# EDGAR Filing Document

**Accession Number:** 0001081938
**File Stem:** 0001654954-25-013083
**Filing Date:** 2025-11
**Character Count:** 175718
**Document Hash:** ab6d3e05d3a099d265d366269488591b
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001654954-25-013083.hdr.sgml**: 20251114

**ACCESSION NUMBER**: 0001654954-25-013083

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 90

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251114

**DATE AS OF CHANGE**: 20251114

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** CANNAPHARMARX, INC.
- **CENTRAL INDEX KEY:** 0001081938
- **STANDARD INDUSTRIAL CLASSIFICATION:** PHARMACEUTICAL PREPARATIONS [2834]
- **ORGANIZATION NAME:** 03 Life Sciences
- **EIN:** 274635140
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-27055
- **FILM NUMBER:** 251486097

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 4439 TOWNSHIP RD 304
- **CITY:** MOUNTAIN VIEW COUNTY
- **NON US STATE TERRITORY:** ALBERTA
- **PROVINCE COUNTRY:** A0
- **ZIP:** T0M 0R0
- **BUSINESS PHONE:** 949-652-6838

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 4439 TOWNSHIP RD 304
- **CITY:** MOUNTAIN VIEW COUNTY
- **NON US STATE TERRITORY:** ALBERTA
- **PROVINCE COUNTRY:** A0
- **ZIP:** T0M 0R0

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** GOLDEN DRAGON HOLDING CO.
- **DATE OF NAME CHANGE:** 20110125

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** CCVG, INC.
- **DATE OF NAME CHANGE:** 20101117

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** CONCORD VENTURES, INC.
- **DATE OF NAME CHANGE:** 20071003

?xml version='1.0' encoding='ASCII'? canna_10q.htm

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

☒&nbsp;&nbsp;&nbsp;&nbsp; QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended **<u>September 30, 2025</u>**

**or**

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

For the transition period from ___________to ___________

Commission File Number: **<u>000-27055</u>**

---

| |
|:---|
| **CANNAPHARMARX, INC.** |
| (Exact name of small business issuer as specified in its charter) |

---

---

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

---

**4439 Township Rd 304, <u>Mountain View County, Alberta, Canada T0M 0R0</u>**

(Address of principal executive offices)

**<u>403-637-0420</u>**

(Issuer's Telephone Number)

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

**None**

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

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| N/A | N/A | N/A |

---

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

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

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

---

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

---

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

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

The number of shares of the registrant's common shares issued and outstanding as of November 14, 2025, was 662,501,405 shares.

**CANNAPHARMARX, INC.**

**September 30, 2025**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
|  | **PART I. FINANCIAL INFORMATION** |  |
| [Item 1](#bs) | [Financial Statements (unaudited)](#bs) | 3 |
| [Item 2](#i2) | [Management's Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation](#i2) | 28 |
| [Item 3](#i3) | [Quantitative and Qualitative Disclosures About Market Risk](#i3) | 40 |
| [Item 4](#i4) | [Controls and Procedures](#i4) | 40 |
|  | **[PART II. OTHER INFORMATION](#p2)** |  |
| [Item 1](#it1) | [Legal Proceedings](#it1) | 42 |
| [Item 1A](#it1a) | [Risk Factors](#it1a) | 43 |
| [Item 2](#it2) | [Unregistered Sales of Equity Securities and Use of Proceeds](#it2) | 43 |
| [Item 3](#it3) | [Defaults Upon Senior Securities](#it3) | 43 |
| [Item 4](#it4) | [Mine Safety Disclosures](#it4) | 43 |
| [Item 5](#it5) | [Other Information](#it5) | 43 |
| [Item 6](#it6) | [Exhibits](#it6) | 44 |
|  | [Signatures](#sg) | 45 |

---

---

| |
|:---|
| 2 |
| *[**Table of Contents**](#toc)* |

---

**CANNAPHARMARX, INC.**<br>**CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS**<br>

---

| | | |
|:---|:---|:---|
|  | **September 30,** <br>**2025** <br>**(Unaudited)** | **December 31,** <br>**2024** |
| **ASSETS** |  |  |
| **Current assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash | $**927** | $2156 |
| &nbsp;&nbsp;&nbsp;&nbsp;Goods and services tax receivable | **17628** | 18707 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | **588393** | 1747 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory | **863807** | 996250 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current assets | **1470755** | 1018860 |
| **Non-current assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Equipment, net | **123333** | 137237 |
| &nbsp;&nbsp;&nbsp;&nbsp;Right-of-use building, net | **5504692** | 5161473 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments | **4518127** | 4518127 |
| **Total assets** | $**11616907** | $10835697 |
| **LIABILITIES AND SHAREHOLDERS' DEFICIT** |  |  |
| **Current liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | $**10189279** | $9276299 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest | **1522539** | 2495337 |
| &nbsp;&nbsp;&nbsp;&nbsp;Notes payable | **478604** | 6678389 |
| &nbsp;&nbsp;&nbsp;&nbsp;Convertible notes | **1017003** | 1298114 |
| &nbsp;&nbsp;&nbsp;&nbsp;Derivative conversion feature | **556755** | 1159324 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans payable to related parties, current portion | **11885572** | 462818 |
| &nbsp;&nbsp;&nbsp;&nbsp;Royalty payable | **287035** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Liability for right-of-use building, current portion | **985027** | 728206 |
| &nbsp;&nbsp;&nbsp;&nbsp;Obligation to issue shares | **1558710** | 3654009 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | **28480524** | 25752496 |
| **Non-current liability** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans payable to related parties | **679397** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Liability for right-of-use building  | **4973729** | 4892838 |
| **Total liabilities** | $**34133650** | $30645334 |
| **SHAREHOLDERS' DEFICIT** |  |  |
| Preferred shares series A, $1.00 par value, 100,000 shares authorized, 74,416 issued and outstanding as at September 30, 2025 and December 31, 2024 | $**74416** | $74416 |
| Preferred shares series B, $1.00 par value, 3,000,000 shares authorized, 455,000 shares issued and outstanding as at September 30, 2025 and December 31, 2024 | **455000** | 455000 |
| Preferred shares series C, $1.00 par value, 100,000 shares authorized, 100,000 shares issued and outstanding as at September 30, 2025 and December 31, 2024 | **100000** | 100000 |
| Common shares, $0.0001 par value; 5,000,000,000 shares authorized, 662,501,405 issued and outstanding as at September 30, 2025 and December 31, 2024 | **66250** | 66250 |
| Treasury shares, $0.0001 par value 6,230,761 shares as at September 30, 2025 and December 31, 2024 | **623** | 623 |
| Additional paid-in capital | **81379443** | 80122590 |
| Accumulated deficit | **(104766005)** | (101184142) |
| Accumulated other comprehensive income | **173530** | 555626 |
| Total shareholders' deficit | **(22516743)** | (19809637) |
| **Total liabilities and shareholders' deficit** | $**11616907** | $10835697 |

---

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

---

| |
|:---|
| 3 |
| *[**Table of Contents**](#toc)* |

---

**CANNAPHARMARX, INC.**<br>**CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**<br>**(Unaudited)**<br>

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended<br>September 30, | Three months ended<br>September 30, | Nine months ended<br>September 30, | Nine months ended<br>September 30, |
|  | **2025** | 2024 | **2025** | 2024 |
| **Revenue** | $**656606** | $312164 | $**1223533** | $338003 |
| **Cost of goods sold** | **1096606** | 668322 | **2787350** | 1582026 |
| **Gross loss** | **(440000)** | (356158) | **(1563817)** | (1244023) |
| **Operating expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation | **-** |  | **-** | 87278 |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | **145444** | 70354 | **260037** | 274610 |
| &nbsp;&nbsp;&nbsp;&nbsp;Payroll and consulting fees | **-** | 25389 | **-** | 160954 |
| &nbsp;&nbsp;&nbsp;&nbsp;Professional fees | **115990** | 64075 | **340546** | 336222 |
| &nbsp;&nbsp;&nbsp;&nbsp;Royalty expense | **234212** | - | **289811** | - |
| Total operating expenses | **495646** | 159818 | **890394** | 859064 |
| Loss from operations | **(935646)** | (515976) | **(2454211)** | (2103087) |
| **Other income (expenses)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in the fair value of derivative conversion feature | **7296** | (6216) | **602569** | 612874 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in the fair value of obligation to issue shares | **168355** | 1324327 | **2095299** | (2060066) |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange gain (loss) | **(24243)** | 18030 | **71084** | 17928 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | **(506331)** | (631744) | **(1779362)** | (1941885) |
| &nbsp;&nbsp;&nbsp;&nbsp;Imputed interest expense | **(187242)** |  | **(187242)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on the extinguishment of debt | **-** |  | **-** | (690712) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other expense | **-** | - | **(1930000)** | - |
| Total other income (expenses) | **(542165)** | 704397 | **(1127652)** | (4061861) |
| **Net income (loss)** | **(1477811)** | 188421 | **(3581863)** | (6164948) |
| Foreign currency translation adjustment | **278300** | (104442) | **(382096)** | 75495 |
| **Net comprehensive income (loss)** | $**(1199511)** | $83979 | $**(3963959)** | $(6089453) |
| Basic and diluted income (loss) per share of common shares | $**(0.00)** | $0.00 | $**(0.01)** | $(0.01) |
| **Weighted average number of shares outstanding** | **662501405** | 662501405 | **662501405** | 612777502 |

---

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

---

| |
|:---|
| 4 |
| *[**Table of Contents**](#toc)* |

---

**CANNAPHARMARX, INC.**<br>**CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS**<br>**(Unaudited)**<br>

---

| | | |
|:---|:---|:---|
|  | Nine months ended<br>September 30,  | Nine months ended<br>September 30,  |
|  | **2025** | 2024 |
| **Operating activities** |  |  |
| Net loss | $**(3581863)** | $(6164948) |
| Adjustments for non-cash items: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation | **-** | 87278 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in the fair value of derivative conversion feature | **(602569)** | (612874) |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in the fair value of obligation to issue shares | **(2095299)** | 2060066 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange gain | **(71084)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on the extinguishment of debt | **-** | 690712 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other expense | **1930000** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | **1779362** | 1941885 |
| &nbsp;&nbsp;&nbsp;&nbsp;Imputed interest expense | **187242** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on impairment of inventory included in cost of goods sold | **1506292** | 529634 |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Goods and services tax receivable | **1079** | (25994) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | **(580559)** | (183082) |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory | **(1290689)** | (615796) |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | **-** | 278036 |
| &nbsp;&nbsp;&nbsp;&nbsp;Royalty payable | **289810** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | **677734** | 695859 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest | **-** | (198118) |
| **Cash used in operating activities** | **(1850544)** | (1517342) |
| **Financing activities** |  |  |
| Proceeds from issuance of share purchase warrants | **-** | 87768 |
| Proceeds from notes payable | **-** | 1819973 |
| Proceeds from loans payable to related parties | **1849315** |  |
| Proceeds from convertible notes | **-** | 67232 |
| Repayment of convertible notes | **-** | (451282) |
| **Cash provided by financing activities** | **1849315** | 1523691 |
| Net change in cash | **(1229)** | 6349 |
| Cash, beginning of period | **2156** | 650 |
| **Cash, end of period** | $**927** | $6999 |
| **Supplemental disclosure of cash flow information:** |  |  |
| Cash paid for income taxes | $**-** | $- |
| Cash paid for interest expense | $**-** | $- |
| **Supplemental disclosure of non-cash financing activities:** |  |  |
| Cancellation of series B preferred shares | $**-** | $2000000 |
| Conversion of convertible loans into common shares | $**-** | $16436 |
| Conversion of preferred shares series A into common shares | $**-** | $1250 |
| Reclassification of notes payable to loans payable to related parties | $**6809386** | $- |
| Reclassification of convertible notes to loans payable to related parties | $**281111** | $- |
| Adjustment for related party loan modification included in additional paid-in capital | $**1256853** | $- |

