

On July 3, 2018, the Company filed

an amendment in its Articles of association to change its name to Target Group Inc.

The Company was able to secure an OTC Bulletin

Board symbol CBDY from Financial Industry Regulatory Authority (FINRA).

On June 27, 2018, the Company entered

into an Agreement and Plan of Share Exchange (“Exchange Agreement”) with Visava Inc., a private Ontario, Canada corporation

(“Visava”).

Visava owns 100% of Canary Rx Inc., a Canadian corporation that holds a leasehold interest in a parcel

of property located in Ontario’s Garden Norfolk County for the production of cannabis.

The Exchange Agreement provides that, subject

to its terms and conditions, the Company issued to the Visava shareholders an aggregate of 25,500,000 shares of the Company’s

Common Stock in exchange for all of the issued and outstanding common stock held by the Visava shareholders.

In addition of its

Common Stock, the Company issued to the Visava shareholders, prorata Common Stock Purchase Warrants purchasing an aggregate of

25,000,000 shares of the Company’s Common Stock at a price per share of $0.10 for a period of two years following the issuance

date of the Warrants.

Upon the closing of the Exchange Agreement, the Visava shareholders held approximately 46.27% of the issued

and outstanding Common Stock of the Company and Visava will continue its business operations as a wholly-owned subsidiary of the

The transaction was closed effective August 2, 2018.

Effective January 25, 2019, the Company entered into

an Agreement and Plan of Share Exchange (“Exchange Agreement”) with CannaKorp Inc., a Delaware corporation (“CannaKorp”).

Company had previously entered into a Letter of Intent with CannaKorp dated November 30, 2018 which was disclosed in the Company’s

report on Form 8-K filed December 4, 2018.

The Exchange Agreement provides that, subject to its

terms and conditions, the Company issued to the CannaKorp shareholders an aggregate of 30,407,412 shares of the Company’s

During the quarter ended, September 30, 2020, all of the

warrants expired, none were exercised.

Effective January 25, 2019, the Company

entered into an Agreement and Plan of Share Exchange (“Exchange Agreement”) with CannaKorp Inc., a Delaware corporation

(“CannaKorp”).

Company had previously entered into a Letter of Intent with CannaKorp dated November 30, 2018 which

was disclosed in the Company’s report on Form 8-K filed December 4, 2018.

The Exchange Agreement provides that, subject

to its terms and conditions, the Company issued to the CannaKorp shareholders an aggregate of 30,407,412 shares of the Company’s

common stock, based on a price per share of $0.10, in exchange for 100% of the issued and outstanding common stock of CannaKorp

9 unchanged sentences

The transaction was closed effective March 1, 2019.

Effective August 8, 2019, the Company entered into

an Exclusive License Agreement (“License Agreement”) with cGreen, Inc., a Delaware corporation (“cGreen”).

Effective August 8, 2019, the Company

entered into an Exclusive License Agreement (“License Agreement”) with cGreen, Inc., a Delaware corporation (“cGreen”).

The License Agreement grants to the Company an exclusive license to manufacture and distribute the patent-pending THC antidote

1 unchanged sentence

in the United States, Europe and the Caribbean.

The term of the license is ten (10) years and four (4) months

The term of the license was ten (10) years and four (4) months

from the effective date of August 8, 2019.

In consideration of the license, the Company will issue 10,000,000 shares of its common

stock as follows:

In consideration of the license, the Company would issue 10,000,000 shares of its

common stock as follows:

(i) 3,500,000 within ten (10) days of the effective date;

(ii) 3,500,000 shares on January 10,

3,000,000 shares not later than June 10, 2020.

In addition, the Company will pay cGreen royalties of 7% of the net sales of the

licensed products and 7% of all sublicensing revenues collected by the Company.

The Company will pay cGreen an advance royalty

of $300,000.00 within ten (10) days of the effective date;

and (iii) 3,000,000 shares not later than June 10, 2020.

In addition, the Company would pay cGreen royalties of

7% of the net sales of the licensed products and 7% of all sublicensing revenues collected by the Company.

The Company would pay

cGreen an advance royalty of $300,000 within ten (10) days of the effective date;

$300,000 on January 10, 2020;

and $400,000.00 on or before June 10,

2020 and $500,000 on or before November 10, 2020.

All advance royalty payments will be credited against the royalties owed by the

Company through December 31, 2020.

The Company is arbitration with cGreen for breach of the terms of the License Agreement, refer to Note

9 for additional details.

In addition, during the quarter ended December 31, 2019, the intangible asset was written off based on

management’s review and evaluation of its recoverability.

On September 17 2019, the CannaKorp has signed an agreement

with Nabis Holding (Nabis), where Nabis will purchase 200 wisp unit and 5000 pods per quarter from the Company.

CannaKorp hereby

agrees to sell to Nabis, one CannaMatic.

The purchase price for the one CannaMatic shall be $4,500 USD in cash to be paid by Nabis

to CannaKorp within 3 calendar days of Nabis obtaining regulatory approval of its vertically integrated licenses and $40,500 or

the balance owing to be paid by Nabis to CannaKorp, within 180 days of the Effective Date.

As of the date of this report, the equipment to Nabis has been

shipped and the 180 days mark has not passed.

Once when it does, the Company will invoice Nabis.

on or before June 10, 2020 and $500,000 on or before November 10, 2020.

All advance royalty payments would be credited

against the royalties owed by the Company through December 31, 2020.

During the quarter ended December 31, 2019, the

intangible asset was written off based on management’s review and evaluation of its recoverability.

During the quarter ended

June 30, 2020, the Company was in arbitration with cGreen for the breaches of the terms of the License Agreement, however,

through an early mediation, both companies reached to a settlement agreement to settle the breaches of the contract on July 27,

2020 (“Effective Date”).

As per the settlement agreement, the License Agreement has been terminated and the Company

does not have to issue the 10 million shares nor pay the outstanding royalty payable in the amount of $1,191,860.

As consideration,

the Company paid $130,000 within 30 days of the Effective Date and will pay $100,000 in monthly installments of $10,000 commencing

in April 2021 to cGreen resulting in a gain on settlement in the amount of $1,704,860.

Effective September 17, 2019, CannaKorp

entered into a Purchase, Licensing and Distribution Agreement (“Agreement”) with Nabis Arizona Property LLC

of Scottsdale, Arizona (“Nabis”) concerning the distribution of CannaKorp’s Wisp ™

Vaporizer and Wisp™

Pods in Arizona.

The term of the Agreement is three (3) years with automatic renewals

for additional one-year periods unless the Agreement is terminated pursuant to its terms.

Nabis is required to pay CannaKorp $45,000

for the equipment needed to manufacture the WISP™

Pods, of which $4,500 will be paid within three (3) calendar

days of Nabis obtaining regulatory approval of its vertically integrated license and the balance of $40,500 within 180 days of

the effective date of the Agreement.

Under the Agreement, Nabis is licensed

to manufacture the WISP™

Pods and to sell the WISP™

Pods in conjunction with the sale of the WISP™

Nabis is required to meet minimum quarterly orders of two hundred (200) WISP™

Vaporizers and five thousand

(5,000) WISP™

Pods cartridges .

Nabis is licensed to sell the WISP™

Vaporizer and the WISP™

Pods to end users in Arizona, excluding Amazon, eBay, Walmart or other multistate/national brick and mortar or online sales.

CannaKorp has granted Nabis a right of first refusal to obtain an exclusive license in Michigan and in Washington for the same

rights granted to Nabis in Arizona.

During the year ended December 31,

2020, the equipment to Nabis has been shipped and the Company has provided Nabis an additional 360 days before invoicing Nabis

for the equipment.

Once when the additional period has passed, the Company will invoice Nabis.

Additionally, the first quarter

1 unchanged sentence

5000 complete Wisp Pods) for online and retail distribution in the Arizona Market.

Nabis has had delays in rolling out all the

products for which they have exclusive licenses with, and the Company expects their next order will likely be in the next 45 to

Due to financial strain and difficulties

during the pandemic Nabis was forced to restructure their company in its entirety.

This has caused strain on the financial position

of Nabis and has affected their ability to fulfill their commitments in the agreement signed with CannaKorp.

At this time, the

partnership has since been terminated and all of CannaKorp’s CannaMatic machinery has now been sent back to CannaKorp.

As of the date of this report, the Company does not have any operations, employees or corporate offices based in United States.

Effective May 14, 2020, Canary entered

into a Joint Venture Agreement (“Joint Venture”) with 9258159 Canada Inc., a corporation organized under the laws of

the Province of Ontario, Canada (referred to as “Thrive”) and 2755757 Ontario Inc., a corporation organized under the

laws of the Province of Ontario, Canada (referred to as “JVCo”).

Canary and Thrive each hold 50% of the voting equity

interest in JVCo.

The term of the Joint Venture is five (5) years from its effective date of May 14, 2020.

On June 15, 2020, the Company, its

first–tier subsidiaries Visava Inc.

(“Visava”) CannaKorp Inc.

(“CannaKorp”), and the Company’s

second-tier subsidiary, Canary Rx Inc.

(“Canary”), entered into a Debt Purchase and Assignment Agreement (“Agreement”)

with CL Investors Inc.

(“CLI”), a corporation organized under the laws of the Province of Ontario, Canada.

was preliminary date of the agreement and the agreement was not finalized until the later date as indicated below.

The CEO of the

Company, is the Secretary of CLI, a director of the Company, is a shareholder of CLI and the brother of CEO, is the President and

sole director of CLI therefore the below loan from CLI is classified under related party transactions.

Pursuant to the Agreement, CLI purchased

from the Company for the sum of $2,277,660, (CAD $2,900,000) a debt obligation owing from Canary to the Company in the principal

balance of $8,325,240 (CAD $10,600,000 (“Canary Debt”)).

Upon receipt of the consideration, the Company loaned the

full sum to Canary under terms of an unsecured, non-interest-bearing promissory note, subject to a covenant by the Company not

to take any collection action so long as the Canary Debt remains unpaid to CLI.

As at December 31, 2020, $78,540 (CAD $100,000)

is still outstanding from CLI which is presented as other receivable on the consolidated balance sheet.

As a condition of the closing of the Agreement,

the terms of the Canary Debt were amended to provide for interest at 5% per annum with a maturity date of 60 months from the date

of the Agreement (“Term”).

The Canary Debt will be repaid according to the following schedule:

In the first year of the Term, Canary will pay CLI the greater of $887,502 (CAD $1,130,000) and fifty percent (50%) of the Net Revenue (hereinafter defined), provided that where the latter amount exceeds the former amount, Canary will, by the end of such first year, pay CLI no less than the former amount and Canary will, within thirty (30) days following the end of such first year, pay CLI the balance of such amount owing for such first year;

In the second year of the Term, Canary will pay CLI the greater of $1,649,340 (CAD $2,100,000) and fifty percent (50%) of the Net Revenue, by way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2021, provided that where the latter amount exceeds the former amount, Canary will, within thirty (30) days following the end of such second year, pay CLI the balance of such amount owing for such second year;

In the third year

of the Term, Canary will pay CLI the greater of $2,528,988 (CAD $3,220,000) and fifty percent (50%) of the Net Revenue, by

way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2022,

provided that where the latter amount exceeds the former amount, Canary will, by the end of such third year, pay CLI no less

than the former amount and Canary will, within thirty (30) days following the end of such third year, pay CLI the balance of

the such payments owing for such third year;

In the fourth year of the Term, Canary will pay CLI the greater of $2,419,032 (CAD $3,080,000) and fifty percent (50%) of the Net Revenue, by way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2023, provided that where the latter amount exceeds the former amount, Canary will Canary will, within thirty (30) days following the end of such fourth year, pay CLI the balance of such amount owing for such fourth year;

In the fifth year of the Term, Canary will pay CLI the balance owing under this Note, by way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2024 for an amount calculated by dividing twelve (12) into the sum of all amounts owing under this Note at the beginning of the fifth year of the Term on account of Principal and Interest, provided that where there are further amounts owing under this Note at the end of such fifth year, Canary will pay CLI all such further amounts within five (5) days following the end of such fifth year.

For the purposes of this Note, “Net

Revenue”

will mean any and all revenue generated from Canary’s Licensed Facility (hereinafter defined) to which it

is entitled net of applicable taxes and third-party expenses.

The repayment of the Canary Debt, as amended,

is guaranteed by Visava and the Company’s wholly-owned subsidiary CannaKorp Inc.

and secured by (i) a general security

interest in the assets of the Company, Canary, Visava and CannaKorp Inc., respectively;

and (ii) a pledge by the Company of

all of the issued and outstanding common stock of Canary, Visava and CannaKorp Inc.

held by the Company.

In addition to the foregoing

guarantees, security interest and stock pledge, CLI has been granted an option, in lieu of repayment of the amended Canary Debt,

to demand, in its sole and absolute discretion the transfer, assignment and conveyance of 75% of the issued and outstanding capital

stock of Visava and Canary.

Furthermore, the President and sole director of CLI has been granted an option to acquire the remaining

25% of the issued and outstanding capital stock of Visava and Canary.

Effective August 14, 2020, the Agreement

was amended (“Amendment”) to provide that CLI will purchase from Rubin Schindermann, a director of the Company, 500,000

shares of the Company’s Series A Preferred Stock in consideration of the payment by CLI to Rubin Schindermann of $78,540

(CAD $100,000) and the issuance to Schindermann of 10,000,000 shares of the Company’s common stock.

In consideration of the

foregoing, Mr., Schindermann resigned as a director of the Company and from any and all administrative and executive positions

with the Company’s subsidiaries Visava Inc., Canary Rx Inc.

and CannaKorp Inc., respectively.

In addition, the Company issued

Common Stock Purchase Warrant for 10,000,000 shares of Target common stock to CLI as consideration for the Agreement.

Note 14 for additional details on warrants.

The combined impact of both transactions resulted in debt issuance cost of $251,518.

This debt issuance cost will be amortized over the term of the debt on straight line basis.

The transactions contemplated by the Agreement

and the Amendment closed on August 14, 2020.

BASIS OF PRESENTATION AND CONSOLIDATION

The summary of significant accounting policies presented

below is designed to assist in understanding the Company’s consolidated financial statements.

Such consolidated financial

statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity

and objectivity.

These accounting policies conform to accounting principles generally accepted in the United States of America

(“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying consolidated financial

The consolidated financial statements include the accounts

of the Company and its wholly-owned subsidiary, Visava Inc.

The summary of significant accounting policies

presented below is designed to assist in understanding the Company’s consolidated financial statements.

Such consolidated

financial statements and accompanying notes are the representations of the Company’s management, who are responsible for

their integrity and objectivity.

These accounting policies conform to accounting principles generally accepted in the United States

of America (“GAAP”) in all material respects and have been consistently applied in preparing the accompanying consolidated

financial statements.

The consolidated financial statements include

the accounts of the Company and its wholly-owned subsidiary, Visava Inc.

and CannaKorp, Inc.

Significant intercompany accounts and transactions

have been eliminated upon consolidation.

Significant intercompany accounts

and transactions have been eliminated upon consolidation.

GOING CONCERN

6 unchanged sentences

financing from its members or other sources, as may be required.

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern;

The accompanying consolidated financial

statements have been prepared assuming that the Company will continue as a going concern;

however, the above condition raises substantial

3 unchanged sentences

that may result should the Company be unable to continue as a going concern.

In order to maintain its current level of operations,

the Company will require additional working capital from either cash flow from operations, sale of its equity or issuance of debt.

In order to maintain its current level

of operations, the Company will require additional working capital from either cash flow from operations, sale of its equity or

issuance of debt.

However, the Company currently has no commitments from any third parties for the purchase of its equity.

If the Company is unable

to acquire additional working capital, it will be required to significantly reduce its current level of operations.

Company is unable to acquire additional working capital, it will be required to significantly reduce its current level of operations.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of consolidated financial statements

in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities

and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts

of revenues and expenses during the reporting periods.

The preparation of consolidated financial

statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets

and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the

reported amounts of revenues and expenses during the reporting periods.

Actual results could differ from those estimates.

Cash and cash equivalents include cash on hand and

on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less.

Cash and cash equivalents include cash

on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of

90 days or less.