---

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

---

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|:---|
| 5 |
| *[**Table of Contents**](#toc)* |

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**CANNAPHARMARX, INC.**<br>**CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT**<br>**(Unaudited)**<br>

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred shares**<br>**series A** | **Preferred shares**<br>**series A** | **Preferred shares**<br>**series B** | **Preferred shares**<br>**series B** | **Preferred shares**<br>**series C** | **Preferred shares**<br>**series C** | **Common shares** | **Common shares** | **Treasury shares** | **Treasury shares** | | | | |
|  | **Number**<br>**of shares** |<br>**Value** | **Number**<br>**of shares** |<br>**Value** | **Number**<br>**of shares** |<br>**Value** | **Number**<br>**of shares** |<br>**Value** | **Number**<br>**of shares** |<br>**Value** | **Additional**<br>**paid-in**<br>**capital** |<br>**Accumulated** <br>**deficit** | **Accumulated other**<br>**comprehensive**<br>**income**<br>**(loss)** | **Total**<br>**shareholders'**<br>**deficit** |
| Balance, December 31, 2023 | 84416 | $84416 | 2455000 | $2455000 | 100000 | $100000 | 440752302 | $44075 | 6230761 | $623 | $76476643 | $(91278353) | $(35617) | $(12153213) |
| Exercise of share purchase warrants on cashless basis |  |  |  |  |  |  | 4895849 | 4489 |  |  | (4489) |  |  |  |
| Conversion of preferred shares series A to common shares | (10000) | (10000) |  |  |  |  | 12500000 | 1250 |  |  | 8750 |  |  |  |
| Cancellation of preferred shares series B |  |  | (2000000) | (2000000) |  |  |  |  |  |  | 2000000 |  |  |  |
| Conversion of convertible notes to common shares |  |  |  |  |  |  | 204353254 | 16436 |  |  | 1553918 |  |  | 1570354 |
| Issuance of share purchase warrants for convertible notes |  |  |  |  |  |  |  |  |  |  | 87768 |  |  | 87768 |
| Foreign currency translation adjustment |  |  |  |  |  |  |  |  |  |  |  |  | 75495 | 75495 |
| Net loss | - | - | - | - | - | - | - | - | - | - | - | (6164948) | - | (6164948) |
| Balance, September 30, 2024 | 74416 | $74416 | 455000 | $455000 | 100000 | $100000 | 662501405 | $66250 | 6230761 | $623 | $80122590 | $(97443301) | $39878 | $(16584544) |
| Exercise of share purchase warrants on cashless basis |  |  |  |  |  |  |  | (4000) |  |  | 4000 |  |  |  |
| Conversion of convertible notes to common shares |  |  |  |  |  |  |  | 4000 |  |  | (4000) |  |  |  |
| Foreign currency translation adjustment |  |  |  |  |  |  |  |  |  |  |  |  | 515748 | 515748 |
| Net loss | - | - | - | - | - | - | - | - | - | - | - | (3740841) | - | (3740841) |
| Balance, December 31, 2024 | 74416 | $74416 | 455000 | $455000 | 100000 | $100000 | 662501405 | $66250 | 6230761 | $623 | $80122590 | $(101184142) | $555626 | $(19809637) |
| Related party loan modification, adjustment |  |  |  |  |  |  |  |  |  |  | 1256853 |  |  | 1256853 |
| Foreign currency translation adjustment | **-** | **-** | **-** | **-** | **-** | **-** | **-** | **-** | **-** | **-** | **-** |  | (382096) | (382096) |
| Net loss | - | - | - | - | - | - | - | - | - | - | - | (3581863) | - | (3581863) |
| **Balance, September 30, 2025**  | **74416** | $**74416** | **455000** | $**455000** | **100000** | $**100000** | **662501405** | $**66250** | **6230761** | $**623** | $**81379443** | $**(104766005)** | $**173530** | $**(22516743)** |

---

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

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|:---|
| 6 |
| *[**Table of Contents**](#toc)* |

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024** <br>

**NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES**

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

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

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

**Cease Trade Order ("CTO")**

In 2023, the British Columbia Securities Commission ("BCSC") issued a Cease Trade Order ("CTO") against the Company due to the Company's failure to file certain continuous disclosure documents under Canadian securities laws. The CTO restricts the trading in its securities in Canada, including share issuances and conversions of convertible instruments. The Company has filed an application to revoke the CTO with the BCSC and received a follow-up inquiry on May 13, 2025, to which the Company has provided its responses and is awaiting further updates. There is no assurance the CTO will be lifted promptly.

**Potential Liability Exposure and Insurance Coverage**

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

***<u>Basis of presentation</u>***

The accompanying unaudited condensed interim consolidated financial statements (the "financial statements") have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP") and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2024.

All figures are in United States ("US") dollars ("USD") unless indicated otherwise. All references to "CAD" are to Canadian dollars.

***<u>Foreign currency translation</u>***

As at September 30, 2025, the official exchange rate for the translation of CAD to USD was 0.7183 (June 30, 2025 - 0.7330, March 31, 2025 - 0.6956 and December 31, 2024 - 0.6950).

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| 7 |
| *[**Table of Contents**](#toc)* |

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024** <br>

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

***<u>Basis of consolidation</u>***

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

***<u>Use of estimates</u>***

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

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). The Company adopted ASU 2023-07 as of April 1, 2024. This update enhances the disclosure requirements for reportable segments, including significant segment expenses and interim period disclosures. The Company's Board of Directors serves as the Chief Operating Decision Maker ("CODM") of the and is responsible for making operating decisions.

In preparing these financial statements, the Company is exposed to the same sources of estimation uncertainty as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

***<u>Reclassification of prior period amounts</u>***

Rent expense for the three and nine months ended September 30, 2024 of $1,099 and $3,308, respectively, has been reclassified to general and administrative expenses, and foreign exchange gain for the three and nine months ended September 30, 2024 of $18,030 and $17,928, respectively, has been reclassified from general and administrative expenses and presented within other income. These reclassifications had no impact on the Company's operating loss or comprehensive loss for any period presented.

***<u>Significant Accounting Policies</u>***

*<u>Debt Modifications and Extinguishments</u>*

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

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

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024** <br>

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

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

<u>New accounting standards adopted</u>

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

<u>New accounting standards not yet adopted</u>

In November 2024, the FASB issued ASU No. 2024-03, Income Statement Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires an entity to disclose the amounts of inventory purchases, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. It also requires an entity to include certain amounts that are already required to be disclosed under current GAAP in the same disclosure. Additionally, it requires an entity to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and to disclose the total amount of selling expenses. The ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. Management is currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

There have been no material changes to our significant accounting policies from our Annual Report on Form 10-K for the year ended December 31, 2024.

**NOTE 2 - GOING CONCERN AND LIQUIDITY**

As at September 30, 2025, the Company had cash of $927 (December 31, 2024 - $2,156), a working capital deficiency of $27,009,769 (December 31, 2024 - $24,733,636) and an accumulated deficit of $104,766,005 (December 31, 2024 - $101,184,142). Additionally, during the nine months ended September 30, 2025, the cash used in operating activities was $1,850,544 (2024 - $1,517,342).

These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. Based on current financial projections, the Company does not have sufficient existing cash resources to fund its current operations. Accordingly, there is substantial doubt about the Company's ability to continue as a going concern.

It is the Company's intention to incur debt and/or raise additional funding through equity financing to fund ongoing operating expenses. There is no assurance that these events will be satisfactorily completed or at terms acceptable to the Company. Any issuance of equity securities, if accomplished, could cause substantial dilution to existing shareholders. Any failure by the Company to successfully implement these plans would have a material adverse effect on its business, including the possible inability to continue operations.

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024** <br>

**NOTE 2 - GOING CONCERN AND LIQUIDITY (continued)**

On March 17, 2025, the Company and its subsidiary, 2323414 Alberta Ltd. ("Alberta Ltd."), which operates the Company's principal business activities, including the cultivation, processing, and distribution of cannabis, entered into a security and royalty agreement with Koze Investments LLC ("Koze"), a California-based limited liability company engaged in providing financing and investment services. Alberta Ltd. Is a subsidiary of the Company in which Koze has been considered a related party since March 11, 2025, the date on which its manager, Elliot Zemel, was appointed as a director of the Company. Pursuant to the agreement, the Company is required to pay a royalty on cannabis product sales from the prior month. If royalty payments are not made on time, the applicable rate increases. The agreement stipulates that a default occurs if Alberta Ltd. fails to make royalty or lease payments for three consecutive months, or for any four months within a rolling six-month period. As collateral, the Company granted Koze a security interest in its entire ownership interest in Alberta Ltd., which will remain in place until all obligations are fully satisfied. As of September 30, 2025, Alberta Ltd. was in default of its payment obligations, and Koze agreed to forbear from exercising his rights over the ownership interest until December 31, 2025. The Company also incurred royalty expenses under the agreement and recorded a related liability in accounts payable and accrued liabilities as of September 30, 2025.

**NOTE 3 - INVENTORY**

A summary of the Company's inventory as at September 30, 2025 and December 31, 2024 is as follows:

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Finished goods | $**465185** | $752134 |
| Work in process | **853887** | 1560137 |
| Less: impairment of finished goods inventory included in cost of goods sold | **(12939)** | (337402) |
| Less: impairment of work in process inventory included in cost of goods sold | **(442326)** | (978619) |
|  | $**863807** | $996250 |

---

**NOTE 4 - RIGHT-OF-USE BUILDING**

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

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

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

A summary of the Company's right-of-use building asset at September 30, 2025 and December 31, 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Gross carrying amount | $**6350348** | $5949483 |
| Accumulated depreciation | **(845656)** | (788010) |
| Net book value | $**5504692** | $5161473 |

---

During the three and nine months ended September 30, 2025, the Company recorded depreciation expense on right-of-use building of $10,257 and $31,003, respectively (2024 - $79,051 and $237,788, respectively).

For the three and nine months ended September 30, 2025, the right-of-use building depreciation expense allocated to inventory was $10,257 and $31,003, respectively (2024 - $79,051 and $151,484, respectively).

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024** <br>

**NOTE 5 - INVESTMENTS** 

On November 22, 2023, the Company closed a transaction with LTB Management, LLC ("LTB") to acquire 100 Class B units of LTB.

The total purchase consideration for the investment was $4,518,127, which consisted of the following: (i) 27,224,962 share purchase warrants with a fair value of $162,129, each entitling the holder to purchase one share of common shares of the Company at $0.02 per share until November 22, 2028; (ii) $3,000,000 in promissory notes payable to Mr. Amir Tal and Koze Investments LLC (Note 11); (iii) 100,000 Class C preferred shares with a fair value of $750,000, each convertible into 1,250 shares of common shares; and (iv) contingent consideration recorded as an obligation to issue Class C preferred shares with a fair value of $605,998. The fair value of the share purchase warrants was determined using an option pricing model and the fair value of the Class C preferred shares was determined based on the shares price of the Company's common shares on November 22, 2023.

The contingent consideration includes a quarterly true up of the sellers of LTB's preferred share proportional ownership to 33% of the outstanding shares of the Company's common shares, and an earn out whereby the sellers of LTB can earn up to an additional 12% pro-rata preferred share proportional ownership (which, if earned, will result in the true up increasing by the pro-rata preferred share proportional ownership earned) based on the Company reaching a threshold of $2,500,000 annual revenue at any time until November 22, 2025. As at September 30, 2025, in connection with the true up, the Company has an obligation to issue an additional 332,554 Class C preferred shares valued at $1,558,710 (December 31, 2024 - 301,597 shares valued at $3,654,009).

The obligation has been estimated based on management's assessment of a 100% probability of the Company reaching the threshold of $2,500,000 of annual revenue by November 22, 2025.

**NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**

A summary of the Company's accounts payable and accrued liabilities as at September 30, 2025 and December 31, 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Accounts payable  | $**5612709** | $4783656 |
| Accrued liabilities | **4386570** | 4302643 |
| Accrued legal settlement (a) | **190000** | 190000 |
| Total accounts payable and accrued liabilities | $**10189279** | $9276299 |

---

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

**NOTE 7 - ACCRUED INTEREST**

A summary of the Company's accrued interest as at September 30, 2025 and December 31, 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Notes payable | $**28446** | $1433652 |
| Loans payable to related parties | **119359** | 214084 |
| Convertible notes | **318638** | 249729 |
| Rent in default on Formosa lease | **1056096** | 597872 |
|  | $**1522539** | $2495337 |

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024** <br>

**NOTE 8 - NOTES PAYABLE** 

A summary of the Company's notes payable as at September 30, 2025 and December 31, 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Notes payable | $**170002** | $160311 |
| Canada Emergency Business Account ("CEBA") loan | **43100** | 41699 |
| Secured promissory notes | **265502** | 269000 |
| Other promissory notes | **-** | 3657379 |
| Promissory notes (LTB Transaction) | **-** | 2550000 |
|  | $**478604** | $6678389 |

---

*<u>Notes payable</u>*

On May 10, 2024 and May 31, 2024, the Company entered into notes payable agreements ("Note A" and "Note B", respectively) bearing interest at 10% per annum and maturing within 12 months from the date of issuance with a third party in the amounts of $50,001 and $70,001, respectively.

During the three and nine months ended September 30, 2025, the Company recorded $1,260 and $3,740, respectively (2024 - $1,260 and $1,959, respectively), in interest expense on Note A, and $1,764 and $5,236, respectively (2024 - $1,764 and $2,340, respectively), in interest expense on Note B. As at September 30, 2025, Note A and Note B are past due in the principal amounts of $50,001 and $70,001, respectively, in addition to accrued interest on these notes. As at September 30, 2025, the accrued interest on Note A was $6,959 (December 31, 2024 - $3,219) and Note B was $9,340 (December 31, 2024 - $4,104).

On August 13, 2024, the Company entered into a note payable agreement ("Note C") with a third individual in the amount of $50,000. Note C was to mature within 8 months from the date of issuance and bears interest at 15% per annum.

During the three and nine months ended September 30, 2025, the Company recorded $1,890 and $5,610, respectively (2024 - $985 and $985, respectively), in interest expense on Note C. As at September 30, 2025, Note C is past due and owing in the principal amount of $50,000 and accrued interest on Note C was $8,486 (December 31, 2024 - $2,877).

*<u>CEBA loan</u>*

Due to the global COVID 19 outbreak, the Government of Canada introduced the CEBA program. The Company participated in this program and received a CAD $60,000 loan. The loan was interest-free until January 18, 2024 at which time it was converted to a non-amortizing term loan with an interest rate of 5% per annum and the full principal repayment due on December 31, 2026.

During the three and nine months ended September 30, 2025, the Company recorded $549 and $1,616, respectively (2024 - $554 and $1,540, respectively), in interest expense on the CEBA loan. As at September 30, 2025, the CEBA loan balance was $43,100 (CAD $60,000) (December 31, 2024 - $41,699 (CAD $60,000)) and accrued interest on the CEBA loan was $3,661 (December 31, 2024 - $1,971).

*<u>Secured promissory notes</u>*

During the year ended December 31, 2021, the Company entered into secured non-interest-bearing promissory note agreements with investors for $50,000 and CAD $300,000 maturing within 12 months. These notes are secured by a general security agreement over all of the Company's present and after acquired property, assets, and undertakings. As at September 30, 2025, the notes are past due and owing in the amounts of $50,000 and $215,502 (CAD $300,000) (December 31, 2024 - $50,000 and $219,000 (CAD $300,000)).

*<u>Promissory notes (LTB transaction) reclassified to loans payable to related parties</u>*

On November 22, 2023, the Company entered into promissory notes of $3,000,000 bearing interest of 13% per annum, as part of the LTB transaction (Note 5), of which $450,000 was with Mr. Amir Tal ("Mr. Tal"), a "control person" of the Company as under the Securities Act of 1933. The outstanding principal was reclassified to loans payable to related parties during 2024 (Note 11). During the three and nine months ended September 30, 2024, the Company recorded interest expense of $14,745 and $43,915, respectively on the note.

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024** <br>

**NOTE 8 - NOTES PAYABLE (continued)**

The remaining $2,550,000 of the November 22, 2023 note was with Koze and the outstanding principal balance on the promissory note was reclassified to loans payable to related parties during the three months ended March 31, 2025 after Koze became a related party on March 11, 2025 (Note 11). During the three and nine months ended September 30, 2024, the Company recorded interest expense of $83,556 and $248,852, respectively on the note.

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

*<u>Other promissory notes reclassified to loans payable to related parties</u>*

On May 25, 2023, the Company entered into two promissory notes with Koze, bearing interest at 24% compounded monthly, to fund for certain documented expenses. During the three and nine months ended September 30, 2024, the Company recorded interest expense of $230,745 and $501,413, respectively, on these notes.

On February 8, 2024, the Company entered into another promissory note with Koze, bearing interest at 24% compounded monthly. During the three and nine months ended September 30, 2024, the Company recorded interest expense of $16,636 and $42,493, respectively, on the note.

As a result of Koze becoming a related party in March 2025, the balance owing on these promissory notes was reclassified from notes payable to loans payable to related parties during the three months ended March 31, 2025 (Note 11).

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

*<u>Debt modification of debt instruments held by Mr. Tal and Koze</u>*

On August 7, 2025, the Company entered into an agreement (the "Debt Modification") with Mr. Tal and Koze to amend the annual interest rates on all outstanding promissory and convertible notes held by them to 6%, compounding annually. This was deemed to be a substantial modification of the terms of the agreements and was accounted for as an extinguishment of the promissory and convertible notes and recognition of new notes at the new 6% rate. The term to maturity was unchanged (Note 11). In connection with the issuance of the new notes resulting from the Debt Modification, the Company determined that the market interest rate for similar instruments was 15%. Accordingly, the debt was recorded at a discount to reflect this effective interest rate, with the discount amortized to imputed interest expense over the term of the debt using the effective interest method.

A summary of the accrued interest of the Company's notes payable (Note 7) as at September 30, 2025 and December 31, 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| CEBA loan | $**3661** | $1971 |
| Note A | **6959** | 3219 |
| Note B | **9340** | 4104 |
| Note C | **8486** | 2877 |
| <u>Reclassified to loans payable to related parties</u>: |  |  |
| Koze LTB | **-** | 362864 |
| Koze A | **-** | 301227 |
| Koze B | **-** | 698261 |
| Koze C | **-** | 59129 |
|  | $**28446** | $1433652 |

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024** <br>

**NOTE 9 - CONVERTIBLE NOTES**

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

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| | |
|:---|:---|
| Balance, December 31, 2023 | $1520858 |
| Additions | 363448 |
| Value of conversion of notes into 204,353,254 shares of common shares | (134910) |
| Settlements | (451282) |
| Balance, December 31, 2024 | 1298114 |
| Reclassification of convertible notes to loan payable to related parties | (281111) |
| **Balance, September 30, 2025** | $**1017003** |

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During the three and nine months ended September 30, 2025, there were no conversions of convertible notes and accordingly, no loss on conversion (2024 - $nil and $690,712, respectively). During the three and nine months ended September 30, 2025, interest expense was $22,870 and $68,610, respectively (2024 - $34,862 and $92,809, respectively).

A summary of the terms and conditions of the convertible notes outstanding which have a derivative conversion feature as at September 30, 2025 is as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Maturity Date** | **Interest Rate** | **Conversion price** | **Principal at inception** | **Principal outstanding** |
| Jan. 7, 2021 | 8% | 75% of the lowest 20-day share price before the conversion date | $100000 | $100000 |
| Dec. 11, 2022 | 24% | Lowest of the 60-day share price before the conversion date | 231250 | 212555 |
| Dec. 11, 2022 | 24% | Lowest of the 60-day share price before the conversion date. Lesser of $0.0025 or 70% of lowest 5-day share price before the conversion date | 60000 | 68555 |
| Apr. 11, 2024 | 12% | $0.010 on the conversion date | 100000 | 100000 |
| May 5, 2024 | 12% | Lesser of $0.0025 or 70% of lowest 5-day share price before the conversion date | 231250 | 60000 |
| Sep. 25, 2024 | 22% | $0.005 on the conversion date | 50000 | 50000 |
|  |  |  | $**772500** | $**591110** |

---

*<u>Convertible notes included in loans payable to related parties</u>*

On August 7, 2025, as a result of the Debt Modification (Note 8), the convertible notes held by Mr. Tal and Koze with outstanding principal of $212,555 and $68,555, respectively (December 31, 2024 - $212,555 and $68,555, respectively), were extinguished and new convertible notes were recognized at the 6% rate, compounding annually. These notes were included in loans payable to related parties. The term to maturity remains unchanged (Note 11). As at September 30, 2025, the accrued interest on the remaining convertible notes was $318,638 (December 31, 2024 - $249,729) (Note 7).

As at the date of these financial statements, all convertible notes were past their maturity date, but they retained the terms and conditions as per their respective agreements. Additionally, because of the late filing of previous annual reports, and the loss of the Company's active listing in the OTC market, the penalty provisions of all convertible notes outstanding became effective.The Company estimated that the maximum penalty provisions amounted to one times the face value of all the convertible notes outstanding on the date the conversion feature became exercisable. As at September 30, 2025, the accrued liability for penalties was $735,002 (December 31, 2024 - $735,002).

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

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 10 - DERIVATIVE CONVERSION FEATURE**

A summary of Company's derivative conversion feature as at September 30, 2025 is as follows:

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| | |
|:---|:---|
| Balance, December 31, 2023 | $1264388 |
| Changes in fair value of derivative conversion feature | (105064) |
| Balance, December 31, 2024 | 1159324 |
| Changes in fair value of derivative conversion feature | (602569) |
| **Balance, September 30, 2025** | $**556755** |

---

The Company used an option pricing model to calculate the derivative conversion feature. A summary of the Company's weighted average inputs used in the model for the nine months ended September 30, 2025 and the year ended December 31, 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Share price | $**0.003** | $0.008 |
| Exercise price | $**0.004** | $0.004 |
| Risk-free interest rate | **2.70%** | 3.00% |
| Expected volatility | **257.50%** | 285.60% |
| Expected life | **1.00 year** | 1.00 year |
| Expected dividend yield | **0.00%** | 0.00% |

---

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

**NOTE 11 - RELATED PARTY TRANSACTIONS**

A related party is any individual or entity that can exercise significant influence over the Company, or over which the Company can exercise significant influence. Related parties include affiliates, principal owners, directors, executive management, their immediate family members, and entities under common control.

a) Key related party transactions

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

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended<br>September 30, | Three months ended<br>September 30, | Nine months ended<br>September 30, | Nine months ended<br>September 30, |
|  | **2025** | 2024 | **2025** | 2024 |
| Revenue | $**-** | 110359 | **231608** | 242973 |
| Lease expense paid to Formosa included in cost of goods sold | **272232** |  | **804457** |  |
| Rent expense included in general and administrative expense | **-** | 1099 | **2124** | 3308 |
| Marketing expense included in general and administrative expense | **71287** |  | **71287** |  |
| Professional fees | **46719** | 26842 | **220725** | 149947 |
| Royalty expense | **234212** |  | **289811** |  |
| Interest expense | **477930** | 27498 | **1691428** | 83297 |
| Imputed interest expense | **187242** |  | **187242** |  |
| Other expense | **-** | - | **1930000** | - |
| **Total related party transactions** | $**1289622** | $165798 | $**5428682** | $479525 |

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 11 - RELATED PARTY TRANSACTIONS (continued)**

*<u>Revenue</u>*

During the three and nine months ended September 30, 2025, the Company recognized revenue of $nil and $231,608, respectively, from D.N.S. CANTEK 2019 LTD ("Cantek"), an Israeli limited corporation owned 100% by Koze, and for which Mr. Tal serves as a financial advisor (Note 14).