The Company did not have cash equivalents as of December 31, 2020 and 2019.

ACCOUNTS RECEIVABLE

Accounts receivable consists of amounts due to the

Company from customers as a result of the Company’s normal business activities.

Accounts receivable is reported on the balance

sheets net of an estimated allowance for doubtful accounts.

The Company establishes an allowance for doubtful accounts for estimated

uncollectible receivables based on historical experience, assessment of specific risk, review of outstanding invoices, and various

assumptions and estimates that are believed to be reasonable under the circumstances, and recognizes the provision as a component

of selling, general and administrative expenses.

Uncollectible accounts are written off against the allowance after appropriate

collection efforts have been exhausted and when it is deemed that a balance is uncollectible.

As of December 31, 2019, the Company

expects to collect these balances completely and therefore has not created any allowance for it.

Inventory is stated at the lower of cost or net

realizable value, cost being determined on a weighted average cost basis, and market being determined as the lower of cost or

net realizable value.

The Company records write-downs of inventory that is obsolete or in excess of anticipated demand or

market value based on consideration of product lifecycle stage, technology trends, product development plans and assumptions

about future demand and market conditions.

Actual demand may differ from forecasted demand, and such differences may have a

material effect on recorded inventory values.

Inventory write-downs are charged to cost of revenue and establish a new cost

basis for the inventory.

Restricted cash represents deposits made to the Company’s bank as a requirement to use the bank’s credit card which not available

for immediate or general business use.

ACCOUNT RECEIVABLE

Account receivable consists of amounts

due to the Company from customers as a result of the Company’s normal business activities.

Account receivable is reported

on the balance sheets net of an estimated allowance for doubtful accounts.

The Company establishes an allowance for doubtful accounts

for estimated uncollectible receivables based on historical experience, assessment of specific risk, review of outstanding invoices,

and various assumptions and estimates that are believed to be reasonable under the circumstances, and recognizes the provision

as a component of selling, general and administrative expenses.

Uncollectible accounts are written off against the allowance after

appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible.

As of December 31,

2020, the Company expects to collect these balances completely and therefore has not created any allowance for it.

Inventory is stated at the lower of cost

or net realizable value, cost being determined on a weighted average cost basis, and market being determined as the lower of cost

or net realizable value.

The Company records write-downs of inventory that is obsolete or in excess of anticipated demand or market

value based on consideration of product lifecycle stage, technology trends, product development plans and assumptions about future

demand and market conditions.

Actual demand may differ from forecasted demand, and such differences may have a material effect

on recorded inventory values.

Inventory write-downs are charged to cost of revenue and establish a new cost basis for the inventory.

The cost is determined on the basis of the average cost or first-in, first-out methods.

Fixed assets are reported at cost, less

accumulated depreciation.

Depreciation is calculated using the straight-line method over the estimated useful lives of assets,

commencing when the assets become available for productive use, based on the following estimated useful lives:

Depreciation is calculated using the following

terms and methods:

Furniture & office equipment

Straight-line

Machinery & equipment

Straight-line

Leasehold improvements

Straight-line

An item of equipment is derecognized upon disposal or when no

future economic benefits are expected from its use.

Any gain or loss arising from derecognition of the asset (calculated as the

difference between the net disposal proceeds and the carrying value of the asset) is included in the profit or loss in the period

the asset is derecognized.

The assets’

residual values, useful lives and methods of depreciation are reviewed at each reporting

date, and adjusted prospectively, if appropriate.

GOODWILL AND INTANGIBLE ASSETS

Goodwill and other identifiable intangible assets with

indefinite lives that are not being amortized, such as trade names, are tested at least annually for impairment and are written

down if impaired.

Identifiable intangible assets with finite lives are amortized over their estimated useful lives and are reviewed

for impairment whenever facts and circumstances indicate that their carrying values may not be fully recoverable.

The Company evaluates the recoverability of the infinite-lived

intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may

not be recoverable.

Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted

cash flows the assets are expected to generate.

If such review indicates that the carrying amount of intangible assets is not recoverable,

the carrying amount of such assets is reduced to fair value.

Goodwill and other identifiable intangible

assets with indefinite lives that are not being amortized, such as trade names, are tested at least annually for impairment and

are written down if impaired.

Identifiable intangible assets with finite lives are amortized over their estimated useful lives

and are reviewed for impairment whenever facts and circumstances indicate that their carrying values may not be fully recoverable.

The Company evaluates the recoverability

of the infinite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount

of such assets may not be recoverable.

Recoverability of these assets is measured by a comparison of the carrying amounts to the

future undiscounted cash flows the assets are expected to generate.

If such review indicates that the carrying amount of intangible

assets is not recoverable, the carrying amount of such assets is reduced to fair value.

REVENUE RECOGNITION

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as an “emerging growth company”.

Since the Company did not have any contracts as of the effective day, therefore,

there was no material impact on the consolidated financial statements upon adoption of the new standard.

Revenue is recognized

when performance obligations under the terms of the contracts with our customers are satisfied.

Our performance obligation generally

consists of the promise to sell our finished products to our customers, wholesalers, distributors or retailers.

Control of the

finished products is transferred upon shipment to, or receipt at, our customers' locations, as determined by the specific terms

of the contract.

Since the Company did not have any contracts as of the effective day, therefore, there

was no material impact on the consolidated financial statements upon adoption of the new standard.

Revenue is recognized when performance

obligations under the terms of the contracts with our customers are satisfied.

Our performance obligation generally consists of

the promise to sell our finished products to our customers, wholesalers, distributors or retailers.

Control of the finished products

is transferred upon shipment to, or receipt at, our customers' locations, as determined by the specific terms of the contract.

Once control is transferred to the customer, we have completed our performance obligation, and revenue is recognized.

The Company generated nil revenue during year ended

December 31, 2019.

Revenue of 263 during year ended December 31, 2018 which represents membership fee for the Company’s chess

gaming website.

Deferred revenue is due to a shipment sent to one of

the Company’s distributors.

However, since control has not been transferred and the performance obligation has not been completed,

revenue has not been recognized and proceeds received are classified as deferred revenue.

The Company generated revenue of $30,000

during year ended December 31, 2020 as compared to $nil revenue during year ended December 31, 2019.

The revenue represents

the sale of Wisp™

vaporizer and pod units and since the customer have received the units and there are no further obligations

as per the agreement, revenue was recognized.

In addition, Canary generated revenue of

$108,930 (though its investment in JVCo) during the quarter end of December 31, 2020 and is represented as share of losses

from joint venture on the consolidated statement of operations.

The entire revenue was sold to one customer.

The revenue represents

the sale of cannabis product.

Since the customer have received the product and there are no further obligations as per the agreement,

revenue was recognized.

Refer to Note 11 for additional details.

Deferred revenue is due to a shipment sent

to one of the Company’s distributors.

However, since control has not been transferred and the performance obligation has

not been completed, revenue has not been recognized and proceeds received are classified as deferred revenue.

FOREIGN CURRENCY TRANSLATION

The functional currency of the Company’s Canadian-based

subsidiary is the Canadian dollar and the US-based parent is the U.S.

In addition, effective April 1, 2019, the Company

changed its functional currency from United States Dollar to Canadian Dollar thereby having an impact on additional paid in capital

and accumulated comprehensive income (loss).

The presentation currency of the Company has remained unchanged at United States

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.

Monetary assets and liabilities denominated in foreign currencies

are translated using the exchange rate prevailing at the balance sheet date.

Non-monetary assets and liabilities are translated

using the historical rate on the date of the transaction.

All exchange gains or losses arising from translation of these foreign

currency transactions are included in net income (loss) for the year.

In translating the consolidated financial statements of

the Company and its Canadian subsidiaries from their functional currency into the Company’s reporting currency of United

States dollars, balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and

income and expense accounts are translated using an average exchange rate prevailing during the reporting period.

resulting from the translation, if any, are included in cumulative other comprehensive income (loss) in stockholders’

The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the

impact of foreign currency fluctuations.

SOFTWARE DEVELOPMENT COSTS

The costs incurred in the preliminary stages of development

are expensed as incurred.

Once an application has reached the development stage, internal and external costs, if direct and incremental,

are capitalized until the application is substantially complete and ready for its intended use.

These costs are amortized using

the straight-line method over the estimated economic useful life of 5 years starting from when the application is substantially

complete and ready for its intended use.

The functional currency of the Company’s

Canadian-based subsidiary is the Canadian dollar and the US-based parent is the U.S.

In addition, effective April 1,

2019, the Company changed its functional currency from United States Dollar to Canadian Dollar thereby having an impact on additional

paid in capital and accumulated comprehensive income (loss).

The presentation currency of the Company has remained unchanged at

United States Dollar.

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.

Monetary assets and liabilities denominated in foreign

currencies are translated using the exchange rate prevailing at the balance sheet date.

Non-monetary assets and liabilities are

translated using the historical rate on the date of the transaction.

All exchange gains or losses arising from translation of these

foreign currency transactions are included in net income (loss) for the year.

In translating the consolidated financial statements

of the Company and its Canadian subsidiaries from their functional currency into the Company’s reporting currency of United

States dollars, balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income

and expense accounts are translated using an average exchange rate prevailing during the reporting period.

Adjustments resulting

from the translation, if any, are included in cumulative other comprehensive income (loss) in stockholders’

has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign

currency fluctuations.

CONCENTRATION OF RISK

Financial instruments that potentially subject the

Company to concentrations of credit risk consist principally of cash.

The Company places its cash with high quality banking institutions.

The Company did not have a cash balances in excess of the Federal Deposit Insurance Corporation limit as of December 31, 2019 (December

The Company had excess cash balances in excess of the Federal Deposit Insurance Corporation limit).

Financial instruments that potentially

subject the Company to concentrations of credit risk consist principally of cash.

The Company places its cash with high quality

banking institutions.

The Company did not have a cash balances in excess of the Federal Deposit Insurance Corporation limit as

of December 31, 2020 and 2019.

Under ASC 740, “Income Taxes,”

tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial

statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities

are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are

expected to be recovered or settled.

Valuation allowances are established when it is more likely than not that some or all of the

deferred tax assets will not be realized.

As of December 31, 2019, there were no deferred taxes due to the uncertainty of the realization

of net operating loss or carry forward prior to expiration.

deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between

the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets

and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary

differences are expected to be recovered or settled.

Valuation allowances are established when it is more likely than not that

some or all of the deferred tax assets will not be realized.

As of December 31, 2020, there were no deferred taxes due to

the uncertainty of the realization of net operating loss or carry forward prior to expiration.

OPERATING LEASES

The Company leases office space and the production

facility under operating lease agreements.

The lease term begins on the date of initial possession of the leased property for purposes

of recognizing lease expense on a straight-line basis over the term of the lease.

Lease renewal periods are considered on a lease-by-lease

basis and are generally not included in the initial lease term.

The Company leases office space and the

production facility under operating lease agreements.

The lease term begins on the date of initial possession of the leased property

for purposes of recognizing lease expense on a straight-line basis over the term of the lease.

Lease renewal periods are considered

on a lease-by-lease basis and are generally not included in the initial lease term.

LOSS PER COMMON SHARE

Basic loss per common share excludes dilution and

is computed by dividing net loss by the weighted average number of common shares outstanding during the period.

Diluted loss per

common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised

or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the entity.

promissory notes, warrants and preferred stock as at December 31, 2019 are likely to be converted into shares of common stock,

however, due to losses, their effect would be antidilutive.

As of December 31, 2019, convertible notes, warrants and preferred

stock warrants outstanding could be converted into 27,535,127 (2018:

9,125,002), 412,654,530 (2018:

88,094,634) and 100,000,000

100,000,000) shares of common stock, respectively.

FASB ASC 260, Earnings Per Share provides

for calculations of “basic”

and “diluted”

earnings per share.

Basic earnings (loss) per common share excludes

dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average common shares outstanding

for the period.

Diluted earnings (loss) per common share reflect the potential dilution of securities that could occur if securities

or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock

that then shared in the income (loss) of the Company.

Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

Convertible promissory notes, warrants

and preferred stock as at December 31, 2020 are likely to be converted into shares of common stock, however, due to losses,

their effect would be antidilutive.

Refer to Note 18 for further details.

CONVERTIBLE NOTES PAYABLE AND DERIVATIVE INSTRUMENTS

The Company has adopted the provisions of ASU 2017-11

to account for the down round features of warrants issued with private placements effective as of January 1, 2017.

warrants with a down round feature previously treated as derivative liabilities in the consolidated balance sheet and measured

at fair value are henceforth treated as equity, with no adjustment for changes in fair value at each reporting period.

accounted for conversion options embedded in convertible notes in accordance with ASC 815.

ASC 815 generally requires companies

to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free-standing

derivative financial instruments.

ASC 815 provides for an exception to this rule when convertible notes, as host instruments, are

deemed to be conventional, as defined by ASC 815-40.

The Company accounts for convertible notes deemed conventional and conversion

options embedded in non-conventional convertible notes which qualify as equity under ASC 815, in accordance with the provisions

of ASC 470-20, which provides guidance on accounting for convertible securities with beneficial conversion features.

the Company records, as a discount to convertible notes, the intrinsic value of such conversion options based upon the differences

between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion

price embedded in the note.

Debt discounts under these arrangements are amortized over the term of the related debt.

The Company has adopted the provisions

of ASU 2017-11 to account for the down round features of warrants issued with private placements effective as of January 1,

In doing so, warrants with a down round feature previously treated as derivative liabilities in the consolidated balance

sheet and measured at fair value are henceforth treated as equity, with no adjustment for changes in fair value at each reporting

The Company accounted for conversion options embedded in convertible notes in accordance with ASC 815.

ASC 815 generally

requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for

them as free-standing derivative financial instruments.

ASC 815 provides for an exception to this rule when convertible notes,

as host instruments, are deemed to be conventional, as defined by ASC 815-40.

The Company accounts for convertible notes deemed

conventional and conversion options embedded in non-conventional convertible notes which qualify as equity under ASC 815, in accordance

with the provisions of ASC 470-20, which provides guidance on accounting for convertible securities with beneficial conversion

Accordingly, the Company records, as a discount to convertible notes, the intrinsic value of such conversion options

based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction

and the effective conversion price embedded in the note.

Debt discounts under these arrangements are amortized over the term of

the related debt.

STOCK BASED COMPENSATION

The Company accounts for stock based payments in accordance

with the provision of ASC 718, which requires that all share-based payments issued to acquire goods or services, including grants

of employee stock options, be recognized in the statement of operations based on their fair values, net of estimated forfeitures.

ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures

differ from those estimates.

Compensation expense related to share-based awards is recognized over the requisite service period,

which is generally the vesting period.

The Company accounts for stock based compensation awards

issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments

issued in exchange for such services, whichever is more readily determinable, using the guidelines in ASC 505-50.

The Company issues

compensatory shares for services including, but not limited to, executive, management, accounting, operations, corporate communication,

financial and administrative consulting services.

The Company accounts for stock based payments

in accordance with the provision of ASC 718, which requires that all share-based payments issued to acquire goods or services,

including grants of employee stock options, be recognized in the statement of operations based on their fair values, net of estimated

ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods

if actual forfeitures differ from those estimates.

Compensation expense related to share-based awards is recognized over the requisite

service period, which is generally the vesting period.

The Company accounts for stock based compensation

awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or

the instruments issued in exchange for such services, whichever is more readily determinable.

The Company issues compensatory shares for services including, but not limited to, executive, management, accounting, operations,

corporate communication, financial and administrative consulting services.

MARKETING EXPENSES

Marketing and advertising expenditures are expensed

in the annual period in which the expenditure is incurred.

Marketing, advertising and promotion expenditures

are expensed in the annual period in which the expenditure is incurred.

IMPAIRMENT OF LONG-LIVED ASSETS

In accordance with ASC 360-10, the Company, on a regular

basis, reviews the carrying amount of long-lived assets for the existence of facts or circumstances, both internally and externally,

that suggest impairment.

The Company determines if the carrying amount of a long-lived asset is impaired based on anticipated undiscounted

cash flows, before interest, from the use of the asset.

In the event of impairment, a loss is recognized based on the amount by

which the carrying amount exceeds the fair value of the asset.