*<u>Lease expense</u>*

The Company has a lease with Formosa, which became a related party upon the appointment of its manager, Elliot Zemel, as a director of the Company on March 11, 2025. During the three and nine months ended September 30, 2025, the Company recognized interest expense related to rent in default of $145,858 and $435,600, respectively, associated with unpaid lease payments (Note 12).

During the three and nine months ended September 30, 2025, the Company incurred lease expense of $272,232 and $804,457, respectively associated with the Formosa lease, which is included in cost of goods sold.

*<u>Rent</u>*

Effective February 1, 2023, the Company entered into a rental agreement granting it the right to use office space located at Suite 3600, 888 5th Avenue SW, Calgary, Alberta, Canada, T2P 3R7 for a monthly rent of CAD $500 per month. This space was provided by a company affiliated with Richard Orman ("Mr. Orman"), chairman of the Company's board of directors.

The Company ceased using the office space and accordingly stopped accruing rent expense after June 30, 2025. During the three and nine months ended September 30, 2025, the Company incurred rent expense of $nil and $2,124, respectively (2024 - $1,099 and $3,308, respectively) which is recorded as a general and administrative expense.

*<u>Marketing expense</u>*

During the three and nine months ended September 30, 2025, the Company incurred marketing expense of $71,287 and $71,287, respectively (2024 - $nil and $nil, respectively) with Sky Home Services LLC, a company managed by Mr. Tal, which is recorded as a general and administrative expense.

*<u>Professional fees</u>*

· During the three and nine months ended September 30, 2025, the Company incurred professional expenses of $42,119 and $168,938, respectively (2024 - $26,842 and $149,947, respectively) related to accounting fees payable to Invictus Accounting Group LLP ("Invictus"), a company to which Oliver Foeste is Managing Partner, which provides part-time CFO, financial reporting, and bookkeeping services to the Company.

· During the three and nine months ended September 30, 2025, the Company incurred professional expenses of $4,600 and $51,787, respectively, payable to Fabian Vancott (2024 - $nil and $nil, respectively) related to legal fees. Anthony Panek who is a partner in Fabian Vancott, is also a director of the Company.

*<u>Royalty expense</u>*

On March 17, 2025, the Company and Alberta Ltd., entered into a security and royalty agreement with Koze (the "Royalty Agreement"), pursuant to which the Company is required to pay a royalty of CAD $0.20 per gram on cannabis product sales. If the royalty is not paid on time, the rate increases to CAD $0.40 per gram sold for the applicable month. During the three and nine months ended September 30, 2025, the Company sold 806,568 and 998,952 grams of cannabis products, respectively, and for the three and nine months ended September 30, 2025, the Company incurred a royalty expense of $234,212 and $289,811, respectively (2024 - $nil and $nil, respectively).

*<u>Interest expense</u>*

· During the three and nine months ended September 30, 2025, the Company incurred interest expense on promissory and convertible notes with Mr. Tal of $17,016 and $71,154, respectively (2024 - $27,498 and $83,297, respectively).

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 11 - RELATED PARTY TRANSACTIONS (continued)**

· During the three and nine months ended September 30, 2025, the Company incurred interest expense on promissory and convertible notes with Koze of $288,597 and $1,109,554, respectively.

· During the three and nine months ended September 30, 2025, the Company incurred interest expense on promissory note with Formosa of $26,459 and $75,120, respectively.

*<u>Imputed interest expense</u>*

---

| |
|:---|
| During the three and nine months ended September 30, 2025, the Company incurred imputed interest expense on promissory and convertible notes with Mr. Tal of $12,135 and $12,135, respectively (2024 - $nil and $nil, respectively). |
| During the three and nine months ended September 30, 2025, the Company incurred imputed interest expense on promissory and convertible notes with Koze of $145,587 and $145,587, respectively. |
| During the three and nine months ended September 30, 2025, the Company incurred imputed interest expense on promissory and convertible notes with Formosa of $29,520 and $29,520, respectively. |

---

*<u>Other expense</u>* 

During the nine months ended September 30, 2025, the Company made a one-time adjustment of $1,930,000 to lease-related rent expense due to a clarification in the interpretation of the lease terms for the Facility, which is recorded as other expense (Note 17).

b) Amounts due to related parties

A summary of the Company's related party liabilities as at September 30, 2025 and December 31, 2024, is as follows:

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Accounts payable and accrued liabilities | $**6255147** | $2174595 |
| Accrued interest | **1175455** | 56298 |
| Loans payable to related parties | **12564969** | 462818 |
| Royalty payable | **287035** |  |
| Obligation to issue shares | **1558710** | 1827005 |
| **Total related party liabilities** | $**21841316** | $4520716 |

---

*<u>Accounts payable and accrued liabilities</u>*

As at September 30, 2025, accounts payable and accrued liabilities include balances owing to related parties as follows:

---

| |
|:---|
| As at September 30, 2025, $3,948,171 was payable to Formosa for outstanding lease payments. As at September 30, 2025, accrued interest on unpaid lease payments on the Formosa lease was $1,056,096. |
| As at September 30, 2025, $126,772 (December 31, 2024 - $89,392) was payable to Invictus for part-time CFO, financial reporting, and bookkeeping services provided to the Company. |
| As at September 30, 2025, $319,279 (December 31, 2024 - $319,279) was payable to Mr. Orman for unpaid directors' fees for 2021 through 2023. |
| As at September 30, 2025, $1,679,060 (December 31, 2024 - $1,661,386) was payable to Dominic Colvin, a director of the Company, for unpaid salary and expense reimbursement amounts during Mr. Colvin's employment with the Company as its CEO during the years 2019 through 2022. |
| As at September 30, 2025, $111,325 (December 31, 2024 - $104,538) was payable to Fabian Vancott in respect of unpaid legal fees. |
| As at September 30, 2025, $70,540 (December 31, 2024 - $nil) was payable to Sky Home Services LLC, a company managed by Mr. Tal, with respect to unpaid marketing expenses. |

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 11 - RELATED PARTY TRANSACTIONS (continued)**

*<u>Loans payable to related parties</u>*

As at September 30, 2025, the loans payable to related parties consists of the following:

<u>PLC International Investments Inc. ("PLC")</u>

· A $13,227 interest-free loan from PLC, a company owned by Dominic Colvin, a director of the Company;

<u>Loans payable to Koze</u>

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| | |
|:---|:---|
| ·  | *<u>Koze LTB:</u>* |
|  | On November 22, 2023, the Company entered into promissory notes of $2,550,000 with Koze, as part of the LTB transaction (Note 5), bearing interest at 13% per annum. Originally due on November 22, 2024, the maturity date for this note was extended to December 31, 2025, by agreement with Koze.<br>As a result of the Debt Modification (Note 8), principal and accrued interest outstanding related to the note as of August 7, 2025 of $2,550,000 and $555,406, respectively, were extinguished. A new note ("Koze LTB") of $2,978,661 bearing 6% interest, compounding annually, was recognized resulting in a gain of $126,745 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $58,136 and $222,524, respectively. During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $45,258 and $45,258, respectively. As at September 30, 2025, the outstanding balance on the note was $3,023,919 (December 31, 2024 - $2,550,000). As at September 30, 2025, the accrued interest on the note was $29,981 (December 31, 2024 - $362,864).  |

---

---

| | |
|:---|:---|
| ·  | *<u>Koze A:</u>* |
|  | On May 25, 2023, the Company entered into a promissory note with Koze, bearing interest at 24% compounded monthly, to fund for certain documented expenses.<br>As a result of the Debt Modification (Note 8), principal and accrued interest outstanding related to the note as of August 7, 2025 of $849,278 and $443,339, respectively, were extinguished. A new note ("Koze B") of $1,134,669 bearing 6% interest, compounding annually, was recognized resulting in a gain of $157,949 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $62,349 and $153,506, respectively. During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $17,836 and $17,836, respectively. As at September 30, 2025, the outstanding balance on the note was $1,244,563 (December 31, 2024 - $640,320). As at September 30, 2025, the accrued interest on the note was $11,391 (December 31, 2024 - $301,227). |

---

---

| | |
|:---|:---|
| ·  | *<u>Koze B:</u>* |
|  | On May 25, 2023, the Company entered into another promissory note with Koze, bearing interest at 24% compounded monthly, to fund the Company for certain documented expenses.<br>As a result of the Debt Modification (Note 8), principal and accrued interest outstanding related to the note as of August 7, 2025 of $4,040,474 and $1,366,780, respectively, were extinguished. A new note ("Koze B") of $4,767,106 bearing 6% interest, compounding annually, was recognized resulting in a gain of $640,148 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $156,655 and $681,064, respectively. During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $75,310 and $75,310, respectively. As at September 30, 2025, the outstanding balance on the note was $5,227,346 (December 31, 2024 - $2,740,885). As at September 30, 2025, the accrued interest on the note was $47,593 (December 31, 2024 - $698,261). |

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 11 - RELATED PARTY TRANSACTIONS (continued)**

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| | |
|:---|:---|
| ·  | *<u>Koze C:</u>* |
|  | On February 8, 2024, the Company entered into another promissory note with Koze, bearing interest at 24% compounded monthly.<br>As a result of the Debt Modification (Note 8), principal and accrued interest outstanding related to the note as of August 7, 2025 of $275,000 and $97,403, respectively, were extinguished. A new note ("Koze C") of $330,551 bearing 6% interest, compounding annually, was recognized resulting in a gain of $41,852 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $8,818 and $41,595, respectively. During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $5,198 and $5,198, respectively. As at September 30, 2025, the outstanding balance on the note was $335,749 (December 31, 2024 - $275,000). As at September 30, 2025, the accrued interest on the note was $3,318 (December 31, 2024 - $59,129). |

---

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| | |
|:---|:---|
| ·  | *<u>Koze convertible note ("Koze CN"):</u>* |
|  | The Company has a convertible note with Koze, bearing interest at 24%. <br>As a result of the Debt Modification (Note 8), principal and accrued interest outstanding related to the note as of August 7, 2025 of $68,555 and $75,714, respectively, were extinguished. A new note, Koze CN, of $126,275 bearing 6% interest, compounding annually, was recognized resulting in a gain of $17,995 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $2,639 and $10,865, respectively. During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $1,985 and $1,985, respectively. As at September 30, 2025, the outstanding balance on the note was $128,260 (December 31, 2024 - $275,000). As at September 30, 2025, the accrued interest on the note was $1,269 (December 31, 2024 - $66,117). |

---

<u>Loans payable to Mr. Tal</u>

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| | |
|:---|:---|
| ·  | *<u>Mr. Tal LTB:</u>* |
|  | On November 22, 2023, the Company entered into a promissory note of $450,000 with Mr. Tal as part of the LTB transaction (Note 5), bearing interest at 13% per annum. Originally due on November 22, 2024, the maturity date for this note was extended to December 31, 2025, by agreement with Koze.<br>As a result of the Debt Modification (Note 8), principal and accrued interest outstanding related to the note as of August 7, 2025 of $438,296 and $89,768, respectively, were extinguished. A new note ("Mr. Tal LTB") of $507,422 bearing 6% interest, compounding annually, was recognized resulting in a gain of $20,641 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded payments to the note of $27,729 and $39,433, respectively (2024 - $nil and $nil, respectively). During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $9,805 and $38,436, respectively (2024 - $14,745 and $43,915, respectively). During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $7,501 and $7,501, respectively. As at September 30, 2025, the outstanding balance on the note was $487,194 (December 31, 2024 - $450,000). As at September 30, 2025, the accrued interest on the note was $4,966 (December 31, 2024 - $56,298). |

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 11 - RELATED PARTY TRANSACTIONS (continued)**

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| | |
|:---|:---|
| ·  | *<u>Mr. Tal convertible note ("Mr. Tal CN"):</u>* |
|  | The Company has a convertible note with Mr. Tal, bearing interest at 24%.<br>As a result of the Debt Modification (Note 8), principal and accrued interest outstanding related to the note as of August 7, 2025 of $212,555 and $121,427, respectively, were extinguished. A new note, Mr. Tal CN, of $294,850 bearing 6% interest, compounding annually, was recognized resulting in a gain of $39,132 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $7,211 and $32,718, respectively (2024 - $12,753 and $39,382, respectively). During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $4,634 and $4,634, respectively. As at September 30, 2025, the outstanding balance on the note was $299,484 (December 31, 2024 - $212,555). As at September 30, 2025, the accrued interest on the note was $2,960 (December 31, 2024 - $91,669). |

---

<u>Promissory note with Formosa</u>

On January 1, 2025, the Company entered into a promissory note with Formosa in the amount of $1,930,000, bearing interest at 5% per annum, with respect to a one-time adjustment made to lease-related rent expense due to a clarification in the interpretation of the lease terms for the Facility.

As a result of the Debt Modification (Note 8), principal and accrued interest outstanding related to the note as of August 7, 2025 of $1,930,000 and $58,098, respectively, were extinguished. A new note of $1,775,707 bearing 6% interest, compounding annually, was recognized resulting in a gain of $212,391 from extinguishment, recorded directly to additional paid-in capital.

During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $26,459 and $75,120, respectively (2024 - $nil and $nil, respectively). During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $29,520 and $29,520, respectively (2024 - $nil and $nil, respectively). As at September 30, 2025, the outstanding balance on the note was $1,805,227 (December 31, 2024 - $nil). As at September 30, 2025, the accrued interest on the note was $17,881 (December 31, 2024 - $nil).

A summary of the accrued interest of the Company's loans payable to related parties (Note 7) as at September 30, 2025 and December 31, 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Koze LTB | $**29981** | $- |
| Koze A | **11391** |  |
| Koze B | **47593** |  |
| Koze C | **3318** |  |
| Koze CN | **1269** | 66117 |
| Mr. Tal LTB | **4966** | 56298 |
| Mr. Tal CN | **2960** | 91669 |
| Promissory note with Formosa | **17881** | - |
|  | $**119359** | $214084 |

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 11 - RELATED PARTY TRANSACTIONS (continued)**

*<u>Royalty payable</u>*

Pursuant to the Royalty Agreement, as of September 30, 2025, the royalty amount payable to Koze was $287,035 (CAD $399,581) (2024 - $nil).

*<u>Obligation to issue shares</u>*

As at September 30, 2025, the Company has an obligation to issue an additional 166,277 Class C preferred shares to each of Mr. Tal and Koze (December 31, 2024 - 150,799 each) as part of the LTB transaction, valued at $779,355 for each party (December 31, 2024 - $1,827,005 each).

**NOTE 12 - LIABILITY FOR RIGHT-OF-USE BUILDING**

A summary of the Company's weighted average discount rate used in calculating lease liabilities and weighted average remaining lease term as at September 30, 2025 and December 31, 2024, is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Weighted average discount rate | **16.9%** | 16.9% |
| Weighted average remaining lease term | **16.3 years** | 16.9 years |

---

A summary of supplementary information of the Company's operating lease liabilities is as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended<br>September 30, | Three months ended<br>September 30, | Nine months ended<br>September 30, | Nine months ended<br>September 30, |
|  | **2025** | 2024 | **2025** | 2024 |
| Interest expense | $**254915** | $247115 | $**752434** | $737605 |
| Depreciation | **10257** | 79051 | **31003** | 237789 |
| Operating lease-related payments included in accounts payable and accrued liabilities | $**272232** | $202191 | $**804457** | $606572 |

---

A summary of the maturity of contractual undiscounted liabilities associated with the Company's operating leases as at September 30, 2025 is as follows:

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| | |
|:---|:---|
| 2025 | $1077509 |
| 2026 | 1077509 |
| 2027 | 1077509 |
| 2028 | 1077509 |
| 2029 | 1077509 |
| Thereafter | 12121975 |
| Total undiscounted cashflows | 17509520 |
| Less: imputed interest on operating lease | (11550764) |
| **Liability for right-of-use building, total** | **5958756** |
| Liability for right-of-use building, current portion | 985027 |
| Liability for right-of-use building, non-current portion | $4973729 |

---

As at September 30, 2025, the Company has not made any payments on its lease liabilities. The unpaid lease payments for the nine months ending September 30, 2025 of $804,457 (2024 - $601,946) were recorded in accounts payable and accrued liabilities.

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 12 - LIABILITY FOR RIGHT-OF-USE BUILDING (continued)**

For the three and nine months ended September 30, 2025, the Company recognized interest expense related to rent in default of $145,858 and $435,600, respectively (2024 - $161,700 and $468,602, respectively) associated with these unpaid lease payments. Under the terms of the agreement, a default occurs if Alberta Ltd. fails to make such payments or lease payments for three consecutive months or for any four months within any rolling six-month period. As collateral for the obligations under the agreement, the Company granted Koze a security interest in all of its ownership interest in Alberta Ltd. The security interest will remain in place until all obligations are fully satisfied. As of September 30, 2025, Alberta Ltd. has failed to make the payments under the agreement and Koze agreed to forbear from exercising his right of ownership interest in Alberta Ltd. until December 31, 2025.

As at September 30, 2025, the accrued interest related to rent in default (Note 7) was $1,056,096 (December 31, 2024 - $597,872).

**NOTE 13 - SHAREHOLDERS' DEFICIT**

*<u>Preferred shares</u>*

The Company is authorized to issue up to 3,200,000 shares of one or more series of preferred shares at a par value of $1.00 per share. The Board of Directors may, without shareholder approval, determine the dividend rates, redemption prices, preferences on liquidation or dissolution, conversion rights, voting rights, and any other preferences.

*<u>Series A preferred shares</u>*

Each share of the Company's series A convertible preferred shares ("Series A Shares") is non-redeemable, entitles the holder to 1,250 votes on all matters submitted to a vote of the shareholders; is convertible into 1,250 shares of common shares and each vote is on an as-converted basis. In addition, the holders of outstanding Series A Shares will only be entitled to receive dividends upon declaration by the Board of Directors of a dividend payable on the Company's common shares, whereupon the holders of the Series A Shares will receive a dividend on the number of shares of common shares into which each share of Series A Shares is convertible.

The beneficial conversion feature ("BCF") attributed to the purchase of the Series A Shares was deemed to have no value on the date of purchase because there was no public trading market for the Series A Shares, and none is expected to develop in the future. Therefore, the BCF related to the Series A Shares was considered to have no value on the date of issuance.

On March 5, 2024, 10,000 shares of Series A Shares were converted into 12,500,000 shares of the Company's common shares. There were no conversions during the nine months ended September 30, 2025.

As at September 30, 2025, 74,416 (December 31, 2024 - 74,416) shares of Series A Shares were issued and outstanding.

*<u>Series B preferred shares</u>*

The Company has 455,000 units at a price of $1.00 per unit. Each unit consists of one share of series B convertible preferred shares ("Series B Shares") and one common share purchase warrant ("Common Warrant") with no expiry date. Each Series B Share is convertible into one share of the Company's common shares at the election of the holder. Each Common Warrant is exercisable to purchase one share of common shares at the election of the holder at an exercise price of $2.00 per share, which offering is to be offered only to "accredited investors," as that term is defined in Rule 501 of Regulation D of the Securities and Exchange Commission regulations.

On March 28, 2024, the Company cancelled 2,000,000 shares of Series B Shares originally issued during the year ended December 31, 2022 as a deposit on the acquisition of LTB.

There were no conversions during the nine months ended September 30, 2025. As at September 30, 2025, 455,000 (December 31, 2024 - 455,000) shares of Series B Shares were issued and outstanding.

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 13 - SHAREHOLDERS' DEFICIT (continued)**

*<u>Series C preferred shares</u>*

Each share of the Company's Series C preferred shares ("Series C Shares") issued in connection with the investment in LTB (Note 5) is convertible into 1,250 shares of the Company's common shares and entitles the holder to 1,250 votes on all matters submitted to a vote of the shareholders. In addition, the holders of outstanding Series C Shares will only be entitled to receive dividends upon declaration by the Board of Directors of a dividend payable on the Company's common shares, whereupon the holders of the Series C Shares will receive a dividend on the number of shares of common shares into which each share of Series C Shares is convertible.

In March 2024, the Company noted a historical accounting treatment error whereby the 100,000 Series C Shares issued in March 2023 shares had been recorded at the stated value rather than the par value. As a result, during the year ended December 31, 2024 the Company adjusted the value of the Series C shares to their par value of $1 per share, for a total par value of $100,000, with the remaining $650,000 of stated value being reclassified to additional paid-in capital.

There were no conversions during the nine months ended September 30, 2025. As at September 30, 2025, 100,000 (December 31, 2024 - 100,000) shares of Series C Shares were issued and outstanding.

*<u>Common shares</u>*

The Company is authorized to issue 5,000,000,000 common shares at a par value of $0.0001 per share. As at September 30, 2025, 662,501,405 (December 31, 2024 - 662,501,405) common shares were issued and outstanding.

The Company issued 204,353,254 common shares upon the conversion of $134,910 of convertible notes during 2024.

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

*There were no share capital transactions during the three and nine months ended September 30, 2025.*

*<u>Share purchase warrants</u>*

A summary of the Company's share purchase warrant activity is as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **Number of share purchase warrants** | **Number of share purchase warrants** | **Weighted average exercise price** |
| Shares purchase warrants outstanding, December 31, 2023 | # | 28722740 | $0.06 |
| Issued |  | 17222200 | 0.01 |
| Redeemed |  | (5000000) | 0.03 |
| Expired |  | (1020000) | 1.02 |
| **Share purchase warrants outstanding, December 31, 2024 and September 30, 2025** | #  | **39924940** | $**0.02** |

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A summary of the number of the Company's share purchase warrants outstanding and exercisable as at September 30, 2025 is as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Expiration date** | **Number of share purchase warrants** | **Number of share purchase warrants** | **Weighted average exercise price** | **Weighted average remaining life (Years)** |
| May 10, 2026 | # | 477778 | $0.30 | 0.61 |
| February 15, 2028 | # | 12222200 | $0.01 | 2.38 |
| November 22, 2028 | # | 27224962 | $0.02 | 3.15 |
|  | **#** | **39924940** | $**0.02** |  |

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There were no share purchase warrants transactions during the three and nine months ended September 30, 2025.

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 13 - SHAREHOLDERS' DEFICIT (continued)**

During the year ended December 31, 2024, 17,222,200 share purchase warrants were issued in connection with the issuance of $17,222 of promissory notes, each entitling the holder to purchase one common share of the Company at $0.01 per share with an expiration date of February 15, 2028, which include a portion of the share purchase warrants that can be exercised without cash consideration.

*<u>Additional paid-in capital</u>*

Pursuant to the Debt Modification (Note 8), as of August 7, 2025 the principal and accrued interest outstanding on all promissory notes and convertible notes held by Mr. Tal and Koze, both related parties, were extinguished and new notes were recognized resulting in a total gain of $1,256,853 from extinguishment (Note 11), which was recorded directly to additional paid-in capital given the related party nature of the transaction.

**NOTE 14 - REVENUE**

The Company generates revenue from the sale of cannabis and related products to its customers. The Company entered into a supply agreement on February 12, 2024 with Cantek, an Israeli limited corporation owned 100% by Koze, and for which Mr. Tal serves as a financial advisor, thereby making Cantek a related party of the Company. Cantek, a major customer of the Company, operates in the medical cannabis industry in Israel and is assisting with increasing the Company's presence in Israel. During the three and nine months ended September 30, 2025, the Company recognized revenue of $nil and $231,608, respectively (2024 - $110,359 and $242,973, respectively) from Cantek.

During the three and nine months ended September 30, 2025, the Company also recognized revenue of $574,001 and $889,942, respectively (2024 - $nil and $nil, respectively) from the sale of cannabis products to a pharmaceutical company based in Germany. This comprised the majority of the revenues generated during the three and nine months ended September 30, 2025.