Fair value is determined based on appraised value of the assets

or the anticipated cash flows from the use of the asset or asset group, discounted at a rate commensurate with the risk involved.

In accordance with ASC 360-10, the Company,

on a regular basis, reviews the carrying amount of long-lived assets for the existence of facts or circumstances, both internally

and externally, that suggest impairment.

The Company determines if the carrying amount of a long-lived asset is impaired based

on anticipated undiscounted cash flows, before interest, from the use of the asset.

In the event of impairment, a loss is recognized

based on the amount by which the carrying amount exceeds the fair value of the asset.

Fair value is determined based on appraised

value of the assets or the anticipated cash flows from the use of the asset or asset group, discounted at a rate commensurate with

the risk involved.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows guidance for accounting for fair

value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are

recognized or disclosed at fair value in the consolidated financial statements on a recurring basis.

Additionally, the Company

adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the

consolidated financial statements on a nonrecurring basis.

The guidance establishes a fair value hierarchy that prioritizes the

inputs to valuation techniques used to measure fair value.

The Company follows guidance for accounting

for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items

that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis.

Additionally, the

Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value

in the consolidated financial statements on a nonrecurring basis.

The guidance establishes a fair value hierarchy that prioritizes

the inputs to valuation techniques used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices

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The three levels of the fair value hierarchy are as follows:

Level 1 inputs are quoted prices (unadjusted) in active

markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 inputs are inputs other than quoted prices

included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset

or liability.

The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity

of these instruments.

The estimated fair value of cash, accounts payable,

and accrued liabilities approximate their carrying values due to the short-term maturity of these instruments.

The derivative liabilities

of the promissory convertible notes are valued Level 3, refer to Note 15 for further details.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability.

The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.

The estimated fair value of cash, accounts

payable, and accrued liabilities approximate their carrying values due to the short-term maturity of these instruments.

The derivative

liabilities of the promissory convertible notes are valued Level 3, refer to Note 17 for further details.

EQUITY METHOD INVESTMENTS

The Company uses the equity method of accounting

for investments when the Company has the ability to significantly influence, but not control, the operations or financial activities

of the investee.

As part of this evaluation, the Company considers the participating and protective rights in the venture as well

as its legal form.

The Company records the equity method investments at cost and subsequently adjust their carrying amount each

period for the Company’s share of the earnings or losses of the investee and other adjustments required by the equity method

of accounting.

Distributions received from the equity method investments are recorded as reductions in the carrying value of such

investments and are classified on the consolidated statements of cash flows pursuant to the cumulative earnings approach.

this approach, distributions received are considered returns on investment and are classified as cash inflows from operating activities

unless the cumulative distributions received, less distributions received in prior periods that were determined to be returns of

investment, exceed the cumulative equity in earnings recognized from the investment.

When such an excess occurs, the current period

distributions up to this excess are considered returns of investment and are classified as cash inflows from investing activities.

The Company monitors equity method investments

for impairment and record reductions in their carrying values if the carrying amount of an investment exceeds its fair value.

impairment charge is recorded when such impairment is deemed to be other-than-temporary.

To determine whether an impairment is

other-than-temporary, we consider our ability and intent to hold the investment until the carrying amount is fully recovered.

Circumstances

that indicate an impairment may have occurred include factors such as decreases in quoted market prices or declines in the operations

of the investee.

The evaluation of an investment for potential impairment requires us to exercise significant judgment and to make

certain assumptions.

The use of different judgments and assumptions could result in different conclusions.

The Company has recorded

impairment losses related to our equity method investments of $nil during the year ended December 31, 2020.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Company qualifies as an “emerging growth

company”

(CGC) under the 2012 JOBS Act.

Section 107 of the JOBS Act provides that an emerging growth company can take advantage

of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting

As an emerging growth company, management can delay the adoption of certain accounting standards until those standards

would otherwise apply to private companies.

The management has elected to take advantage of the benefits of this extended transition

From time to time, new accounting pronouncements are

issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of

the specified effective date.

In July 2017, the FASB issued Accounting Standards

Update (ASU) No.

2017-11, Earnings Per Share (Topic 260);

Distinguishing Liabilities from Equity (Topic 480);

Derivatives and Hedging

Accounting for Certain Financial Instruments with Down Round Features

Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception

The amendments in Part I of this Update change the

classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.

When determining

whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer

precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock.

The amendments

also clarify existing disclosure requirements for equity-classified instruments.

The amendments in Part II of this Update recharacterize

the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a

scope exception.

Those amendments do not have an accounting effect.

The amendments in this Update apply to all companies.

Part I becomes effective for public business entities in the annual period ending after December 15, 2018, and interim periods

within those fiscal years, with early application permitted.

Management does not expect to have a significant impact of this ASU

on the Company’s financial statements.

The amendments in Part II of this Update do not require any transition guidance because

those amendments do not have an accounting effect.

In August 2018, the FASB issued ASU 2018-13, “Changes

to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements

for recurring and nonrecurring fair value measurements.

The standard removes, modifies, and adds certain disclosure requirements,

and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

will be evaluating the impact this standard will have on the Company’s consolidated financial statements.

In June 2018, the FASB issued an accounting pronouncement

(FASB ASU 2018-07) to expand the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions

for acquiring goods and services from nonemployees.

The pronouncement is effective for fiscal years, and for interim periods within

those fiscal years, beginning after December 15, 2018, with early adoption permitted.

The Company is currently in the process of

evaluating the effects of this pronouncement on the consolidated financial statements.

In February 2016, the FASB issued ASU No.

The Company qualifies as an “emerging

growth company”

(EGC) under the 2012 JOBS Act.

Section 107 of the JOBS Act provides that an emerging growth company

can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying

with new or revised accounting standards.

As an emerging growth company, management can delay the adoption of certain accounting

standards until those standards would otherwise apply to private companies.

The management has elected to take advantage of the

benefits of this extended transition period.

From time to time, new accounting pronouncements

are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company

as of the specified effective date.

In February 2016, the FASB issued

2016-02, Leases (Topic 842).

This guidance revises the accounting related to leases by requiring lessees to recognize a lease

liability and a right-of-use asset for all leases.

The new lease guidance also simplifies the accounting for sale and

leaseback transactions.

This ASU is effective for annual reporting periods beginning after December 15, 2018 and early

adoption is permitted.

The Company is currently in the process of evaluating the effects of this pronouncement on the

consolidated financial statements and will have material impact in the first quarter of year ending December 31, 2020.

In July 2018, the FASB issued ASU No.

2018-10, Codification Improvements to

Topic 842, Leases (ASU 2018-10), which provides narrow amendments to clarify how to apply certain aspects of the new lease standard,

2018-11, Leases (Topic 842)—Targeted Improvements (ASU 2018-11), which addressed implementation issues related

to the new lease standard.

These and certain other lease-related ASUs have generally been codified in ASC 842.

ASC 842 supersedes

the lease accounting requirements in ASC Topic 840, Leases (ASC 840).

ASC 842 establishes a right-of-use model that requires a

lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases.

Under ASC 842, leases are classified

as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

was effective for annual reporting periods beginning after December 15, 2018 and interim periods within that reporting period

(for “emerging growth company”

from January 1, 2020).

The Company adopted ASC 842 on January 1, 2020 using

the effective date transition method.

Prior period results continue to be presented under ASC 840 based on the accounting standards

originally in effect for such periods.

The Company has elected certain practical

expedients permitted under the transition guidance within ASC 842 to leases that commenced before January 1, 2020, including

the package of practical expedients.

The election of the package of practical expedients resulted in the Company not reassessing

prior conclusions under ASC 840 related to lease identification, lease classification and initial direct costs for expired and

existing leases prior to January 1, 2020.

The Company elected the practical expedient to not record short-term leases on its

consolidated balance sheet.

The adoption of ASU 2016-02 did not have a significant impact on the Company’s consolidated results

of operations or cash flows.

See Note 16 for additional information.

In August 2018, the FASB issued ASU

2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of

disclosure requirements for recurring and nonrecurring fair value measurements.

The standard removes, modifies, and adds certain

disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15,

2019 (for “emerging growth company”

beginning after December 15, 2020).

The Company will be evaluating the impact

this standard will have on the Company’s consolidated financial statements.

In June 2018, the FASB issued an accounting

pronouncement (FASB ASU 2018-07) to expand the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based

payment transactions for acquiring goods and services from nonemployees.

The pronouncement is effective for fiscal years, and for

interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted (for “emerging

growth company”

beginning after December 15, 2019).

The Company has adopted this standard effective from January 1,

2020 and the adoption of this standard did not have any significant impact on the consolidated financial statements.

The FASB recently issued ASU 2020-06, Debt

Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging –

Contracts in Entity’s

Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to reduce complexity

in applying GAAP to certain financial instruments with characteristics of liabilities and equity.

The guidance in ASU 2020-06 simplifies

the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20,

Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion

features in equity, separately from the host convertible debt or preferred stock.

The guidance in ASC 470-20 applies to convertible

instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for

as derivatives.

In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding

financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’

equity, by removing certain criteria required for equity classification.

These amendments are expected to result in more freestanding

financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer

embedded features requiring separate accounting from the host contract.

The amendments in ASU 2020-06 further revise the guidance

in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by

using the if-converted method.

In addition, entities must presume share settlement for purposes of calculating diluted EPS when

an instrument may be settled in cash or shares.

The amendments in ASU 2020-06 are effective for public entities for fiscal years

beginning after December 15, 2021 with early adoption permitted (for “emerging growth company”

beginning after

December 15, 2023).

The Company will be evaluating the impact this standard will have on the Company’s consolidated

financial statements.

PREPAID ASSET

At December 31, 2019, the Company had prepaid expenses

of $37,702 compared to $35,145 as at December 31, 2018.

The balance represents the retainer fees paid to the lawyer and security

deposit for the leased land of the subsidiary’s facility.

At December 31, 2020, the Company

had prepaid expenses of $46,775 compared to $37,702 as at December 31, 2019.

The balance represents the security deposit for

the leased land of the subsidiary’s facility.

SALES TAX RECOVERABLE

At December 31, 2019, the Company had $48,744

of gross sales tax recoverable compared to $294,033 as at December 31, 2018.

This is due to sales tax paid by the subsidiary on

expenses incurred during the year which are recoverable from the government.

The Company has recorded an allowance

of 25% of the sales tax recoverable of $12,186 (2018:

$75,902) stemming from the potential uncollectible balances within the outstanding

sales tax recoverable amount.

At December 31, 2019, the inventory in

the amount of $124,000 consists of finished goods and is held at a third-party location as at December 31, 2019.

At December 31, 2020, the Company

had $95,386 of gross sales tax recoverable compared to $48,744 as at December 31, 2019.

This is due to sales tax paid by the

subsidiary on expenses incurred during the year which are recoverable from the government.

The Company has recorded an allowance in

the amount of $19,924 (2019:

$12,186) stemming from the potential uncollectible balances within the outstanding sales tax recoverable

At December 31, 2020, the inventory

in the amount of $99,000 (2019:

$124,000) consists of finished goods and is held at a third-party location as at December 31,

During the year ended December 31,

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In addition, the inventory in the amount

of $124,000 is secured against the loan provided by the Company’s shareholder.

Refer to Note 13 for further details.

of $99,000 (2019:

$124,000) is secured against the loan provided by a related party and the Company’s shareholder.

to Note 14 for further details.

INTANGIBLE ASSETS

Effective August 8, 2019, the Company entered into

an Exclusive License Agreement (“License Agreement”) with cGreen, Inc., a Delaware corporation (“cGreen”).

The License Agreement grants to the Company an exclusive license to manufacture, and distribute the patent-pending THC antidote

True Focus™

Effective August 8, 2019, the Company

entered into an Exclusive License Agreement (“License Agreement”) with cGreen, Inc., a Delaware corporation (“cGreen”).

The License Agreement granted the Company an exclusive license to manufacture and distribute the patent-pending THC antidote True

in the United States, Europe and the Caribbean.

The term of the license is ten (10) years and four (4) months

The term of the license were ten (10) years and four (4) months

from the effective date of August 8, 2019.

In consideration of the license, the Company will issue 10,000,000 shares of its common

stock as follows:

In consideration of the license, the Company would issue 10,000,000 shares of its

common stock as follows:

(i) 3.500,000 within ten (10) days of the effective date;

(ii) 3,500,000 shares on January 10,

3,000,000 shares not later than June 10, 2020.

In addition, the Company will pay cGreen royalties of 7% of the net sales of the

licensed products and 7% of all sublicensing revenues collected by the Company.

The Company will pay cGreen an advance royalty

of $300,000.00 within ten (10) days of the effective date;

and (iii) 3,000,000 shares not later than June 10, 2020.

In addition, the Company would pay cGreen royalties of

7% of the net sales of the licensed products and 7% of all sublicensing revenues collected by the Company.

The Company would pay

cGreen an advance royalty of $300,000 within ten (10) days of the effective date;

$300,000 on January 10, 2020;

and $400,000.00 on or before June 10,

2020 and $500,000 on or before November 10, 2020.

All advance royalty payments will be credited against the royalties owed by the

Company through December 31, 2020.

The value of the license is based on 10 million common stock valued at the market rate of the

stock prevailing on August 8, 2019 and the royalty payments.

The asset is amortized over the terms of license.

During the quarter ended December 31, 2019,

the intangible asset was written off in the amount of $2,149,613 based on management’s review and evaluation of its recoverability.

As at December 31, 2019, no shares have

been issued, the first tranche of 3,500,000 shares, in the amount of $260,050, have been recorded in shares to be issued as equity

while the remaining 6,500,000 shares, in the amount of $482,950, are have been recorded in shares to be issued as liability.

initial payment of royalty payable of $308,140 has been paid during the year ended December 31, 2019 while the remaining in the

amount of $1,191,860 is recorded as royalty payable.

on or before June 10, 2020 and $500,000 on or before November 10, 2020.

All advance royalty payments would be credited

against the royalties owed by the Company through December 31, 2020.

During the quarter ended December 31, 2019, the

intangible asset was written off in the amount of $2,149,613 based on management’s review and evaluation of its recoverability.

Additionally, during the quarter ended

June 30, 2020, the Company was in arbitration with cGreen for the breaches of the terms of the License Agreement, however,

through an early mediation, both companies reached to a settlement agreement to settle the breaches of the contract on July 27,

2020 (“Effective Date”).

As per the settlement agreement, the License Agreement has been terminated and the Company

does not have to issue the 10 million shares nor pay the outstanding royalty payable in the amount of $1,191,860.

As consideration,

the Company paid $130,000 within 30 days of the Effective Date and will pay $100,000 in monthly installments of $10,000 commencing

in April 2021 to cGreen.

FIXED ASSETS AND CAPITAL WORK IN PROGRESS

The Company’s subsidiary,

Canary, initiated construction on its 44,000 square foot cannabis cultivation facility in September of 2017.

The Company’s subsidiary, Canary,

initiated construction on its 44,000 square foot cannabis cultivation facility in September of 2017.

Since then, extensive

demolition and structural upgrades have been carried out at the site.

As at December 31, 2019, the Company has capitalized $7,713,444

in payments to multiple vendors for the construction of the facility.

On May 1, 2019, the Company completed the

construction of its 44,000 square foot cannabis cultivation facility and on May 14, 2019, the Company submitted a Site Evidence

Package to Health Canada as part of the steps to obtain the license to cultivate cannabis at the Company’s facility.

8, 2019, the Company was granted licenses to cultivate, process and sell cannabis pursuant to the Cannabis Act (Bill

Since the facility is not operating during

the year ended December 31, 2019, no depreciation has been charged on all assets of Canary.

During the year ended December 31, 2020, the Company

has capitalized $42,505 (2019:

$3,510,401) in payments to multiple vendors for the upgrade and renovation of the facility.

On May 1, 2019, the Company completed

the construction of its 44,000 square foot cannabis cultivation facility and on May 14, 2019, the Company submitted a Site

Evidence Package to Health Canada as part of the steps to obtain the license to cultivate cannabis at the Company’s facility.

On October 8, 2019, the Company was granted licenses to cultivate, process and sell cannabis pursuant to the Cannabis

Act (Bill C-45).