**NOTE 15 - COST OF GOODS SOLD**

A summary of the Company's cost of goods sold is as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended<br>September 30, | Three months ended<br>September 30, | Nine months ended<br>September 30, | Nine months ended<br>September 30, |
|  | **2025** | 2024 | **2025** | 2024 |
| Direct materials | $**75745** | $93423 | $**163732** | $162411 |
| Direct labor | **208151** | 215494 | **401535** | 347712 |
| Depreciation | **13537** | 80657 | **50554** | 172650 |
| Overhead | **339084** | 199569 | **665237** | 369618 |
| Loss on impairment of inventory | **460089** | 79179 | **1506292** | 529635 |
|  | $**1096606** | $668322 | $**2787350** | $1582026 |

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 16 - COMMITMENTS AND CONTINGENCIES**

As at September 30, 2025, the Company has outstanding borrowings under various loan agreements with multiple lenders, most of which are in default. Certain borrowings are secured by the Company's assets, including equipment, investments and receivables. In the event of default, lenders may have the right to seize collateralized assets.

**Ataraxia Canada, Inc.**

As part of the Company's acquisition of Alternative Medical Solutions Inc. ("AMS") in 2018, an action filed against AMS by Ataraxia Canada, Inc. ("Ataraxia") was assumed, alleging breach of contract, specifically, breach of a non-binding term sheet providing for Ataraxia to acquire controlling interest in AMS. Ataraxia is seeking $15 million in damages. A Statement of Claim was prepared and circulated to AMS, as defendant, on August 2, 2018, under the Ontario Superior Court of Justice (Court file no. CV-17-580157). The parties have engaged in discussions with respect to a potential settlement of this matter. Counsel has advised that it believes it is premature to speculate on any outcome of this litigation, including the likelihood of a settlement or any potential liability at this time.

The Company's agreement to acquire AMS contained a provision requiring the Company to diligently defend against the claims brought forth in, and assume full and complete control of, the Ataraxia litigation, provided that Company will not enter into any compromise or settlement in respect of the Ataraxia litigation without the prior written consent of the sellers, which consent is not to be unreasonably withheld, conditioned or delayed. The sellers are obligated to cooperate fully and make available to the Company all pertinent information and witnesses under their control, make such assignments and take such other steps as in the opinion of Company's counsel are reasonably necessary to enable the Company to defend against the claims brought forth in the Ataraxia litigation.

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

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

**Bristol Capital Investors, LLC**

On April 15, 2021, Bristol Capital Investors, LLC ("BCI") filed a lawsuit in the Superior Court of the State of California, County of Los Angeles against the Company and Does 1 - 50, inclusive (Case No. 21<sup>st</sup> CV1 3696). The lawsuit alleges that the Company breached the Amended and Restated Limited Liability Company Membership Purchase Agreement entered into with BCI to purchase BCI's interest in Ramon Road Production Campus, LLC, a single asset entity which owned an improved property, known as the Glass House, located in Cathedral City, California. BCI alleges causes of action for fraud, breach of contract, breach of the implied covenant of good faith and fair dealing, and negligent misrepresentation, and seeks compensatory and consequential damages in the amount of $10.5 million dollars plus attorneys' fees and costs. The Company intends to vigorously defend against BCI's lawsuit. The parties conducted a court-ordered mediation and are engaging in on-going discussions.

The Company does not believe that this situation presents a probability of material risk and therefore a loss contingency is not reflected in our consolidated financial statements.

**Deloitte LLP**

On July 18, 2024, Deloitte LLP ("Deloitte") filed a civil claim in the Alberta Court of Justice, alleging a breach of contract. Deloitte was engaged by the Company to assist with fiscal year 2022 finance backfill and diagnostic services and in accordance with a signed engagement letter dated August 29, 2022, proceeded to perform the professional services. Deloitte pleads that it has discharged its responsibilities and delivered its accounts to the Company. The Company acknowledged the satisfactory completion of services and the debts rendered but made no further payment as agreed other than an instalment payment on April 18, 2024. Deloitte is seeking recovery of the amount owed. As of September 30, 2025, the amount payable for services from Deloitte included in accounts payable and accrued liabilities was $33,997 (December 31, 2024 - $32,891).

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 16 - COMMITMENTS AND CONTINGENCIES (continued)**

**Former Executives**

Former executives John Cassels and Andrew Steedman (collectively the "plaintiffs") have filed a lawsuit against the Company alleging wrongful termination, related misconduct, and unpaid compensation. The plaintiffs seek $3 million in compensatory damages and an additional $3 million in punitive damages. As of September 30, 2025, the Company maintains an accrual of approximately $917,000 for unpaid salaries owed to the plaintiffs for services rendered from April 2019 through June 2023. No additional loss contingency has been recorded, as the lawsuit remains in its early stages and the ultimate outcome is uncertain. The Company actively monitors this matter and will update its assessment as additional information becomes available.

**Astor Street LLC**

Astor Street LLC was issued two promissory notes by the Company in January 2021 and granted a security interest in all present and after acquired assets of the Company. Astor Street LLC commenced a claim to recover the amounts owing for CAD $312,303 in April 2022, obtained default judgment in the amount of CAD $314,273 in March 2023. On September 30, 2025, Astor Street LLC took steps to seize assets belonging to the Company. The Company is currently assessing the validity of the claim and default judgment, and whether it is necessary to come to a negotiated resolution. As of September 30, 2025, the amounts payable for promissory notes to Astor Street LLC included in notes payable was $215,502 (CAD $300,000) (December 31, 2024 - $219,000 (CAD $300,000)).

**NOTE 17 - OTHER EXPENSE**

During the nine months ended September 30, 2025, a one-time adjustment of $1,930,000 was made to lease-related rent expense due to a clarification in the interpretation of the lease terms for the Facility (Note 8).

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**CANNAPHARMARX, INC.**<br>**NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**<br>**FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**<br>

**NOTE 18 - SEGMENT NOTE**

The Company operates as one operating segment. The Company's CODM is its Board of Directors, which reviews financial information presented on a consolidated basis. The CODM uses revenue, cost of goods sold, consolidated operating margin and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow its operating profit margin and the allocation of budget between cost of goods sold, professional fees, and general and administrative expenses.

The following table presents selected financial information with respect to the Company's single operating segment for the three and nine months ended September 30, 2025 and 2024:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended<br>September 30, | Three months ended<br>September 30, | Nine months ended<br>September 30, | Nine months ended<br>September 30, |
|  | **2025** | 2024 | **2025** | 2024 |
| **Revenue** | $**656606** | $312164 | $**1223533** | $338003 |
| **Cost of goods sold** | **1096606** | 668322 | **2787350** | 1582026 |
| **Gross loss** | **(440000)** | (356158) | **(1563817)** | (1244023) |
| **Operating expenses** |  |  |  |  |
| Depreciation | **-** |  | **-** | 87278 |
| General and administrative | **145444** | 70354 | **260037** | 274610 |
| Payroll and consulting fees | **-** | 25389 | **-** | 160954 |
| Professional fees | **115990** | 64075 | **340546** | 336222 |
| Royalty expense | **234212** | - | **289811** | - |
| Total operating expenses | **495646** | 159818 | **890394** | 859064 |
| **Loss from operations** | **(935646)** | (515976) | **(2454211)** | (2103087) |
| Other segment items | **(542165)** | 704397 | **(1127652)** | (4061861) |
| Net loss | $**(1477811)** | $188421 | $**(3581863)** | $(6164948) |

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**NOTE 19 - EARNINGS (LOSS) PER SHARE**

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

Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares. Diluted EPS calculations are determined by dividing net income by the weighted average number of shares of common shares and dilutive common share equivalents outstanding. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.

As of September 30, 2025, convertible preferred shares outstanding totaled 629,416 shares (December 31, 2024 - 629,416 shares) and share purchase warrants outstanding totaled 39,924,940 (December 31, 2024 - 39,924,940). The Company's convertible notes were all excluded from the calculation of diluted EPS on the basis that they were anti-dilutive.

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**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*The following discussion and analysis of the Company's financial condition and results of operations for the interim period as at and for the three and nine months ended September 30, 2025 and 2024 should be read together with the Company's financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and related footnotes included on our Form 10-K for the year ended December 31, 2024.*

*In connection with, and because we desire to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this Report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements.*

***Forward-Looking Statements***

This Quarterly Report on Form 10-Q includes a number of "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements concerning anticipated financial results and developments of our operations in future periods that reflect management's current views with respect to future events and financial performance. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other comparable terminology. These statements include statements regarding the intent, belief or current expectations of us and members of our management team, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks set forth in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 as filed with the U.S. Securities and Exchange Commission (the "SEC") on April 8, 2025 any of which may cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in our forward-looking statements. These risks and factors include, by way of example and without limitation:

· risks associated with the Company's history of losses and need for additional financing,

· risks associated with increased costs affecting its financial condition,

· risks associated with uninsured risks,

· risks associated with governmental and environmental regulations,

· risks associated with future legislation regarding the cannabis industry and climate change,

· risks associated with cybersecurity and cyber-attacks,

· risks related to economic conditions,

· risks related to our ability to manage growth,

· risks related to our dependence on key personnel,

· risks related to our SEC filing history, and

· risks related to our securities.

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This list is not exhaustive of the factors that may affect the Company's forward-looking statements. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as required by law, the Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. The Company qualifies all the forward-looking statements contained in this Quarterly Report on Form 10-Q by the foregoing cautionary statements.

Readers are urged to carefully review and consider the various disclosures made by us in this Report and in our other reports filed with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.

**OVERVIEW AND HISTORY**

As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms "CannaPharmaRX", the "Company", "we", "us", and "our" refer to CannaPharmaRX, Inc. and our wholly owned subsidiaries. Unless otherwise specified, all dollar amounts are expressed in United States dollars ("USD"). We specialize in the acquisition, development, and operation of cannabis cultivation facilities in Canada. We were originally incorporated in the state of Colorado in August 1998 as Network Acquisitions, Inc. In October 2014, we changed our legal name to CannaPharmaRx, Inc. We evolved to focus on producing high-quality medical cannabis and craft products. Our principal executive office is located at 302, 3204—Rideau Place SW., Calgary, Alberta, Canada T2S 1Z2.

On January 6, 2022, we entered into a 20-year operating lease for the use of a 55,000 square foot facility located in Cremona, Alberta, Canada (the "Facility"). During 2022, we recommissioned the Facility into an indoor cannabis farm with 10 growing rooms and one drying and packing room. The Facility currently operates six of these growing rooms and the drying and packing room and plans to increase capacity over the next one to two years to open a second drying and packing room and to operate all 10 growing rooms.

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

**Growth strategy**

We plan to grow by increasing our growth capacity at the Facility to support sales of cannabis to the European markets, with a focus on Germany and Israel. To support this initiative, we intend to increase the operations in the Facility from six growing rooms to 10 growing rooms over the next one to two years and to open a second drying and packing room; building and developing a sales network in Germany and Israel; and applying for European Union Good Manufacturing Practices ("EU-GMP") certification. Currently, we are required to send our cannabis to a third-party European intermediary for packaging in compliance with EU-GMP standards. Once certified, we will be able to remove this step from our delivery process and ship directly to countries within the European Union ("EU"), reducing overall costs and shipping timelines.

To facilitate our growth strategy, on November 22, 2023, we entered into an agreement with LTB Management, LLC ("LTB") in support of building and developing a sales network in the EU and obtaining access to LTB's e-commerce technology related to online sales of cannabis in the EU. Under this agreement, we obtained 100 Class B units of LTB in exchange for 27,224,962 share purchase warrants, each entitling the holders to purchase one share of our common shares at $0.02 per share until November 22, 2028; $3,000,000 in promissory notes payable to the LTB; and 100,000 Class C preferred shares of our company. Contingent consideration included a quarterly true up of LTB's preferred share proportional ownership to 33% of the outstanding shares of our common shares, and an earn out whereby LTB can earn up to an additional 12% pro-rata preferred share proportional ownership (which, if earned, will result in the true up increasing by the pro-rata preferred share proportional ownership earned) based on our reaching a threshold of $2,500,000 in annual revenue at any time within 24 months of the agreement date. As at September 30, 2025, we have an obligation to issue an additional 332,554 Class C preferred shares to LTB under the true up, valued at $1,558,710.

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**OUR PRODUCTS**

*<u>Cannabis Products</u>*

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

**Going Concern**

Significant doubt exists as to our ability to continue as a going concern based on the fact that we do not have adequate working capital to finance our day-to-day operations. For the three and nine months ended September 30, 2025, we reported revenues of $656,606 and $1,223,533, respectively (2024 - $312,164 and $338,003, respectively). As at September 30, 2025, we had cash of $927, a working capital deficiency of $27,009,769 and an accumulated deficit of $104,766,005. Additionally, for the nine months ended September 30, 2025, we used $1,850,544 (2024 - $1,517,342) of cash in operating activities. These financial metrics and the Company's accumulated deficit of $104,766,005 as at September 30, 2025 indicate material uncertainty over the Company's ability to continue as a going concern. Management's plans include engaging in further research and development and raising additional capital in the short term to fund such activities through sales of its common shares. Management's ability to implement its plans and continue as a going concern will be dependent upon raising additional capital. The Company is subject to an active CTO in Canada, which has significantly constrained our ability to raise capital through traditional public equity markets. Consequently, our current financing activities are primarily reliant on related party transactions, including loans and advances from directors, officers, and affiliated entities. Our continued existence depends on the success of our efforts to raise additional capital necessary to meet our obligations as they come due and to obtain sufficient capital to execute our business plan. We may obtain capital primarily through issuances of debt or equity or entering into collaborative arrangements with corporate partners. There can be no assurance that we will be successful in completing additional financing or collaboration transactions or, if financing is available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we may be required to scale down or perhaps even cease the operation of our business. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current shareholders. Obtaining commercial or related party loans, assuming those loans would be available, will increase our liabilities and future cash commitments. Our financial statements do not include adjustments that might result from the outcome of this uncertainty.

**RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**

**Revenue**

During the three months ended September 30, 2025 and 2024, the Company reported revenue of $656,606 and $312,164, respectively. The increase was primarily driven by the continued expansion of the Company's medical cannabis product line, improved distribution capabilities, increased market penetration, and the onboarding of new retail partners since late 2024.

**Cost of Goods Sold**

During the three months ended September 30, 2025 and 2024, the Company reported cost of goods sold of $1,096,606 and $668,322, respectively. The increase was primarily driven by higher sales volumes in 2025, which necessitated increased production activity and resulted in elevated costs related to direct materials, labor, and manufacturing overhead. Included in cost of goods sold for the three months ended September 30, 2025 and 2024 is loss on impairment of inventory of $460,089 and $79,179, respectively, primarily due to a decline in estimated net realizable value as a result of market price compression, and evolving product and regulatory requirements that impacted the recoverability of certain product lines. Additionally, a portion of the inventory was found to contain tetrahydrocannabinol ("THC") concentrations below the Company's targeted potency thresholds, rendering these products less marketable and limiting their commercial viability.

**Gross Loss**

During the three months ended September 30, 2025 and 2024, the Company reported a gross loss of $440,000 and $356,158, respectively. The gross loss increased during 2025 as the Company generated revenue from sales offset by a disproportionate increase in cost of goods sold resulting from increased costs of direct materials, labor and overheads during the three months ended September 30, 2025. Additionally, revenue was negatively impacted by the sale of cannabis products with suboptimal THC concentrations, which limited their marketability and commanded lower selling prices.

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**Operating Expenses**

A summary of the Company's operating expenses for the three months ended September 30, 2025 and 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| General and administrative | $**145444** | $70354 |
| Payroll and consulting fees | **-** | 25389 |
| Professional fees | **115990** | 64075 |
| Royalty expense | **234212** | - |
|  | $**495646** | $159818 |

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During the three months ended September 30, 2025 and 2024, the Company's operating expenses consisted primarily of general and administrative expenses, payroll and consulting fees, professional fees associated with the costs for services or employees in finance, accounting, sales, administrative activities and the compliance of a public company, and royalty expense. Overall operating expenses for the three months ended September 30, 2025 were $495,646 compared to operating expenses of $159,818 in the prior year comparable period, an increase of $335,828. The increase is primarily attributable to the following:

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| | |
|:---|:---|
| ·  | A $51,915 increase in professional fees due to higher fees incurred in 2025 for legal counsel services related to the Company's cease trade order and other ongoing legal matters. |
| ·  | A $234,212 increase in royalty expense due to an agreement entered into by the Company with Koze on March 17, 2025, which did not exist during the prior year comparable period. |
| ·  | A $75,090 increase in general and administrative expenses primarily due to increase in marketing costs in the current period. |
| The increase was partially offset by the following decrease in operating expenses: | The increase was partially offset by the following decrease in operating expenses: |
| ·  | A $25,389 reduction in payroll and consulting fees due to a change in management resulting in a reduction in payroll accruals for officers, as well as the allocation of direct labor to inventory. |

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**Other income (expenses)**

A summary of the Company's other income and expenses for the three months ended September 30, 2025 and 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Change in the fair value of derivative conversion feature | $**7296** | $(6216) |
| Change in the fair value of obligation to issue shares | **168355** | 1324327 |
| Foreign exchange gain (loss) | **(24243)** | 18030 |
| Interest expense | **(506331)** | (631744) |
| Imputed interest expense | **(187242)** | - |
|  | $**(542165)** | $704397 |

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Other expenses totaled $542,165 for the three months ended September 30, 2025 compared to other income of $704,397 in the 2024 period, primarily due to the following:

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| Change in the fair value of obligation to issue shares was a gain of $168,355 compared to a gain of $1,324,327 in the 2024 comparable period resulting from remeasurement of the obligation to issue shares. Key factors influencing the measurement of the obligation to issue shares include fluctuations in the Company's common shares price, term to expiration, and the probability of the Company reaching the threshold of $2,500,000 of annual revenue by November 22, 2025. |
| A $42,273 increase in the foreign exchange loss primarily due to currency fluctuations between the USD and CAD. |
| A $187,242 increase in imputed interest expense due to debt modification of certain loans to related parties, which resulted in a remeasurement of the liabilities and recognition of additional imputed interest expense. |

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The decrease in other income was partially offset by the following increases:

· Change in the fair value of derivative conversion feature was a gain of $7,296 compared to a loss of $6,216 in the 2024 comparable period. Key factors include fluctuations in market conditions and changes in underlying assumptions used in valuation of the derivative conversion feature of convertible notes.

· A $125,413 decrease in interest expense is primarily attributable to a reduction in the interest rate for certain loans to related parties, pursuant to a debt modification agreement entered into by the Company with those related parties.

**Net Loss**

As a result of the foregoing, during the three months ended September 30, 2025, the Company recorded a net loss of $1,477,811 or $0.00 per share compared to net income of $188,421 or $0.00 per share in the 2024 comparable quarter.

**RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**

**Revenue**

During the nine months ended September 30, 2025 and 2024, the Company reported revenue of $1,223,533 and $338,003, respectively. The increase was primarily driven by the continued expansion of the Company's medical cannabis product line, improved distribution capabilities, increased market penetration, and the onboarding of new retail partners since late 2024.

**Cost of Goods Sold**

During the nine months ended September 30, 2025 and 2024, the Company reported cost of goods sold of $2,787,350 and $1,582,026, respectively. The increase in cost of goods sold was primarily attributable to higher sales volumes in 2025, which drove greater production activity and led to increased expenditures on raw materials, labor, and overhead. Included in cost of goods sold for the nine months ended September 30, 2025 and 2024 are losses on the impairment of inventory of $1,506,292 and $529,634, respectively, primarily due to downward pricing pressures in the market and changes in product specifications and regulatory standards that affected the recoverability of select products. Furthermore, a portion of the inventory was identified as having THC potency levels below the Company's established thresholds, diminishing its appeal in the marketplace and adversely impacting its expected selling price and commercial feasibility.

**Gross Loss**

During the nine months ended September 30, 2025 and 2024, the Company reported a gross loss of $1,563,817 and $1,244,023, respectively. The increase in gross loss in 2025 was primarily due to an increase in revenue, which was outpaced by a corresponding rise in cost of goods sold. The growth in revenue was driven by higher sales volumes and expanded operational activities during the period. Cost of goods sold also increased by a higher proportion due to higher production costs including raw materials, labor, manufacturing overhead, contributing to the overall decrease in gross loss.

**Operating Expenses**

A summary of the Company's operating expenses for the nine months ended September 30, 2025 and 2024 is as follows:

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|:---|:---|:---|
|  | **2025** | 2024 |
| Depreciation | $**-** | $87278 |
| General and administrative | **260037** | 274610 |
| Payroll and consulting fees | **-** | 160954 |
| Professional fees | **340546** | 336222 |
| Royalty expense | **289811** | - |
|  | $**890394** | $859064 |

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During the nine months ended September 30, 2025 and 2024, the Company's operating expenses consisted primarily of depreciation, general and administrative expenses, payroll and consulting fees, professional fees associated with the costs for services or employees in finance, accounting, sales, administrative activities and the compliance of a public company, and royalty expense. Overall operating expenses for the nine months ended September 30, 2025 were $890,394 compared to operating expenses of $859,064 in the 2024 period, an increase of $31,330. The increase is primarily attributable to the following:

· $289,811 increase in royalty expense due to an agreement entered into by the Company with Koze on March 17, 2025, which did not exist during the 2024 period.

The increase was partially offset by the following decreases:

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| |
|:---|
| A $87,278 decrease in depreciation expenses primarily due to allocation of the entire expense to inventory during the current period and an overall decrease in depreciation expense due to fixed assets reaching or nearing the end of their useful lives. |
| A $14,573 decrease in general and administrative expenses primarily due to allocation of certain expenses related to direct materials, labor and overheads to inventory in the current period. |
| A $160,954 decrease in payroll and consulting fees due to a change in management resulting in a reduction in payroll accruals for officers, as well as allocation of direct labor to inventory. |

---

**Other income (expenses)**

A summary of the Company's other income and expenses for the nine months ended September 30, 2025 and 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Change in the fair value of derivative conversion feature | $**602569** | $612874 |
| Change in the fair value of obligation to issue shares | **2095299** | (2060066) |
| Foreign exchange gain | **71084** | 17928 |
| Interest expense | **(1779362)** | (1941885) |
| Imputed interest expense | **(187242)** |  |
| Loss on the extinguishment of debt | **-** | (690712) |
| Other expense | **(1930000)** | - |
|  | $**(1127652)** | $(4061861) |

---

Other expenses totaled $1,127,652 for the nine months ended September 30, 2025 compared to $4,061,861 in the 2024 comparable period. The decrease of $2,934,209 was primarily attributable to the following:

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| |
|:---|
| The fair value of the obligation to issue shares liability decreased from $3,654,009 as at December 31, 2024 to $1,558,710 as at September 30, 2025, resulting in a gain from the change in the fair value of the obligation to issue shares of $2,095,299 recognized during the nine months ended September 30, 2025. In the 2024 comparable period, the fair value of the obligation to issue shares liability changed from $204,220 as at December 31, 2023 to $2,264,286 as at September 30, 2024, resulting in a loss from the change in the fair value of the obligation to issue shares of $2,060,066 recognized during the nine months ended September 30, 2025. Key factors influencing the measurement of the obligation to issue shares include fluctuations in the Company's common shares price, term to expiration, and the probability of the Company reaching the threshold of $2,500,000 of annual revenue by November 22, 2025. |
| A $53,156 increase in the foreign exchange gain primarily due to currency fluctuations between the USD and CAD. |
| A $162,523 decrease in interest expense is primarily attributable to a reduction in the interest rate for certain loans to related parties, pursuant to a debt modification agreement entered into by the Company with those related parties. |
| Loss on the extinguishment of debt of $690,712 was recorded in the 2024 period. No such loss was recorded in the current period as the current period refinancing activities were with related parties and the effects of modification were recorded directly to additional paid-in capital. |

---

The decrease in other expenses was partially offset by the following increases:

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| |
|:---|
| The fair value of the derivative conversion feature liability decreased from $1,159,324 as at December 31, 2024 to $556,755 as at September 30, 2025, resulting in a gain from the change in the fair value of the derivative conversion feature of $602,569 recognized during the nine months ended September 30, 2025. In the 2024 comparable period, the fair value of the derivative conversion feature liability changed from $1,264,388 as at December 31, 2023 to $651,514 as at September 30, 2024, resulting in a gain from the change in the fair value of the derivative conversion feature of $612,874 recognized during the nine months ended September 30, 2025. |
| A $187,242 increase in imputed interest expense primarily due to debt modification of certain loans to related parties, which resulted in a remeasurement of the liabilities and recognition of additional imputed interest expense. |
| During the nine months ended September 30, 2025, a one-time adjustment of $1,930,000 was made to lease-related rent expense due to a clarification in the interpretation of the lease terms between management and Formosa. |

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**Net Loss**

As a result of the foregoing, during the nine months ended September 30, 2025, the Company recorded a net loss of $3,581,863 or $0.01 per share compared to a net loss of $6,164,948 or $0.01 per share in the prior year comparable period.