It has recorded depreciation expense of $225,585 during the year ended December 31, 2020 (2019:

The Company’s other subsidiary, CannaKorp,

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Accumulated depreciation

JOINT VENTURE

Effective May 14, 2020, Canary entered

into a Joint Venture Agreement (“Joint Venture”) with 9258159 Canada Inc., a corporation organized under the laws of

the Province of Ontario, Canada (referred to as “Thrive Cannabis”) and 2755757 Ontario Inc., a corporation organized

under the laws of the Province of Ontario, Canada (referred to as “JVCo”).

Canary and Thrive Cannabis each hold 50%

of the voting equity interest in JVCo.

The term of the Joint Venture is five (5) years from its effective date of May 14,

Under the Joint Venture, JVCo is permitted

to use a portion, consisting of seven (7) rooms of Canary’s licensed cannabis cultivation facilities located in Simcoe,

Ontario, Canada ("Licensed Site Portion”) for the purpose of operating and managing the Licensed Site Portion for the

cultivation and process of cannabis pursuant to Canary’s license issued by Health Canada.

During the term of the Joint Venture,

JVCo will be responsible for the administration, operation and management of the Licensed Site Portion and all proceeds from the

sale of the cannabis and related cannabis products cultivated therein will be payable to the JVCo.

In addition, Canary, Thrive Cannabis, and

JVCo entered into a Unanimous Shareholder Agreement dated May 14, 2020 governing the management and administration of the

business of JVCo.

As per the Joint Venture, Canary will provide

the JVCo with a Hard Cost Loan with the maximum amount of $942,480 (CAD $1,200,000).

This loan bears an interest rate of 7% per

annum, matures in 12 months from effective date, and is be secured against the personal property of the JVCo and Thrive will guarantee

one-half (1/2) of the outstanding balance of the loan.

As at December 31, 2020, the loan advanced amounts to $263,109 (CAD

$335,000) and interest income charged for the year ended in amount of $8,074 (CAD $10,280) is included in other income on the consolidated

statement of operations and comprehensive loss and interest receivable in the amount of the same amount is included in receivable

from joint venture on the consolidated balance sheet.

The JVCo will reimburse Canary for certain

expenses incurred by Canary for the cultivation and processing of cannabis products.

As at December 31, 2020, the total eligible

recoverable expenses were $1,123,731 (CAD $1,430,776) leading to a recoverable amount of $1,091,834 (CAD $1,390,163).

recorded sales of $108,930 (CAD $138,694) during the quarter end of December 31, 2020.

The entire revenue was sold to one customer.

The JVCo shall make payments out of the revenues,

net of applicable taxes and expenses (“Net Income”), in accordance with the following order of priority:

a) First, the payment of recoverable expenses, explained below;

b) Second, to the repayment of the Hard Cost Loan until repaid in full;

c) Third, to the repayment of the Soft Costs (costs of services and materials provide by Thrive Cannabis)

until repaid in full;

d) Finally, any remaining Net Income shall be distributed, on a monthly basis, as follows:

(i) For the first two (2) years following execution of this Agreement, Canary shall receive 60% and Thrive

Cannabis shall receive 40%;

(ii) For the three (3) years following such period, Canary shall receive 57.5% and Thrive shall receive 42.5%.

The net equity of the JVCo as at December 31,

2020 was negative $523,496 (CAD $666,534) resulting in a loss of equity for $261,748 (CAD $333,267).

The JV had liabilities of

$1,363,018 (CAD $1,735,444) and assets of $839,522 (CAD $1,068,910).

Business Acquisition

10 unchanged sentences

CannaKorp Inc.

Effective January 25, 2019, the Company entered into

an Agreement and Plan of Share Exchange (“Exchange Agreement”) with CannaKorp Inc., a Delaware corporation (“CannaKorp”).

Company had previously entered into a Letter of Intent with CannaKorp dated November 30, 2018 which was disclosed in the Company’s

report on Form 8-K filed December 4, 2018.

The Exchange Agreement provides that, subject to its

terms and conditions, the Company issued to the CannaKorp shareholders an aggregate of 30,407,412 shares of the Company’s

Effective January 25, 2019, the Company

entered into an Agreement and Plan of Share Exchange (“Exchange Agreement”) with CannaKorp Inc., a Delaware corporation

(“CannaKorp”).

Company had previously entered into a Letter of Intent with CannaKorp dated November 30, 2018 which

was disclosed in the Company’s report on Form 8-K filed December 4, 2018.

The Exchange Agreement provides that, subject

to its terms and conditions, the Company issued to the CannaKorp shareholders an aggregate of 30,407,412 shares of the Company’s

common stock, based on a price per share of $0.10, in exchange for 100% of the issued and outstanding common stock of CannaKorp

9 unchanged sentences

The transaction was closed effective March 1, 2019.

Due to the publicly traded nature of the Company’s

shares of the common stock, the equity issuance of the shares was considered to be a more reliable measurement of fair market value

of the transaction compared to having a separate valuation of the net assets.

This acquisition was accounted for using the acquisition

method of accounting.

The fair value of assets, liabilities and intangible assets and the purchase price allocation as of March

1, 2019 was as follows:

Due to the publicly traded nature of the

Company’s shares of the common stock, the equity issuance of the shares was considered to be a more reliable measurement

of fair market value of the transaction compared to having a separate valuation of the net assets.

This acquisition was accounted for using

the acquisition method of accounting.

The fair value of assets, liabilities and intangible assets and the purchase price allocation

as of March 1, 2019 was as follows:

Allocation of

10 unchanged sentences

Total net assets acquired

The purchase consideration of 30,407,412 shares and 7,211,213 warrants of

the Company’s common stock valued as detailed below:

The purchase consideration of 30,407,412 shares and 7,211,213

warrants of the Company’s common stock valued as detailed below:

Number of Common Stock

7 unchanged sentences

Purchase consideration

The fair value of these warrants was measured at the

date of acquisition using the Black-Scholes option pricing model using the following assumptions:

The fair value of these warrants was measured

at the date of acquisition using the Black-Scholes option pricing model using the following assumptions:

Forfeiture rate of 0%;

7 unchanged sentences

2019, the goodwill was revaluated after the completion of CannaKorp’s audit of the year ended December 31, 2018.

This resulted

in changing the balance on acquisition date, March 1, 2019 thereby increasing the goodwill by $369,315 to $6,071,627.

resulted in changing the balance on acquisition date, March 1, 2019 thereby increasing the goodwill by $369,315 to $6,071,627.

During the year ended, December 31,

2019, the Company identified circumstances which would call for evaluation of goodwill impairment and therefore impaired $1,485,925

reducing the goodwill related to the CannaKorp to $4,585,702.

During the year ended, December 31, 2020, the Company identified

circumstances which would call for evaluation of goodwill impairment and therefore impaired $1,485,925 reducing the goodwill related

to the CannaKorp to $4,585,702.

As at December 31, 2019, there were 8,724,327 (2018:

nil) warrants outstanding, fully vested and with a remaining contractual life term of 1.16 years (2018:

circumstances which would call for evaluation of goodwill impairment and therefore impaired the remaining balance of goodwill related

to the CannaKorp to $nil.

Refer to Note 18 for details on warrants.

Visava Inc./Canary Rx Inc.

On June 27, 2018, the Company entered into an Agreement

and Plan of Share Exchange (“Exchange Agreement”) with Visava Inc., a private Ontario, Canada corporation (“Visava”).

Visava owns 100% of Canary Rx Inc., a Canadian corporation that holds a leasehold interest in a parcel of property located in Ontario’s

Garden Norfolk County for the production of cannabis.

Pursuant to the Agreement, the Company acquired 100%

of the issued and outstanding shares of Visava Inc.

in exchange for the issuance of 25,500,000 shares of the Company’s Common

Stock and will issue to the Visava shareholders, prorata Common Stock Purchase Warrants purchasing an aggregate of 25,000,000 shares

of the Company’s Common Stock at a price per share of $0.10 for a period of two years following the issuance date of the

On June 27, 2018, the Company entered

into an Agreement and Plan of Share Exchange (“Exchange Agreement”) with Visava Inc., a private Ontario, Canada corporation

(“Visava”).

Visava owns 100% of Canary Rx Inc., a Canadian corporation that holds a leasehold interest in a parcel

of property located in Ontario’s Garden Norfolk County for the production of cannabis.

Pursuant to the Agreement, the Company

acquired 100% of the issued and outstanding shares of Visava Inc.

in exchange for the issuance of 25,500,000 shares of the Company’s

Common Stock and will issue to the Visava shareholders, prorata Common Stock Purchase Warrants purchasing an aggregate of 25,000,000

shares of the Company’s Common Stock at a price per share of $0.10 for a period of two years following the issuance date

of the Warrants.

As a result of this transaction, Visava Inc.

3 unchanged sentences

The transaction was closed effective August 2,

This acquisition was accounted for using the acquisition

method of accounting.

The fair value of assets, liabilities and intangible assets and the purchase price allocation as of August

2, 2018 was as follows:

During the quarter ended, September 30, 2020, all of the warrants expired, none were exercised.

This acquisition was accounted for using

the acquisition method of accounting.

The fair value of assets, liabilities and intangible assets and the purchase price allocation

as of August 2, 2018 was as follows:

Allocation of

19 unchanged sentences

Purchase consideration

The fair value of these warrants was measured at the

date of acquisition using the Black-Scholes option pricing model using the following assumptions:

The fair value of these warrants was measured

at the date of acquisition using the Black-Scholes option pricing model using the following assumptions:

Forfeiture rate of 0%;

5 unchanged sentences

Expected dividend rate of 0%

As at December 31, 2019, there were 25,000,000 (2018:

25,000,000) warrants outstanding, fully vested and with a remaining contractual life term of 0.59 years.

Refer to Note 18 for details on warrants.

During the year ended December 31,

the Company has identified no circumstances which would call for further evaluation of goodwill impairment related to Canary.

The Company tests for impairment of goodwill at the

reporting unit level.

In assessing whether goodwill is impaired, the Company utilize the two-step process as prescribed by ASC

The first step of this test compares the fair value of the reporting unit, determined based upon discounted estimated future

cash flows, to the carrying amount, including goodwill.

If the fair value exceeds the carrying amount, no further work is required

and no impairment loss is recognized.

If the carrying amount of the reporting unit exceeds the fair value, the goodwill of the

reporting unit is potentially impaired and step two of the goodwill impairment test would need to be performed to measure the amount

of an impairment loss, if any.

In the second step, the impairment is computed by comparing the implied fair value of the reporting

unit’s goodwill with the carrying amount of the goodwill.

If the carrying amount of the reporting unit’s goodwill is

greater than the implied fair value of its goodwill, an impairment loss in the amount of the excess is recognized and charged to

statement of operations.

2020 and 2019, the Company has identified no circumstances which would call for further evaluation of goodwill impairment related

The Company tests for impairment of goodwill

at the reporting unit level.

In assessing whether goodwill is impaired, the Company utilize the two-step process as prescribed

The first step of this test compares the fair value of the reporting unit, determined based upon discounted estimated

future cash flows, to the carrying amount, including goodwill.

If the fair value exceeds the carrying amount, no further work is

required and no impairment loss is recognized.

If the carrying amount of the reporting unit exceeds the fair value, the goodwill

of the reporting unit is potentially impaired and step two of the goodwill impairment test would need to be performed to measure

the amount of an impairment loss, if any.

In the second step, the impairment is computed by comparing the implied fair value of

the reporting unit’s goodwill with the carrying amount of the goodwill.

If the carrying amount of the reporting unit’s

goodwill is greater than the implied fair value of its goodwill, an impairment loss in the amount of the excess is recognized and

charged to statement of operations.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

1 unchanged sentence

as at December 31, 2020, primarily represents consulting and construction services related to capital work in progress amounting

to $1,079,498, interest on promissory notes and loan amounting to $53,945, marketing services cost amounting to $18,115, valuation

fee accrual of $3,500, accounting fee accrual of $2,500 and review fee accrual of $3,000, and outstanding professional fees of

to 141,935, interest on promissory notes and loans amounting to $403,865, and outstanding plus accrued professional fees of $1,002,098.

Accounts payable amounting to $2,494,588

as at December 31, 2019, primarily represents consulting and construction services related to capital work in progress amounting

to $ 1,330,693, interest on promissory notes amounting to $133,082, advertising and promotion services amounting to $332, marketing

services cost amounting to $13,650, valuation fee accrual of $3,500, accounting fee accrual of $2,500 and review fee accrual of

$3,000, and outstanding professional fees of $54,391.

to $1,079,498, interest on promissory notes and loan amounting to $53,945, and outstanding plus accrued professional fees of $951,000.

RELATED PARTY TRANSACTIONS AND BALANCES

During the year ended December 31,

$nil (December 31, 2018:

$300,000) was recorded as management services fee payable to Rubin Schindermann and Alexander Starr, who

are shareholders and former officers in the Company.

The amount is included in the related party balance as at December 31,

They were issued 14,834,850 shares (December

5,529,412 shares) for these services performed and to settle the shareholder advance as of and for the year ended December 31, 2019.

These were recorded at fair value in the amount of

Rubin Schindermann received 3,000,000 shares in quarter ended June 30, 2019 as part of the Employee Stock Incentive

On February 22, 2019, Alexander Starr terminated

his employment agreement and the Company has guaranteed to pay $180,000 within the next twelve months starting from March 1, 2019

with payments being made twice a month.

As at December 31, 2019, the balance outstanding is $60,000.

In addition to the above, during the quarter

ended June 30, 2019, out of the above mentioned 14,834,850 share issuance, 8,234,850 shares, fair valued at $885,329 were issued

to Alexander Star to settle the outstanding management service fee payable of $162,019 and shareholder advances in amount of $14,032.

The company recorded a loss on settlement in the amount of $709,278.

Amounts payable to Rubin Schindermann and

Alexander Starr as at December 31, 2019 were $nil and $nil, respectively (December 31, 2018:

$200,00 and $139,697, respectively).

During the year ended, December 31,

2019, Saul Niddam, Chief Innovation Officer of Target & CEO of the subsidiary, CannaKorp, purchased 1,666,667 shares

(December 31, 2018:

nil shares) as consideration for private placement.

These were recorded at fair value in the amount of

$37,385 based on the cash proceeds received by the Company.

These shares were issued in settlement of accrued wages owing.

at December 31, 2019, the balance outstanding is $30,796.

During the year ended December 31, 2019,

$196,991 (December 31, 2018:

$60,000) was paid as remuneration for management services as salaries to Randal MacLeod, who is shareholder

in the Company and President of the subsidiary, Visava.

In addition, 3,000,000 shares were issued as a bonus for completing the

facility’s construction, fair valued in the amount of $294,000 included in management fee.

As at December 31, 2019, the balance

owing is $18,582.

During the year ended December 31, 2019,

the Company settled with the loan holders provided to the Company's subsidiary, CannaKorp.

Total amount subject to settlement was

$817,876 which includes accrued interest and accrued payroll.

The company settled by paying $954,374 as consideration of cash,

920,240 shares and warrants of 920,240 shares with an exercise price of $0.15 per share.

This resulted in a settlement loss of

Of the total settlement amount, $40,000 is still outstanding to be paid.

During the year ended December 31, 2019,

the Company has purchased goods and services amounting to $500,000 from a Euro Horti Tech which is owned by a shareholder of the

Additionally, on December 20, 2019, one

2020, the Company expensed $286,978 (December 31, 2019:

$1,481,284) in management service fee for services provided by the

current key officers of the company.

The breakdown of the related party balance

as at December 31, 2020 in the amount of $9,934,960 (December 31, 2019:

$431,660) is below:

Debt purchase by CL Investors Inc.

On June 15, 2020, the Company

and its subsidiaries, entered into a Debt Purchase and Assignment Agreement (“Agreement”) with CL Investors Inc.

(“CLI).

June 15th was preliminary date of the agreement and the agreement was not finalized until the later date as indicated below.

The CEO of the Company, is the

Secretary of CLI, a director of the Company, is a shareholder of CLI and the brother of CEO, is the President and sole director

of CLI therefore the loan from CLI is classified under related party transactions.

Pursuant to the Agreement, CLI

purchased from the Company for the sum of $2,277,660, (CAD $2,900,000) a debt obligation owing from Canary to the Company in the

principal balance of $8,325,240 (CAD $10,600,000 (“Canary Debt”)).

Upon receipt of the consideration, the Company loaned

the full sum to Canary under terms of an unsecured, non-interest-bearing promissory note, subject to a covenant by the Company

not to take any collection action so long as the Canary Debt remains unpaid to CLI.

As at December 31, 2020, $78,540 (CAD

$100,000) is still outstanding from CLI which is presented as other receivable on the consolidated balance sheet.

The Canary debt owed to CLI from

Canary bears an interest at 5% per annum and matures on August 14, 2025.

The repayment of the debt is guaranteed by the Company

and its subsidiaries plus secured by a general security interest in the assets of the Company and its subsidiaries and a pledge

by the Company of all of the issued and outstanding common stock of Canary, Visava and CannaKorp Inc.

held by the Company.

to the above, CLI has been granted an option, in lieu of repayment of the amended Canary Debt, to demand, in its sole and absolute

discretion the transfer, assignment and conveyance of 75% of the issued and outstanding capital stock of Visava and Canary.

the President and sole director of CLI has been granted an option to acquire the remaining 25% of the issued and outstanding capital

stock of Visava and Canary.

Interest expense charged for the year ended in amount of $158,411 (CAD $201,694) is included in interest and bank charges on the consolidated

statement of operations and comprehensive loss and accrued interest of same the amount is included in accounts payable and accrued liabilities

on the consolidated balance sheet.

The repayment schedule of the

minimum principal payments is shown below:

Current portion

$ (1,031,320 )

Non-current portion

Effective August 14, 2020,

the Agreement was amended (“Amendment”) to provide that CLI will purchase from Rubin Schindermann, a director of the

Company, 500,000 shares of the Company’s Series A Preferred Stock in consideration of the payment by CLI to Rubin Schindermann

of $78,540 (CAD $100,000) and the issuance to Mr.

Schindermann of 10,000,000 shares of the Company’s common stock.

consideration of the foregoing, Mr., Schindermann resigned as a director of the Company and from any and all administrative and

executive positions with the Company’s subsidiaries.

In addition, the Company issued Common Stock Purchase Warrant for 10,000,000

shares of Target common stock to CLI as consideration for the Agreement.

Refer to Note 18 for additional details on warrants.

combined impact of both transactions resulted in debt issuance cost of $263,495.

This debt issuance cost will be amortized over

the term of the debt on straight line basis.

As at December 31, 2020, the balance is $243,440 of which $52,845 is current

while $190,595 is non-current.

Shareholder loan

On December 20, 2019, one

of the Company’s shareholders provided a loan up to $785,400 (CAD $1,000,000).

The loan bears an annual interest rate of

16%, is secured by all assets owned by the Company and its subsidiaries and matures in one year that is December 20, 2020.

December 31, 2019, the Company was advanced $269,465 (CAD $350,000).

Interest expense charged in amount of $1,279 (CAD $1,688)

is included in interest and bank charges on the consolidated statement of loss and comprehensive loss and accrued interest is included

16%, is secured by all assets owned by the Company and its subsidiaries including leasehold improvements and matures in one year

that is December 20, 2020.

During the year ended December 31, 2020, the loan maximum was increased by $785,400 (CAD $1,000,000).

This additional loan bears an annual interest rate of 43% and has a lender fee of 10%.

Due to above amendment, the maximum loan

which the company can borrow is $1,570,800 (CAD $2,000,000) which is also the outstanding balance as at December 31, 2020.

Interest expense charged for the year ended in amount of $336,503 (CAD $428,448) is included in interest and bank charges on the

consolidated statement of operations and comprehensive loss and accrued interest in the amount of $196,257 (CAD $249,882) is included

in accounts payable and accrued liabilities on the consolidated balance sheet.

As at December 31, 2019, the remaining

balance of $12,817 in payable to related parties are management fee accruals for services performed by key management personals

(December 31, 2018:

During the year ended December 31, 2019,

the Company has purchased consulting services amounting to $26,100 from GTA Angel Group which is owned by the Company’s CEO.

The balance is still outstanding as at December 31, 2019 and is included in accounts payable and accrued liabilities.

During the year ended December 31, 2019,

the Company has purchased consulting services amounting to $26,100 from BaK Consulting which is owned by one of the Company’s

The balance is still outstanding as at December 31, 2019 and is included in accounts payable and accrued liabilities.

Shareholder promissory note

Effective April 20, 2020,

the Company issued its promissory note (“Note”) to one of the Company’s shareholders in the principal amount

The Note contained an original issue discount of $15,300 resulting in net proceeds to the Company of $221,693.

Note carried interest at the rate of 12% per annum and the note matured on April 20, 2021.

During the quarter ended, September 30,

2020, the Company paid the outstanding balance and accrued interest in full, in the amount of $251,213.

Outstanding management service fee

The balance owing to key officers of

the Company is $217,359 (December 31, 2019:

The outstanding balance are primarily outstanding management service fee.

During the year ended December 31, 2020, nil shares (December 31, 2019:

17,834,850 shares) were issued for these services performed

as of and for the year ended December 31, 2020.

Balances outstanding related to subsidiaries

On February 22, 2020, Randal

MacLeod, who is shareholder in the Company and former President of the subsidiary, Visava terminated his employment agreement and

during the year ended December 31, 2020, $54,307 (December 31, 2019:

$196,991) was paid as remuneration for management

services included in salaries and wages.

As at December 31, 2020, the balance owing is $nil (December 31, 2019:

During the year ended December 31,

the Company leases its principal executive office premise from Norlandam Marketing Inc., a company owned by one of directors and

rent expense amounted to $38,324.

There is no balance outstanding as at December 31, 2019.

Refer to Note 17 for the lease terms.

2019, the Company settled with the loan holders provided to the Company's subsidiary, CannaKorp.

Total amount subject to settlement

was $817,876 which includes accrued interest and accrued payroll.

The company settled by paying $954,374 as consideration of cash,

920,240 shares (recorded in shares to be issued) and warrants of 920,240 shares with an exercise price of $0.15 per share.

resulted in a settlement loss of $136,498.

Of the total settlement amount, as at December 31, 2020 and 2019, $65,000 was outstanding

This amount includes late payment penalties of $25,000.

During the year ended December 31, 2020,

the Company had advanced $130,883 to ProCanna Bioscience Inc.

(“ProCanna”), a company owned by one of employees of

the Company and expensed the entire amount as the employee’s management fee for management services provided by the employee.

There is no balance owing or outstanding from ProCanna as at December 31, 2019.

the Company has purchased $nil of consulting services from GTA Angel Group which is partially owned by the Company’s CEO’s

The balance outstanding as at December 31, 2020 is $26,625 and is included in accounts payable and accrued liabilities.

During the year ended December 31, 2020,

the Company expensed $1,481,284 (2018:

$362,500) in management service fee for services provided by CEO, President, CFO and other

key officers of the company.

the Company has purchased consulting services amounting to $14,782 from BaK Consulting which is owned by one of the Company’s director.

The balance outstanding as at December 31, 2020 is $nil.

During the year ended December 31,

a loan owed to one of the Company’s shareholders in the amount of $72,570 (CAD $99,000) was extinguished in exchange of 15,800,100

Class A common shares of the Company’s subsidiary Visava Inc.

Thereby, a gain on loan settlement in the amount of $74,933

(CAD $99,000) was recorded.

SHAREHOLDER ADVANCES

Shareholder advances represent

expenses paid by the owners from personal funds.

2020, the Company leases its principal executive office premise from Norlandam Marketing Inc., a company owned by one of directors

and rent payments amounted to $25,600.

The outstanding balance as at December 31, 2020 is balance of $5,379.

SHAREHOLDER ADVANCES AND RECEIVABLE

Shareholder advances represent expenses

paid by the owners from personal funds.

The amount is non-interest bearing, unsecured and due on demand.

The amount of

advance as at December 31, 2019 and December 31, 2018 was $nil and $209,046, respectively.

Additionally, in the amount of $2,025

were receivable from a shareholder.

The amounts repaid during the year ended December 31, 2019 and 2018 were $203,945 and $281,927,

respectively, and during the year ended December 31, 2019, $133,423 was settled through issuance of shares of common stock.

to Note 13 for details.

The amount of advance

as at December 31, 2020 and 2019 were $nil while the amount of receivable as at December 31, 2020 and 2019 were $nil

and $2,025, respectively.

The amounts repaid during the year ended December 31, 2020 and 2019 were $nil and $203,945, respectively.

During the year ended December 31, 2020 and 2019, $nil and $133,423 was settled through issuance of shares of common stock.

Refer to Note 14 for details.

OPERATING LEASE RIGHT-OF-USE ASSETS AND LEASE LIABILITY

The Company adopted ASC 842 as of

January 1, 2019, using a modified retrospective approach and applying the standard’s transition provisions at

January 1, 2020, the effective date.

The Company made an accounting policy election to exclude from balance sheet

reporting those leases with initial terms of 12 months or less.

The Company determines if an arrangement is a lease at

This determination generally depends on whether the arrangement conveys to the Company the right to control the

use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration.

Control of an

underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain

substantially all of the economic benefits from using the underlying asset.

The Company has lease agreements which include

lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of

underlying assets.

Lease expense for variable lease components is recognized when the obligation is probable.

Right-of-use assets and liabilities are

recognized at commencement date based on the present value of lease payments over the lease term.

ASC 842 requires a lessee to

discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined,

its incremental borrowing rate.

As an implicit interest rate is not readily determinable in the Company’s leases, the incremental

borrowing rate is used based on the information available at adoption date in determining the present value of lease payments.

The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods

covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise,

or an option to extend (or not to terminate) the lease controlled by the lessor.

Options for lease renewals have been excluded

from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is

The Company does not own any real property.

It currently leases two office/facility spaces.

For accounting purposes, this lease is treated as an operating lease.

adoption of ASC 842, the Company recognized $1,773,600 (CAD $2,258,212) of right-to-use assets as operating leases and operating

lease obligations.

The right-to-use asset was reduced by $1,641,424 (CAD $2,089,921) due to recognition of the prior deferred

rent liability which was eliminated upon adoption of ASC 842.

Details of these leases are detailed below:

The Company is a party to a 5-year lease

agreement (initiated on September 2018) with respect to its office premises.

Total minimum rent for the premises is $872 (CAD

$1,100) plus applicable taxes per month.

On the first anniversary date, the minimum rent per month will increase to $894 (CAD $1,138)

plus applicable taxes, on the second anniversary date, the minimum rent per month will increase to $915 (CAD $1,166) plus applicable

taxes, on the third anniversary date, the minimum rent per month will increase to $937 (CAD $1,193) plus applicable taxes, on the

fourth anniversary date, the minimum rent per month will increase to $959 (CAD $1,221) plus applicable taxes.

The Company’s subsidiary, Canary, is a party

to a 10-year lease agreement (initiated on July 2014) with respect to its facility to produce Craft Cannabis at Scale.

agreement was amended effective January 1, 2020, where the amended 10-year term starts on May 1, 2020 and provides the Company

an option to extend for three (3) additional terms of ten (10) years.

Additionally, effective January 1, 2020, the amended

agreement increased the minimum rent to $27,489 (CAD $35,000) plus applicable taxes per

month and on each anniversary date, commencing from January 1, 2021, the minimum rent will increase by 1.00%.

Furthermore, only the

current 10-year term has been factored into the calculation of the lease liability.

Effective May 1, 2020, due to the implementation

of the new lease, $737,467 (CAD $988,293) was forgiven by the landlord and one vendor.

These leases will expire between 2023 and

The weighted average discount rate used for these leases were 16% (average borrowing rate of the Company).

of lease liabilities were:

Total lease payment

Less imputed interest

Present value of lease liabilities

Current portion

Non-current portion

Below is the reconciliation of the net

operating lease presented on the consolidated statement of operations:

December 31, 2020

Gross operating lease expense

Gross rent and utilities expenses

Recoverable expenses from JVCo related to rent and utilities

As explained in Note 11, the JVCo reimburses

certain percentage of gross expenses incurred by Canary which includes rent and utilities.

Due to this unique circumstance and

since operating lease expense are related to rent expenses, the Company has decided to group the operating lease expenses, all

lease related expenses and the recoverable amount from JVCo to show a net operating lease expense.

CONVERTIBLE PROMISSORY NOTES

During the year ended December 31, 2019,

the Company issued convertible promissory notes, details of which are as follows:

Below lists the convertible promissory

notes the Company has issued:

Convertible promissory note issued on October 18,

2019, amounting to $168,300 (Note R).

The key terms/features of the convertible note are

The maturity date of the Note is April 18, 2021.

Interest on the unpaid principal balance of this Note accrues at the rate of 12% per annum.

In the event the Note holder exercises the right of conversion, the conversion price will be equal to 75% of the lowest closing bid price of the Company’s common stock for the fifteen (15) trading days prior to the date of conversion.

The Company shall not be obligated to accept any conversion request before six months from the date of the note.

Conversion is limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

The key terms/features of the convertible

note are as follows:

The maturity date of the Note was April 18, 2021.

Interest on the unpaid principal balance of this Note accrued at the rate of 12% per annum.

In the event the Note holder exercised the right of conversion, the conversion price would be equal to 75% of the lowest closing bid price of the Company’s common stock for the fifteen (15) trading days prior to the date of conversion.

The Company was not obligated to accept any conversion request before six months from the date of the note.

Conversion was limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the quarter ended June 30,

2020, the Company settled the outstanding balance of Note R in full with a cash payment and recorded a loss of $43,156 as settlement

of debt in the consolidated statement of operations.

The loss is due to the prepayment penalty as per the note agreement.

Convertible promissory note issued on February 16,

2019, amounting to $103,000 (Note Q).

The key terms/features of the convertible note are

The maturity date of the Note is August 16, 2020.

Interest on the unpaid principal balance of this Note accrues at the rate of 12% per annum.

In the event the Note holder exercises the right of conversion, the conversion price will be equal to 61% of the lowest closing bid price of the Company’s common stock for the fifteen (15) trading days prior to the date of conversion.

The Company shall not be obligated to accept any conversion request before six months from the date of the note.

Conversion is limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the quarter ended June 30, 2019, the Company

settled the outstanding balance in full with a cash payment and recorded a loss of $35,173 as settlement of debt in the condensed

consolidated statement of operations.

The key terms/features of the convertible

note are as follows:

The maturity date of the Note was August 16, 2020.

Interest on the unpaid principal balance of this Note accrued at the rate of 12% per annum.

In the event the Note holder exercised the right of conversion, the conversion price would be equal to 61% of the lowest closing bid price of the Company’s common stock for the fifteen (15) trading days prior to the date of conversion.

The Company was not obligated to accept any conversion request before six months from the date of the note.

Conversion was limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the quarter ended June 30,

2019, the Company settled the outstanding balance in full with a cash payment and recorded a loss of $35,173 as settlement of debt

in the consolidated statement of operations.

The loss is due to the prepayment penalty as per the note agreement.

1 unchanged sentence

2018, amounting to $83,000 (Note P).

The key terms/features of the convertible note are

The maturity date of the Note is June 24, 2020.

Interest on the unpaid principal balance of this Note shall accrue at the rate of 12 % per annum.

In the event the Note holder exercises the right of conversion, the conversion price will be equal to 61% of the average of the three (3) lowest trading price of the Company’s common stock for the fifteen (15) trading days prior to the date of conversion.

The Company shall not be obligated to accept any conversion request before six months from the date of the note.

Conversion is limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the quarter ended June 30, 2019, the Company

settled the outstanding balance in full with a cash payment and recorded a loss of $36,085 as settlement of debt in the condensed

consolidated statement of operations.

The key terms/features of the convertible

note are as follows:

The maturity date of the Note was June 24, 2020.

Interest on the unpaid principal balance of this Note accrued at the rate of 12% per annum.

In the event the Note holder exercised the right of conversion, the conversion price would be equal to 61% of the average of the three (3) lowest trading price of the Company’s common stock for the fifteen (15) trading days prior to the date of conversion.

The Company was not obligated to accept any conversion request before six months from the date of the note.

Conversion was limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the quarter ended June 30,

2019, the Company settled the outstanding balance in full with a cash payment and recorded a loss of $36,085 as settlement of debt

in the consolidated statement of operations.

The loss is due to the prepayment penalty as per the note agreement.

1 unchanged sentence

2018, amounting to $75,000 (Note O).

The key terms/features of the convertible note are

The maturity date of the Note is November 28, 2019.

Interest on the unpaid principal balance of this Note shall accrue at the rate of 10 % per annum.

In the event the Note holder exercises the right of conversion, the conversion price will be equal to 52% of the lowest trading price of the Company’s common stock for the twenty (20) trading days prior to the date of conversion.

Conversion is limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the quarter ended June 30, 2019, the Company

settled the outstanding balance in full with a cash payment and recorded a loss of $27,526 as settlement of debt in the condensed

consolidated statement of operations.

The key terms/features of the convertible

note are as follows:

The maturity date of the Note was November 28, 2019.

Interest on the unpaid principal balance of this Note accrued at the rate of 10% per annum.

In the event the Note holder exercised the right of conversion, the conversion price would be equal to 52% of the lowest trading price of the Company’s common stock for the twenty (20) trading days prior to the date of conversion.

Conversion was limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the quarter ended June 30,

2019, the Company settled the outstanding balance in full with a cash payment and recorded a loss of $27,526 as settlement of debt

in the consolidated statement of operations.

The loss is due to the prepayment penalty as per the note agreement.

1 unchanged sentence

2018, amounting to $103,000 (Note N).

The key terms/features of the convertible note are

The maturity date of the Note is December 5, 2019.

Interest on the unpaid principal balance of this Note shall accrue at the rate of 12 % per annum.

The Company shall not be obligated to accept any conversion request before six months from the date of the note.

Conversion is limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the quarter ended March 31, 2019, the Company

settled the outstanding balance in full with a cash payment and recorded a loss of $27,368 as settlement of debt in the condensed

consolidated statement of operations.

The key terms/features of the convertible

note are as follows:

The maturity date of the Note was December 5, 2019.

Interest on the unpaid principal balance of this Note accrued at the rate of 12% per annum.

The Company was not obligated to accept any conversion request before six months from the date of the note.

Conversion was limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the quarter ended March 31,

2019, the Company settled the outstanding balance in full with a cash payment and recorded a loss of $27,368 as settlement of debt

in the consolidated statement of operations.

The loss is due to the prepayment penalty as per the note agreement.

1 unchanged sentence

2018, amounting to $65,000 (Note M).

The key terms/features of the convertible note are

The maturity date of the Note is September 9, 2019.

Interest on the unpaid principal balance of this Note shall accrue at the rate of 10% per annum.

In the event the Note holder exercises the right of conversion, the conversion price will be equal to 52% of the lowest closing bid price of the Company’s common stock for the twenty (20) trading days prior to the date of conversion.

Conversion is limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the quarter ended March 31, 2019, the Company

settled the outstanding balance in full with a cash payment and recorded a loss of $23,342 as settlement of debt in the condensed

consolidated statement of operations.

The key terms/features of the convertible

note are as follows:

The maturity date of the Note was September 9, 2019.

Interest on the unpaid principal balance of this Note accrued at the rate of 10% per annum.

In the event the Note holder exercised the right of conversion, the conversion price would be equal to 52% of the lowest closing bid price of the Company’s common stock for the twenty (20) trading days prior to the date of conversion.

Conversion was limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the quarter ended March 31,

2019, the Company settled the outstanding balance in full with a cash payment and recorded a loss of $23,342 as settlement of debt

in the consolidated statement of operations.

The loss is due to the prepayment penalty as per the note agreement.

1 unchanged sentence

2018, amounting to $28,000 (Note L).

The key terms/features of the convertible note are

The key terms/features of the convertible

note are as follows:

The maturity date of the Note was October 30, 2018.

7 unchanged sentences

2017, amounting to $33,000 (Note K).

The key terms/features of the convertible note are

The key terms/features of the convertible

note are as follows:

The maturity date of the Note was March 10, 2019.

4 unchanged sentences

Conversion is limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

Convertible promissory note issued on May

5, 2017 amounting to $23,000 (Note J).

The key terms/features of the convertible note are

The maturity date of the note was February 20, 2018

Interest on the unpaid principal balance of this note accrued at the rate of 12% per annum.

When the Note holder exercised the right of conversion, the conversion price was equal to 58% of the average of the three (3) lowest closing bid price of the Company’s common stock for the fifteen (15) trading days prior to the date of conversion.

The Company was not be obligated to accept any conversion request before six months from the date of the note.

Conversion was limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

Note J’s full principal amount and

its associated accrued interest was converted during the year ended December 31, 2018.

Convertible promissory note issued on January 31,

2017 amounting to $33,000 (Note I).

The key terms/features of the convertible note are

The key terms/features of the convertible

note are as follows:

The maturity date of the note was November 5, 2017

Interest on the unpaid principal balance of this note accrues at the rate of 12% per annum.

In the event the Note holder exercises the right of conversion, the conversion price will be equal to 58% of the average of the three (3) lowest closing bid price of the Company’s common stock for the fifteen (15) trading days prior to the date of conversion.

Interest on the unpaid principal balance of this note accrued at the rate of 12% per annum.

In the event the Note holder exercised the right of conversion, the conversion price would be equal to 58% of the average of the three (3) lowest closing bid price of the Company’s common stock for the fifteen (15) trading days prior to the date of conversion.

As maturity date has passed, the Company is now obligated to accept all conversion requests on the note.

Conversion is limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

During the year ended December 31, 2016, the Company

issued convertible promissory notes, details of which are as follows:

Convertible Redeemable note issued on October

18, 2016, amounting to $140,000 (Note H), representing commitment fee owed by the Company pursuant to Securities Purchase Agreement

entered into by the Company dated October 18, 2016.

The commitment fee was considered a prepaid asset.

During the three months

ended September 30, 2017, the pending S1 registration statement was withdrawn, removing the benefit associated with the prepaid

The amount was therefore written off as commitment fee in the statement of operations.

During the quarter ended March 31, 2018,

the Company obtained forgiveness of the liability and the interest associated with the note payable and recorded a gain of $153,471

as forgiveness of debt in the consolidated statement of operations.

Conversion was limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

The Company converted the outstanding principal

and accrued interest balance of Note I during quarter ended June 30, 2020.

Convertible Redeemable notes issued on

October 18, 2016, amounting to $100,000 and $25,000 (Notes F and G).

The key terms/features of the convertible

3 unchanged sentences

In the event the Note holder exercises the right of conversion, the conversion price will be equal to 57.5% of the lowest trading price of the Company’s common stock for the twenty (20) trading days prior to the date of conversion.

As maturity date has passed, the Company is now obligated to accept all conversion requests on the note.

Conversion is limited to the holder beneficially holding not more than 9.99% of the Company’s then issued and outstanding common stock after the conversion.

Convertible Redeemable notes issued on October 18,

2016, amounting to $100,000 and $25,000 (Notes F and G).

The key terms/features of the convertible note are

The maturity date of the Note was July 18, 2017.

Interest on the unpaid principal balance of this Note accrues at the rate of 7 % per annum.

As maturity dates has passed, the Company is now obligated to accept all conversion requests on the note.

Conversion is limited to the holder beneficially holding not more than 9.99% of the Company’s then issued and outstanding common stock after the conversion.

During the six months ended June 30, 2018, the Company

entered into a Debt Exchange Agreement with the holder of the convertible note F and G.

The outstanding principal amounts of the

notes were extinguished and settled by issuance of 2,500,000 common shares of the Company.

The Company recorded a loss of $267,522

as a result of this settlement.

During the six months ended June 30,

2018, the Company entered into a Debt Exchange Agreement with the holder of the convertible note F and G.

The outstanding principal

amounts of the notes were extinguished and settled by issuance of 2,500,000 common shares of the Company.

The Company recorded

a loss of $267,522 as a result of this settlement.

Convertible promissory note issued on May 13,

2016, amounting to $75,000 (Note D).

The key terms/features of the convertible note are

The key terms/features of the convertible

note are as follows:

The maturity date of the note was May 13, 2017.

3 unchanged sentences

Conversion is limited to the holder beneficially holding not more than 4.99% of the Company’s then issued and outstanding common stock after the conversion.

Convertible promissory notes issued on March 1, 2016

amounting to $150,000 each to two investors (Notes B and C).

The key terms/features of the convertible notes are

The Holders have the right from six months after the date of issuance, and until any time until the Notes are fully paid, to convert any outstanding and unpaid principal portion of the Notes, into fully paid and non–assessable shares of Common Stock (par value $.0001).

The Notes are convertible at a fixed conversion price of 45% of the lowest trading price of the Common Stock as reported on the OTC Pink maintained by the OTC Markets Group, Inc.

upon which the Company’s shares are currently quoted, for the four (4) prior trading days including the day upon which a Notice of Conversion is received by the Company.

During June 2018, an amendment to the note was executed where by the conversion price was fixed at $0.0151 per share.

Interest on the unpaid principal balance of this Note accrues at the rate of twenty-four (24 %) per annum.

Beneficial ownership is limited to 4.99%.

The Notes may be prepaid in whole or in part, at any time during the period beginning on the issue date and ending on the maturity date September 1, 2016, beginning at 100% of the outstanding principal, accrued interest and certain other amounts that may be due and owing under the Notes.

Interest amounting to $75,348 was accrued for the year

ended December 31, 2019 (2018:

Interest amounting to $12,182 was accrued

for the year ended December 31, 2020 (2019:

Principal amount outstanding as at December 31,

was $200,488 of which $32,188 is current portion while $168,300 is the non-current portion (2018:

$479,079 –

All notes maturing prior to the date of this report

are outstanding.

2020 and 2019 was $3,128 and $200,488, respectively.

As at December 31, 2020, the entire balance was current while in comparison,

as at December 31, 2019, $32,188 is current portion while $168,300 is the non-current portion.

All notes maturing prior to the date of

this report are outstanding.

Derivative liability

During the year ended December 31, 2019, holders of

convertible promissory notes converted principal and interest amounting to $159,908 and $77,353, (2018:

During the year ended December 31,

2020, holders of convertible promissory notes converted principal and interest amounting to $29,060 and $11,710, (2019:

and $77,353), respectively.

1 unchanged sentence

liability as at

Conversions / Redemption

Change due to

liability as at

During the quarter ended December 31, 2018, the Company

changed its valuation method from Black-Scholes Model to Multinomial Lattice Model.

This is considered a change in the Company’s

estimate and therefore, it has been accounted prospectively.

Key assumptions used for the valuation of convertible

Derivative element of the convertible notes was fair

valued using multinomial lattice model.

Key assumptions used for the valuation

of convertible notes

Derivative element of the convertible notes

was fair valued using multinomial lattice model.

Following assumptions were used to fair value these notes as at December 31,

Projected annual volatility of 170.5% to 208.1%;

Discount rate of 1.55% to 1.59%;

Projected annual volatility of 182.3%;

Risk free interest rate of 0.06%;

Stock price of $0.014;

Liquidity term of 0.25 to 1.38 years;

Exercise price of $0.0072 to $0.0151 to and

Liquidity term of 0.25 years;

Dividend yield of 0%;

During the quarter ended December 31, 2018, the Company issued three (3)

new notes, resulting in the initial derivative liability recognized in the amount of $322,668.

As a result, the Company recorded

an initial discount in the amount of $260,380 and a loss on issuance of notes (day one derivative) in the amount of $62,288.

the quarter, $2,923 of the discount has been amortized and the remaining portion expected to be amortized over the life of the

notes in year ended December 31, 2019.

Exercise price of a range between $0.0055 to $0.0151.

STOCKHOLDERS’

On July 3, 2017, the Company filed an amended Certificate of

Incorporation in Delaware to increase its authorized common stock to 20,000,000,000 shares.

The Company’s authorized preferred

stock remained at 20,000,000 shares.

1,000,000 shares of Preferred Stock having a par value of $0.0001 per share shall be designated

as Series A Preferred Stock (“Series A Stock”).

Effective September 25, 2018, the Company filed an

amended Certificate of Incorporation in Delaware to decrease its authorized common stock to 850,000,000 shares.

On July 3, 2017, the Company filed

an amended Certificate of Incorporation in Delaware to increase its authorized common stock to 20,000,000,000 shares.

The Company’s

authorized preferred stock remained at 20,000,000 shares.

1,000,000 shares of Preferred Stock having a par value of $0.0001 per

share shall be designated as Series A Preferred Stock (“Series A Stock”).

Effective September 25, 2018, the

Company filed an amended Certificate of Incorporation in Delaware to decrease its authorized common stock to 850,000,000 shares.

The Company’s authorized preferred stock remained at 20,000,000 shares.

Capitalization

The Company is authorized to issue 850,000,000 shares

of common stock, par value $0.0001, of which 571,145,968 shares are outstanding as at December 31, 2019 (at December 31, 2018:

The Company is authorized to issue 850,000,000

shares of common stock, par value $0.0001, of which 573,277,094 shares are outstanding as at December 31, 2020 (at December 31,

571,145,968 shares of common stock issued and outstanding).

The Company is also authorized to issue 20,000,000 shares of preferred

stock, par value $0.0001, of which 1,000,000 shares were outstanding as at December 31, 2019 and 2018.

As of December 31, 2019, convertible notes,

warrants and preferred stock warrants outstanding could be converted into 27,535,127 (2018:

The Company is also authorized to issue 20,000,000 shares of

preferred stock, par value $0.0001, of which 1,000,000 shares were outstanding as at December 31, 2020 and 2019.

As of December 31, 2020, convertible

notes, warrants and preferred stock warrants outstanding could be converted into 6,928,486 (2019:

27,535,127), 364,891,384 (2019:

1 unchanged sentence

100,000,000) shares of common stock, respectively.

These together will exceed the authorized common share

These together will exceed the authorized

common share limit;

however, majority of the warrants are unlikely to be exercised due to the depressed share price.

9 unchanged sentences

authorized stock, unless otherwise required by law or otherwise.

Series A Preferred Stock (“Series

A Stock”)

Dividends shall be declared and set aside for any shares of

Series A Stock in the same manner and amount as for the Common Stock.

Series A Stock, as a class, shall have voting rights equal

to a multiple of 2X the number of shares of Common Stock issued and outstanding that are entitled to vote on any matter requiring

shareholder approval.

The Series A Stock holders shall not vote as a separate class, but shall vote together with the common stock

on all matters, including any amendment to increase or decrease the authorized capital stock.

Upon the voluntary or involuntary

dissolution, liquidation or winding up of the corporation, the assets of the Company available for distribution to its shareholders

shall be distributed to the holders of common stock and the holders of the Series A Stock ratably without any preference to the

holders of the Series A Stock.

Shares of Series A Stock can be converted at any time into fully-paid and nonassessable shares

of Common Stock at the rate of One Hundred (100) shares of Common Stock for each One (1) share of Series A Stock.

Holders of shares of common stock are entitled to one

vote for each share on all matters to be voted on by the stockholders.

Holders of common stock do not have cumulative voting rights.

Subject to preferences that may be applicable to any

outstanding shares of preferred stock, the holders of common stock are entitled to share ratably in dividends, if any, as may be

declared from time to time by the board of directors in its discretion from funds legally available therefor.

Holders of common stock have no pre-emptive rights

to purchase the Company’s common stock.

There are no conversion or redemption rights or sinking fund provisions with respect

to the common stock.

The Company may issue additional shares of common stock which could dilute its current shareholder's share

During the quarter ended March 31, 2018, the Company issued 5,529,412

shares of common stock to Rubin Schindermann and Alexander Starr as consideration to settle outstanding management fee recorded

at fair value of $84,000, of which $9,000 had previously been recorded in Accounts Payable.

Additionally, the Company issued 5,156,933

shares of common stock to individuals on conversion of convertible promissory notes amounting to $21,518 and 300,000 shares were

issued as consideration for consulting services amounting to $3,600.

During the quarter ended June 30, 2018, the Company

issued 3,140,506 shares of common stock to individuals on conversion of convertible promissory notes amounting to $47,826 and 500,000

shares were issued as consideration for consulting services amounting to $22,500.

Furthermore, the Company issued 2,500,000 shares

of common stock to the note holder for settlement of debt.

See Note 15 for detail.

During the quarter ended September 30, 2018, the Company

issued 4,551,990 shares of common stock to individuals on conversion of convertible promissory notes amounting to $85,695.

to that, the Company issued 25,500,000 shares of common stock to shareholders of Visava Inc.

as per the Exchange Agreement mentioned

in Note 11 and 750,000 shares were issued as consideration for marketing services amounting to $46,575.

During the quarter ended December 31, 2018, the Company

issued 7,964,528 shares of common stock to individuals on conversion of convertible promissory notes amounting to $126,384.

During the year ended December 31, 2018, 63,094,634

shares of common stock to be issued as consideration for private placements.

These were recorded at fair value of $2,735,545, based

on the cash proceeds received by the Company.

As part of consideration for the private placement, the Company also agreed to issue

warrants to purchase 63,094,634 shares of common stock.

Out of the total amount of shares to be issued, the Company issued 22,757,102

shares during quarter ended December 31, 2018.

Refer below for additional details regarding the warrant issued under the subheading

“Warrants”.

Additionally, $215,680 were received as partial consideration

for private placements and since signed agreements were executed during December 2018, the remaining balance of $220,319 has been

classified as a Stock subscription receivable under equity.

During the quarter ended March 31, 2019, the remaining balance was

During the quarter ended March 31, 2019, the Company

issued 588,237 shares of common stock to individuals on conversion of convertible promissory notes amounting to $30,000.

Additionally,

the Company issued 30,407,412 shares of common stock to shareholders of CannaKorp Inc.

as per the Exchange Agreement mentioned

During the quarter ended March 31, 2019, the Company

sold 226,441,371 shares of common stock as consideration for private placements.

These were recorded at fair value of $4,558,282,

based on the cash proceeds received by the Company.

As part of consideration for the private placement, the Company also agreed

to issue warrants to purchase 226,554,129 shares of common stock.

Effective April 1, 2019, the Company changed its

functional currency from United States Dollar to Canadian Dollar thereby having an impact on prepaid expenses, additional

paid in capital and accumulated comprehensive income (loss) in the amount of $600, $339,007 and $339,607.

The presentation currency of the Company has remained unchanged

at United States Dollar.

During the quarter ended June 30, 2019, the Company

issued 10,562,252 shares of common stock to individuals on conversion of convertible promissory notes amounting to $159,490.

250,000 shares of common stock to be issued as consideration

Series A Preferred Stock (“Series A

Stock”)

Dividends shall be declared and set aside

for any shares of Series A Stock in the same manner and amount as for the Common Stock.

Series A Stock, as a class, shall

have voting rights equal to a multiple of 2X the number of shares of Common Stock issued and outstanding that are entitled to vote

on any matter requiring shareholder approval.

The Series A Stock holders shall not vote as a separate class but shall vote

together with the common stock on all matters, including any amendment to increase or decrease the authorized capital stock.

the voluntary or involuntary dissolution, liquidation or winding up of the corporation, the assets of the Company available for

distribution to its shareholders shall be distributed to the holders of common stock and the holders of the Series A Stock

ratably without any preference to the holders of the Series A Stock.

Shares of Series A Stock can be converted at any

time into fully-paid and nonassessable shares of Common Stock at the rate of One Hundred (100) shares of Common Stock for each

One (1) share of Series A Stock.

Holders of shares of common stock are entitled

to one vote for each share on all matters to be voted on by the stockholders.

Holders of common stock do not have cumulative voting

Subject to preferences that may be applicable

to any outstanding shares of preferred stock, the holders of common stock are entitled to share ratably in dividends, if any, as

may be declared from time to time by the board of directors in its discretion from funds legally available therefore.

Holders of common stock have no pre-emptive

rights to purchase the Company’s common stock.

There are no conversion or redemption rights or sinking fund provisions with

respect to the common stock.

The Company may issue additional shares of common stock which could dilute its current shareholder's

During the quarter ended December 31,

2019, the Company had found an error in issuing in the incorrect private placement and therefore had recorded a subscription receivable

in the amount of $220,000 based on the cash proceeds of the private placement and this was offset by shares to be issued, therefore,

a net zero effect on equity.

During quarter ended March 31, 2020, the incorrect number of shares, 11,000,000, were cancelled.

During the quarter ended March 31,

2020, 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by Smit to the Company’s

subsidiary, Canary.

These were recorded at fair value of $193, based on the market price of the Company’s stock on the date

of agreement.

These are currently recorded under shares to be issued and will be allocated between common stock and additional

paid in capital once the shares are issued.

During the quarter ended June 30,

2020, the Company issued 3,131,126 shares of common stock to individual on conversion of a convertible promissory note amounting

to $40,770 (including principal balance and accrued interest).

In addition, 5,208 shares of common stock to be issued as consideration

of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary.

1 unchanged sentence

of $42, based on the market price of the Company’s stock on the date of agreement.

These were initially recorded under

shares to be issued and allocated between common stock and additional paid in capital during the quarter ended June 30, 2019 when

the shares were issued.

During the quarter ended June 30, 2019, the

Company issued 6,600,000 and 8,234,850 shares of common stock to Rubin Schindermann and Alexander Starr, respectively, as

consideration to settle outstanding management fee and shareholder advances recorded at fair value of $1,665,329.

3,000,000 shares of common stock were issued as a bonus for completing the facility’s construction, fair valued in the

amount of $294,000.

Refer to Note 13 for additional details.

In addition, 500,000 shares were issued as consideration for

consulting services amounting to $48,000.

During the three months ended, June 30, 2019, Saul

Niddam, Chief Operating Officer of the subsidiary, CannaKorp purchased 1,666,667 shares (December 31, 2018:

nil shares) as consideration

for private placement.

These were recorded at fair value in the amount of $37,385 based on the cash proceeds received by the Company.

During the quarter ended June 30, 2019, the Company

sold 126,109,709 shares of common stock as consideration for private placements.

These are currently recorded under shares

to be issued and will be allocated between common stock and additional paid in capital once the shares are issued.

As explained in Note 14, during the quarter

ended September 30, 2020, the Company issued 10,000,000 shares of common stock to a director of the company pursuant to Amendment

to the Debt Purchase and Assignment Agreement (“Agreement”) with CLI.

These were recorded at fair value of $130,000,

based on the cash proceeds received by the Company.

As part of consideration for the private placement, the Company also agreed

to issue warrants to purchase 81,139,987 shares of common stock.

During the quarter ended June 30, 2019, the Company

issued 358,520,843 shares for past and current private placements.

Refer below for additional details regarding the warrant issued

under the subheading “Warrants”.

Additionally, proceeds of $358,074 were received as consideration for private

placements, however signed agreements were not executed as at June 30, 2019 and these have therefore been classified as a liability.

Subsequently, during the quarter ended September 30, 2019, the agreements were executed and shares were issued, therefore, transfer

During the quarter ended September 30, 2019, the Company

issued 1,324,503 shares of common stock to an individual on conversion of convertible promissory notes amounting to $20,000.

During the quarter ended September 30, 2019, the Company

sold 3,879,524 shares of common stock as consideration for private placements.

These were recorded at fair value of $229,545 based

on the cash proceeds received by the Company.

As part of consideration for the private placement, the Company also agreed to issue

warrants to purchase 8,724,327 shares of common stock.

During the quarter ended September 30, 2019, the Company

issued 18,459,885 shares for past and current private placements.

Refer below for additional details regarding the warrant issued

under the subheading “Warrants”.

During the quarter ended December 31, 2019, the Company

issued 1,243,107 shares of common stock to two individuals on conversion of convertible promissory notes amounting to $18,771.

During the quarter ended September 30, 2019, the Company

sold 454,545 shares of common stock as consideration for private placements.

These were recorded at fair value of $7,576 based

on the cash proceeds received by the Company.

During the quarter ended December 31, 2019, the Company

issued 4,876,691 shares for past and current private placements.

Refer below for additional details regarding the warrant issued

under the subheading “Warrants”.

During the quarter ended December 31, 2019, the

Company had found an error in issuing in the incorrect private placement and therefore had recorded a subscription receivable

in the amount of $220,000 based on the cash proceeds of the private placement and this was offset by shares to be issued, therefore, a net zero effect on equity.

Subsequent to the year end, during quarter

ended March 31, 2020, the incorrect number of shares, 11,000,000, were cancelled.

based on the market price of the Company’s stock on the date of agreement.

In addition, 26,040 shares of common stock to

be issued as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary.

were recorded at fair value of $353, based on the market price of the Company’s stock on the date of agreement.

currently recorded under shares to be issued and will be allocated between common stock and additional paid in capital once the

shares are issued.

In addition, CLI purchased 500,000 shares of the Company’s Series A Preferred Stock from a director of the company, Rubin Schindermann,

thus gaining voting control.

During the quarter ended December 31,

2020, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted

by Smit to the Company’s subsidiary, Canary.

These were recorded at fair value of $215, based on the market price of the

Company’s stock on the date of agreement.

These are currently recorded under shares to be issued and will be allocated between

common stock and additional paid in capital once the shares are issued.

During the quarter ended March 31,

2019, the Company issued 588,237 shares of common stock to individuals on conversion of convertible promissory notes amounting

Additionally, the Company issued 30,407,412 shares of common stock to shareholders of CannaKorp Inc.

as per the Exchange

Agreement mentioned in Note 1.

During the quarter ended March 31,

2019, the Company sold 226,441,371 shares of common stock as consideration for private placements.

These were recorded at fair

value of $4,558,282, based on the cash proceeds received by the Company.

As part of consideration for the private placement, the

Company also agreed to issue warrants to purchase 226,554,129 shares of common stock.

Effective April 1, 2019, the Company

changed its functional currency from United States Dollar to Canadian Dollar thereby having an impact on prepaid expenses, additional

paid in capital and accumulated comprehensive income (loss) in the amount of $600, $339,007 and $339,607.

The presentation currency

of the Company has remained unchanged at United States Dollar.

During the quarter ended June 30,

2019, the Company issued 10,562,252 shares of common stock to individuals on conversion of convertible promissory notes amounting

250,000 shares of common stock to be issued

as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary.

These were recorded

at fair value of $27,000, based on the market price of the Company’s stock on the date of agreement.

These were initially

recorded under shares to be issued and allocated between common stock and additional paid in capital during the quarter ended June 30,

2019 when the shares were issued.

During the quarter ended June 30,

2019, the Company issued 6,600,000 and 8,234,850 shares of common stock to Rubin Schindermann and Alexander Starr, respectively,

as consideration to settle outstanding management fee and shareholder advances recorded at fair value of $1,665,329.

Plus, 3,000,000

shares of common stock were issued as a bonus for completing the facility’s construction, fair valued in the amount of $294,000.

In addition, 500,000 shares were issued as consideration for consulting services amounting to $48,000.

During the quarter ended, June 30,

2019, Saul Niddam, Chief Operating Officer of the subsidiary, CannaKorp purchased 1,666,667 shares (December 31, 2018:

shares) as consideration for private placement.

These were recorded at fair value in the amount of $37,385 based on the cash proceeds

received by the Company.

During the quarter ended June 30,

2019, the Company sold 126,109,709 shares of common stock as consideration for private placements.

These were recorded at fair

value of $4,194,665, based on the cash proceeds received by the Company.

As part of consideration for the private placement, the

Company also agreed to issue warrants to purchase 81,139,987 shares of common stock.

During the quarter ended June 30,

2019, the Company issued 358,520,843 shares for past and current private placements.

Refer below for additional details regarding

the warrant issued under the subheading “Warrants”.

Additionally, proceeds of $358,074 were received as consideration

for private placements, however signed agreements were not executed as at June 30, 2019 and these have therefore been classified

as a liability.

Subsequently, during the quarter ended September 30, 2019, the agreements were executed and shares were issued,

therefore, transfer to equity.

During the quarter ended September 30,

2019, the Company issued 1,324,503 shares of common stock to an individual on conversion of convertible promissory notes amounting

During the quarter ended September 30,

2019, the Company sold 3,879,524 shares of common stock as consideration for private placements.

These were recorded at fair value

of $229,545 based on the cash proceeds received by the Company.

As part of consideration for the private placement, the Company

also agreed to issue warrants to purchase 8,724,327 shares of common stock.

During the quarter ended September 30,

2019, the Company issued 18,459,885 shares for past and current private placements.

Refer below for additional details regarding

the warrant issued under the subheading “Warrants”.

During the quarter ended December 31,

2019, the Company issued 1,243,107 shares of common stock to two individuals on conversion of convertible promissory notes amounting

During the quarter ended December 31,

2019, the Company sold 454,545 shares of common stock as consideration for private placements.

These were recorded at fair value

of $7,576 based on the cash proceeds received by the Company.

During the quarter ended December 31,

2019, the Company issued 4,876,691 shares for past and current private placements.

Refer below for additional details regarding

the warrant issued under the subheading “Warrants”.

Shares to be issued include the following:

4,006,832 numbers of shares outstanding as at December

31, 2019 amounting to $611,261 as details below:

80,000 shares of common stock to be issued as compensation

to advisers and consultants.

These were recorded at fair value of $52,000, based on the market price of the Company’s stock

on the date of issue.

35,000 to be issued as settlement of amount due for

website development services amounting to $247,306.

The fair value of the shares on the date of settlement was $21,000, resulting

in gain on settlement amounting to $226,306 during year ended December 31, 2017.

703,439 shares of common stock to be issued as

consideration for private placements with a fair value of $37,840 based on cash proceeds received.

80,000 shares of common stock to be issued

as compensation to advisers and consultants.

These were recorded at fair value of $52,000, based on the market price of the Company’s

stock on the date of issue.

35,000 to be issued as settlement of amount

due for website development services amounting to $247,306.

The fair value of the shares on the date of settlement was $21,000,

resulting in gain on settlement amounting to $226,306 during year ended December 31, 2017.

Private placements

Consideration for private placements with

the fair value based on cash proceeds received.

Proper allocation between common stock and additional paid in capital of the amount

received will be completed in the period when the shares are issued.

930,240 shares of common stock to be issued as consideration

for settlement of loan based on a fair value of $80,838.

Refer Note 13 for details.

3,500,000 shares of common stock to be issued as consideration

for intangible assets based on a fair value of $260,050.

During the period ended June 30, 2020,

the Company found the allocation between shares to be issued and additional paid in capital was not performed correctly when the

shares were issued for the past private placements.

This has been corrected in this period and as a result of this reclassification,

there was no impact on total equity.

Settlement of

CannaKorp's loans

Refer Note 14 for details.

The fair value of the warrants issued during the year

issued was measured at the date of acquisition using the Black-Scholes option pricing model using the following assumptions:

Agreement with

Serious Seeds

As consideration for intellectual property rights granted by Smit.

The fair value is based on the market price of the Company’s stock on the date of issue as per the agreement.

License Agreement

During the period ended June 30, 2020, 6,500,000 shares with a fair value of $482,950 to be issued in connection with License Agreement with cGreen (as explained in detail in annual year ended December 31, 2019 10-K) were transferred to equity.

However, upon execution of the settlement agreement as detailed in Note 1, these shares were no longer required to be issued due to the termination of the License Agreement.

As further explained in Note 20, the warrants

(with exercise price in United States Dollar) were re-classified as liability as at December 31, 2019 and therefore have been revalued

on each quarter end.

The fair value of the warrants was measured on reporting dates using the Black-Scholes option pricing model using

the following assumptions:

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

Forfeiture rate

$0.014 per share

$0.011 per share

$0.018 per share

$0.010 per share

$0.020 per share

Exercise price

$0.023 to $0.200

Risk free interest rate

0.13% to 2.48%

0.16% to 2.66%

0.23% to 2.66%

1.58% to 2.66%

Expected life

0.15 to 1.93 years

0.01 to 1.93 years

0.01 to 2.12 years

0.24 to 2.37 years

0.49 and 2.66 years

Expected dividend rate

The fair value of the warrants issued during

the year issued was measured at the date of acquisition using the Black-Scholes option pricing model using the following assumptions:

During quarter ended

December 31, 2020

During quarter ended

September 30, 2020

During quarter ended

June 30, 2020

During quarter ended

March 31, 2020

Forfeiture rate

$0.012 to $0.014 per share

$0.008 to $0.018 per share

$0.008 per share

$0.010 to $0.014 per share

Exercise price

$0.200 per share

$0.037 to $0.200 per share

$0.200 per share

$0.150 to $0.200 per share

Risk free interest rate

0.14% to 0.16%

0.11% to 0.27%

Expected life

Expected dividend rate

Fair value of warrants

During quarter

8 unchanged sentences

$0.080 to $0.120 per share

$0.060 to $0.210 per share

Exercise price

3 unchanged sentences

$0.050 per share

$0.050 to $0.150 per share

Risk free interest rate

2 unchanged sentences

2.26% to 2.60%

2.52% to 2.96%

Expected life

1 unchanged sentence

2 and 3 years

Expected dividend rate

Fair value of warrants

As at December 31, 2019, related to private placements,

there were 379,513,077 (2018:

63,094,634) warrants were outstanding, fully vested and with a remaining contractual life term of

a range between 0.49 and 2.62 (2018:

1.49 and 2.98) years.

As at December 31, 2019, related to the acquisition

of the Company’s subsidiaries, Visava Inc.

and CannaKorp Inc, there were 25,000,000 (2018:

25,000,000) and 7,211,213 (2018:

nil) warrants outstanding, fully vested and with a remaining contractual life term of 0.59 (2018:

1.59) and 1.16 (2018:

respectively.

As at December 31, 2019, related to the settlement of the Company’s

subsidiary, CannaKorp’s loan, there were 930,240 (2018:

N/A) warrants outstanding, fully vested and with a remaining contractual

life term of 1.24 (2018:

The Company is a party to a 5-year lease

agreement (initiated on September 2018) with respect to its office premises.

Total minimum rent for the premises is $838 (CAD $1,100)

plus applicable taxes per month.

On the first anniversary date, the minimum rent per month will increase to $876 (CAD $1,138) plus

applicable taxes, on the second anniversary date, the minimum rent per month will increase to $897 (CAD $1,166) plus applicable

taxes, on the third anniversary date, the minimum rent per month will increase to $919 (CAD $1,193) plus applicable taxes, on the

fourth anniversary date, the minimum rent per month will increase to $940 (CAD $1,221) plus applicable taxes.

The Company’s subsidiary, Canary,

is a party to a 10-year lease agreement (initiated on July 2014) with respect to its facility to produce Medical Marijuana.

minimum rent for the building is $1,925 (CAD $2,500) plus applicable taxes per month.

Effective January 1, 2019, the minimum rent

was increased to $19,248 (CAD $25,000) plus applicable taxes per month.

The lease agreement

has three 10-year renewal options and on each anniversary date, commencing from January 1, 2020, the minimum rent will increase

by the cumulative annual percentage increase in the Canadian Consumer Price Index.

Deferred rent is due to the amortization

of the operating lease expense resulting from the use of straight-line method versus the non-level lease payments and tenant improvements

being made in the Company’s production facility paid by the Company’s landlord in amount of $1,716,694 (CAD $2,331,063).

As at December 31, 2019, The Company has recorded tenant improvement allowance incentive amount in work in progress.

will be amortizing these deferred rent charges on a monthly basis in the amount of $28,042 (CAD $36,423) over the remaining term

ending on June 30, 2024 as a reduction in rent expense.

The Company’s subsidiary, CannaKorp,

is a party to a monthly lease agreement (initiated on December 1, 2014) with respect to its facility, approximately 1,000 square

feet of space located in a multi-tenant building.

Total minimum rent for the premises is $1,200 plus applicable taxes per month,

tenancy may be terminated by a sixty (60) days written notice by the Company or the landlord.

For the year ended December 31, 2019, rent expense was $183,105

Future minimum rent payments for above

leases are as follows:

The Tax Cuts and Jobs Act (the “Act”) enacted

on December 22, 2017 reduces the US federal corporate tax rate from 35% to 21% and requires companies to pay a one-time transition

tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced

As of December 31, 2018, the Company has not completed the accounting for the tax effects of enactment of the Act;

as described below, it has made a reasonable estimate of the effects on existing deferred tax balances.

These amounts are provisional

and subject to change.

The provision for income taxes is calculated at US

corporate tax rate of approximately 21% (2018:

Breakdown of warrants outstanding as at

December 31, 2020 and 2019 are details below:

outstanding as at

December 31, 2019

contractual life term

December 31, 2019

Acquisition of Canary

Acquisition of CannaKorp

Private placements

Settlement of CannaKorp loans

Serious Seeds

During year ended December 31, 2020,

54,576,116 warrants expired (related to private placements and acquisition of Canary).

CONTINGENCIES AND COMMITMENTS

Contingencies

During the year ended December 31,

2019, a terminated employee of Canary has filed a lawsuit against the Company amounting to approximately $1,649,340 (CAD $2,100,000)

in Ontario, Canada.

Currently, the Company is defending its position and believes that the ultimate decision will be in favor of

Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim, no

provision has been recognized.

During the year ended December 31,

2019, a terminated employee of Canary had delivered a demand letter claiming wrongful dismissal.

A settlement was reached in the

amount of $5,792 (CAD $7,375) which were due within 30 days of the execution of the settlement agreement.

During the quarter ended

June 30, 2020, the Company has paid the settlement amount in full.

During the year ended December 31,

2019, a terminated employee of Canary had delivered a demand letter claiming wrongful dismissal plus unpaid wages, expenses and

vacation pay for a minimum amount of $54,516 (CAD $69,412).

During quarter ended June 30, 2020, the Company settled with the

employee in the amount of $7,495 (CAD $9,543).

A complaint for damages in the amount of

$150,000 was lodged against CannaKorp by the former Chief Financial Officer of the CannaKorp for outstanding professional fees.

No claim has been registered and is working with management for a settlement.

The Management are of the view that no material losses

will arise in respect of the legal claim at the date of these consolidated financial statements.

As at December 31, 2020,

$188,865 has been recorded in the CannaKorp’s payable based on past accruals and outstanding invoices.

Due to the uncertainty

of timing and the amount of estimated future cash flows, if any, relating to this claim, no further amount has been recognized.

A complaint for damages was lodged against

the Company by cGreen for missed payment of the January 2020, non-issuance of 7 million shares as promised in the agreement

and loss in the share value.

During the quarter ended June 30, 2020, the Company was in arbitration with cGreen for the breaches

of the terms of the License Agreement, however, through an early mediation, both companies reached to a settlement agreement to

settle the breaches of the contract on July 27, 2020 (“Effective Date”).

As per the settlement agreement, the

License Agreement has been terminated and the Company does not have to issue the 10 million shares nor pay the outstanding royalty

payable in the amount of $1,191,860.

As consideration, the Company paid $130,000 within 30 days of the Effective Date and will

pay $100,000 in monthly installments of $10,000 commencing in April 2021 to cGreen resulting in a gain on settlement in the

amount of $1,704,860.

In April 2020, an employee of Canary,

who had previously resigned from the company, filed a claim that their bonus, that had been promised in their employment agreement

was unpaid and had filled a claim with the Ministry of Labour in Ontario.

While the Ministry of Labour deemed the bonus owed as

a valid payment, the matter has since progressed to the Ontario Labour Relations Board (OLRB) in which the company is disputing

this bonus due to several contractual factors that the company believes will allow this ruling to be overturned and revised in

the company’s favor.

Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to

this claim, no further amount has been recognized.

A claim for damages in the amount of $1,463,047

(CAD $1,862,805) was lodged against Company and its directors by the former Chief Financial Officer of the Company for wrongful

The management are of the view that no material losses will arise in respect of the legal claim at the date of these

consolidated financial statements.

As at December 31, 2020, $11,540 has been recorded in the Target’s payable based

on past accruals.

Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim,

no further amount has been recognized.

During the year ended December 31,

2020, a claim for damages in the amount of $102,713 (CAD $130,778) was lodged against Canary by a vendor for breach of contract.

The management are of the view that no material losses will arise in respect of the legal claim at the date of these consolidated

financial statements.

As at December 31, 2020, $108,503 (CAD $138,150) has been recorded in the Canary’s payable based

on past accruals.

Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim,

no further amount has been recognized.

Covid-19 Pandemic

On March 11, 2020, the World Health Organization

declared the ongoing COVID-19 outbreak as a global health emergency.

This resulted in governments worldwide enacting emergency measures

to combat the spread of the virus, including the closure of certain non-essential businesses.

During the year ended December 31, 2020, the pandemic

did not have a material impact on the Company’s operations.

As at December 31, 2020, the Company did not observe any material impairment

of its assets or a significant change in the fair value of assets due to the COVID-19 pandemic.

The Company has taken steps to minimize

the potential impact of the pandemic including safety measures with respect to personal protective equipment, the reduction in travel

and the implementation of a virtual office including regular video conference meetings and participation in virtual customer meetings

and other virtual events.

Due to the rapid developments and uncertainty surrounding COVID-19,

it is not possible to predict the impact that COVID-19 will have on the Company’s business, balance sheet and operating results

in the future.

In addition, it is possible that estimates in the Company’s financial statements will change in the near term as

a result of COVID-19 and the effect of any such changes could be material, which could result in, among other things, impairment of long-lived

assets including goodwill.

The Company is closely monitoring the impact of the pandemic on all aspects of its business.

As per the Distribution, Collaboration

and Licensing Agreement (“Agreement”) entered with Serious Seeds B.V.

(“Serious Seeds”) ,

effective December 6, 2018, the Company will issue to Serious Seeds B.V.

each month 5,208 shares of common stock, beginning

on the thirteen (13 th ) month following the effective date of the Agreement and continuing through the sixtieth (60 th )

month of the initial term.

Furthermore, Serious Seeds B.V.

will be issued warrants in each of the foregoing months to purchase

16,667 shares of Target common stock at varying exercise prices ranging from $0.20 to $0.35 per share.

All of the warrants must

be exercised on or before the two (2) year anniversary date of each of the warrant issuance dates.

As at December 31,

2020, none of the above shares have been issued.

In consideration of the Company’s

appointment as Serious’

exclusive distributor in Canada, the Company will pay Serious certain royalties as follows:

2.00% of gross sales

2.25% of gross sales

2.50% of gross sales

2.75% of gross sales

5 th and following years:

3.00% of gross sales

During quarter ended March 31, 2020,

the Company identified that due to the change in functional currency of the Company from United States Dollar to Canadian Dollar

during year ended December 31, 2019, the outstanding warrants as at December 31, 2019 no longer meet the scope exception

of ASC 815 and therefore, should not be considered indexed to its own stock and as a result, these warrants should be re-classified

from additional paid-in-capital to liability as at December 31, 2019.

As a result of this restatement, the following

line items were restated in the comparative balance sheet as at December 31, 2019:

Warrant liability

Total liability

Additional paid-in capital

The Tax Cuts and Jobs Act (the “Act”)

enacted on December 22, 2017 reduces the US federal corporate tax rate from 35% to 21% and requires companies to pay a one-time

transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign

sourced earnings.

As of December 31, 2020, the Company has not completed the accounting for the tax effects of enactment of

however, as described below, it has made a reasonable estimate of the effects on existing deferred tax balances.

amounts are provisional and subject to change.

The provision for income taxes is calculated

at US corporate tax rate of approximately 21% (2019:

21%) as follows:

4 unchanged sentences

Deferred tax assets

Deferred taxes are provided on a liability method whereby

deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred

tax liabilities are recognized for taxable temporary differences.

Temporary differences are the differences between the reported

amounts of assets and liabilities and their tax bases.

Deferred tax assets are reduced by a valuation allowance when, in the opinion

of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets consist of the following components

as of December 31:

Deferred taxes are provided on a liability

method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards

and deferred tax liabilities are recognized for taxable temporary differences.

Temporary differences are the differences between

the reported amounts of assets and liabilities and their tax bases.

Deferred tax assets are reduced by a valuation allowance when,

in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets consist of the

following components as of December 31:

Tax effect of NOL Carryover

11 unchanged sentences

All tax years since inception are open to examination because no tax returns have been

CONTINGENCIES

During the year ended December 31, 2019,

a terminated employee of Canary has filed a lawsuit against the Company amounting to approximately $1,616,790 (CAD $2,100,000)

in Ontario, Canada.

Currently, the Company is defending its position and believes that the ultimate decision will be in favor of

Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim, no

provision has been recognized.

During the year ended December 31, 2019,

a terminated employee of Canary had delivered a demand letter claiming wrongful dismissal.

A settlement was reached in the amount

of $5,678 (CAD $7,375) which were due within 30 days of the execution of the settlement agreement.

To date the Company has not

made any payment and is in violation of the agreement.

Due to the immaterial amount, no provision has been recognized.

During the year ended December 31, 2019,

a terminated employee of Canary had delivered a demand letter claiming wrongful dismissal plus unpaid wages, expenses and vacation

pay for a minimum amount of $53,440 (CAD $69,412).

Currently, the Company is defending its position and believes that the ultimate

decision will be in favor of the Company, however, the Company is open to a settlement.

As at December 31, 2019, $33,424 (CAD $33,424)

has been recorded in the Canary’s payable.

Due to the uncertainty of timing and the amount of estimated future cash flows,

if any, relating to this claim, no further amount has been recognized.

A complaint for damages in the amount of $150,000

was lodged against CannaKorp by the former Chief Financial Officer of the CannaKorp for outstanding professional fees.

claim has been registered and is working with management for a settlement.

The Management are of the view that no material

losses will arise in respect of the legal claim at the date of these financial statements.

As at December 31, 2019, $96,480

has been recorded in the CannaKorp’s payable.

Due to the uncertainty of timing and the amount of estimated future cash

flows, if any, relating to this claim, no further amount has been recognized.

A complaint for damages was lodged against the

Company by cGreen for missed payment of the January 2020, non issuance of 7 million shares as promised in the agreement and

loss in the share value.

No claim has been registered and is working with management for a settlement.

The management are of

the view that no material losses will arise in respect of the legal claim at the date of these financial statements.

Note 9, for royalty payable and shares to be issued balance as at December 31, 2019.

Due to the uncertainty of timing and the

amount of estimated future cash flows, if any, relating to this claim, no further amount has been recognized.

SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent

events up to April 14, 2020, the date the consolidated financial statements were issued, pursuant to the requirements of ASC 855

and has determined the following material subsequent events:

As disclosed in Note 16, during January 2020, the Company

cancelled 11,000,000 shares.

During February 2020, Target and Canary settled with

a vendor providing equipment to Canary for outstanding dues.

The settlement agreement cleared the outstanding balance of $100,150

due to the vendor and the vendor removed the equipment from Canary’s premises.

Effective March 11, 2020, the Company and

the Company’s shareholder, as mentioned in Note 13, (“Lender”) entered into a First Amending Agreement with the

Lender pursuant to which the Lender agreed to lend the Company an additional $230,970 (CAD $300,000).

The new loan carries interest

at the rate of 3.0146% per month.

The loan is payable upon demand of the Lender.

The net proceeds to the Company is $207,873 (CAD

$270,000) after the payment of a $23,097 (CAD $30,000) loan fee to the Lender.

The remaining terms and conditions of the Original

Loan remain in full force and effect.

During March 2020, Canary and 9258159 Canada Inc.

(“Thrive”)

signed a letter of intent (the "Letter of Intent") to create a joint venture which will enter into a Master Services

Agreement (the “MSA”) with Canary in respect of the cultivation, processing and sale of cannabis at Canary’s

licensed site.

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure

There were no changes in or disagreements with accountants

on accounting and financial disclosure for the period covered by this report.

events up to March 30, 2021, the date the consolidated financial statements were issued, pursuant to the requirements of ASC 855 and has

determined there are no material subsequent events to report.

Changes in and Disagreements

with Accountants on Accounting and Financial Disclosure

There were no changes in or disagreements

with accountants on accounting and financial disclosure for the period covered by this report.

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 5. Market for Registrant’s Common Equity