**LIQUIDITY AND CAPITAL RESOURCES**

As of September 30, 2025, we had a cash balance of $927. In 2025, the Company's funding was primarily attributable to advances from Koze, pursuant to a promissory note agreement whereby Koze agreed to pay $1,888,748 of expenses on behalf of the Company.

The summary of the Company's cash flows for the nine months ended September 30, 2025 and 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Cash used in operating activities | $**(1850544)** | $(1517342) |
| Cash provided by financing activities | **1849315** | 1523691 |
|  | $**(1229)** | $6349 |

---

As of September 30, 2025, the Company had $927 in cash as compared to $2,156, and working capital deficiency of $27,009,769 compared to $24,733,636 as of December 31, 2024.

*Cash flows from operating activities*

Cash used in operating activities for the nine months ended September 30, 2025 increased by $333,202 compared to the prior year comparable period, primarily due to increase in cost of goods sold which includes direct materials, labor and overhead resulting from an increase in sales volumes during the period.

*Cash flows from investing activities*

For the nine months ended September 30, 2025 and 2024, there were no cash flows arising from investing activities.

*Cash flows from financing activities*

Cash provided by financing activities for the nine months ended September 30, 2025 was $1,849,315 as compared to $1,523,691 in the prior year comparable period primarily due to additional proceeds from related party loans of $29,342. Other factors include no repayments of convertible notes in the current period, compared to repayments of $451,282 in the prior-year period. This increase was partially offset by the non-recurrence of proceeds from share purchase warrant issuances of $87,768 and convertible notes of $67,232, all of which were received in the prior-year period but not in the current period.

**Related party transactions**

*<u>Revenue</u>*

During the three and nine months ended September 30, 2025, the Company recognized revenue of $nil and $231,608, respectively, from D.N.S. CANTEK 2019 LTD, an Israeli limited corporation owned 100% by Koze, and for which Mr. Tal serves as a financial advisor.

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

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

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| | | |
|:---|:---|:---|
| | **Average Price per Gram (CAD)<sup>\*</sup>** | **Average Price per Gram (CAD)<sup>\*</sup>** |
| <br>**Market** | **Premium Batches**  | **Medium Batches**  |
| Germany | **2.05** | **1.6** |
| Israel | **2.0** | **1.6-1.8** |
| Canada | **2.0** | **1.1-1.5** |
| Portugal | **1.8-2.0** | **0.8-1.5** |

---

<sup>\*</sup> Batches with THC concentrations below 20% are generally sold at lower average prices compared to higher-THC batches.

*<u>Lease expense</u>*

The Company has a lease with Formosa, which became a related party upon the appointment of its manager, Elliot Zemel, as a director of the Company on March 11, 2025. During the three and nine months ended September 30, 2025, the Company recognized interest expense related to rent in default of $145,858 and $435,600, respectively, associated with unpaid lease payments. During the three and nine months ended September 30, 2025, the Company incurred lease expense of $272,232 and $804,457, respectively associated with the Formosa lease, which is included in cost of goods sold.

*<u>Rent</u>*

Effective February 1, 2023, the Company entered into a rental agreement granting it the right to use office space located at Suite 3600, 888 5<sup>th</sup> Avenue SW, Calgary, Alberta, Canada, T2P 3R7 for a monthly rent of CAD $500 per month. This space was provided by a company affiliated with Richard Orman, chairman of the Company's board of directors.

The Company ceased using the office space and accordingly stopped accruing rent expense after June 30, 2025. During the three and nine months ended September 30, 2025, the Company incurred rent expense of $nil and $2,124, respectively (2024 - $1,099 and $3,308, respectively) which is recorded as a general and administrative expense.

*<u>Professional fees</u>*

· During the three and nine months ended September 30, 2025, the Company incurred professional expenses of $42,119 and $168,938, respectively (2024 - $26,842 and $149,947, respectively) related to accounting fees payable to Invictus Accounting Group LLP, a company to which Oliver Foeste is Managing Partner, which provides part-time CFO, financial reporting, and bookkeeping services to the Company.

· During the three and nine months ended September 30, 2025, the Company incurred professional expenses of $4,600 and $51,787, respectively, payable to Fabian Vancott (2024 - $nil and $nil, respectively) related to legal fees. Anthony Panek who is a partner in Fabian Vancott, is also a director of the Company.

*<u>Royalty expense</u>*

On March 17, 2025, the Company and Alberta Ltd., entered into a security and royalty agreement with Koze, pursuant to which the Company is required to pay a royalty of CAD $0.20 per gram on cannabis product sales. If the royalty is not paid on time, the rate increases to CAD $0.40 per gram sold for the applicable month. During the three and nine months ended September 30, 2025, the Company sold 806,568 and 998,952 grams of cannabis products, respectively, and for the three and nine months ended September 30, 2025, the Company incurred a royalty expense of $234,212 and $289,811, respectively (2024 - $nil and $nil, respectively).

*<u>Interest expense</u>*

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| During the three and nine months ended September 30, 2025, the Company incurred interest expense on promissory and convertible notes with Mr. Tal of $17,016 and $71,154, respectively (2024 - $27,498 and $83,297, respectively). |
| During the three and nine months ended September 30, 2025, the Company incurred interest expense on promissory and convertible notes with Koze of $288,597 and $1,109,554, respectively. |
| During the three and nine months ended September 30, 2025, the Company incurred interest expense on promissory note with Formosa of $26,459 and $75,120, respectively. |

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*<u>Imputed interest expense</u>*

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| |
|:---|
| During the three and nine months ended September 30, 2025, the Company incurred imputed interest expense on promissory and convertible notes with Mr. Tal of $12,135 and $12,135, respectively (2024 - $nil and $nil, respectively). |
| During the three and nine months ended September 30, 2025, the Company incurred imputed interest expense on promissory and convertible notes with Koze of $145,587 and $145,587, respectively. |
| During the three and nine months ended September 30, 2025, the Company incurred imputed interest expense on promissory and convertible notes with Formosa of $29,520 and $29,520, respectively. |

---

*<u>Other expense</u>* 

During the nine months ended September 30, 2025, the Company made a one-time adjustment of $1,930,000 to lease-related rent expense due to a clarification in the interpretation of the lease terms for the Facility, which is recorded as other expense.

*<u>Accounts payable and accrued liabilities</u>*

As at September 30, 2025, accounts payable and accrued liabilities include balances owing to related parties as follows:

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| |
|:---|
| As at September 30, 2025, $3,948,171 was payable to Formosa for outstanding lease payments. As at September 30, 2025, accrued interest on unpaid lease payments on the Formosa lease was $1,056,096. |
| As at September 30, 2025, $126,772 (December 31, 2024 - $89,392) was payable to Invictus for part-time CFO, financial reporting, and bookkeeping services provided to the Company. |
| As at September 30, 2025, $319,279 (December 31, 2024 - $319,279) was payable to Mr. Orman for unpaid directors' fees for 2021 through 2023. |
| As at September 30, 2025, $1,679,060 (December 31, 2024 - $1,661,386) was payable to Dominic Colvin, a director of the Company, for unpaid salary and expense reimbursement amounts during Mr. Colvin's employment with the Company as its CEO during the years 2019 through 2022. |
| As at September 30, 2025, $111,325 (December 31, 2024 - $104,538) was payable to Fabian Vancott in respect of unpaid legal fees. |
| As at September 30, 2025, $70,540 (December 31, 2024 - $nil) was payable to Sky Home Services LLC, a company managed by Mr. Tal, with respect to unpaid marketing expenses. |

---

*<u>Loans payable to related parties</u>*

As at September 30, 2025, the loans payable to related parties consists of the following:

<u>PLC International Investments Inc. ("PLC")</u>

· A $13,227 interest-free loan from PLC, a company owned by Dominic Colvin, a director of the Company;

<u>Loans payable to Koze</u>

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|:---|:---|
| ·  | *<u>Koze LTB:</u>* |
|  | On November 22, 2023, the Company entered into promissory notes of $2,550,000 with Koze, as part of the LTB transaction, bearing interest at 13% per annum. Originally due on November 22, 2024, the maturity date for this note was extended to December 31, 2025, by agreement with Koze.<br>As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $2,550,000 and $555,406, respectively, were extinguished. A new note ("Koze LTB") of $2,978,661 bearing 6% interest, compounding annually, was recognized resulting in a gain of $126,745 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $58,136 and $222,524, respectively. During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $45,258 and $45,258, respectively. As at September 30, 2025, the outstanding balance on the note was $3,023,919 (December 31, 2024 - $2,550,000). As at September 30, 2025, the accrued interest on the note was $29,981 (December 31, 2024 - $362,864).  |

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| ·  | *<u>Koze A:</u>* |
|  | On May 25, 2023, the Company entered into a promissory note with Koze, bearing interest at 24% compounded monthly, to fund for certain documented expenses.<br>As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $849,278 and $443,339, respectively, were extinguished. A new note ("Koze B") of $1,134,669 bearing 6% interest, compounding annually, was recognized resulting in a gain of $157,949 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $62,349 and $153,506, respectively. During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $17,836 and $17,836, respectively. As at September 30, 2025, the outstanding balance on the note was $1,244,563 (December 31, 2024 - $640,320). As at September 30, 2025, the accrued interest on the note was $11,391 (December 31, 2024 - $301,227). |

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|:---|:---|
| ·  | *<u>Koze B:</u>* |
|  | On May 25, 2023, the Company entered into another promissory note with Koze, bearing interest at 24% compounded monthly, to fund the Company for certain documented expenses.<br>As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $4,040,474 and $1,366,780, respectively, were extinguished. A new note ("Koze B") of $4,767,106 bearing 6% interest, compounding annually, was recognized resulting in a gain of $640,148 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $156,655 and $681,064, respectively. During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $75,310 and $75,310, respectively. As at September 30, 2025, the outstanding balance on the note was $5,227,346 (December 31, 2024 - $2,740,885). As at September 30, 2025, the accrued interest on the note was $47,593 (December 31, 2024 - $698,261). |

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|:---|:---|
| ·  | *<u>Koze C:</u>* |
|  | On February 8, 2024, the Company entered into another promissory note with Koze, bearing interest at 24% compounded monthly.<br>As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $275,000 and $97,403, respectively, were extinguished. A new note ("Koze C") of $330,551 bearing 6% interest, compounding annually, was recognized resulting in a gain of $41,852 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $8,818 and $41,595, respectively. During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $5,198 and $5,198, respectively. As at September 30, 2025, the outstanding balance on the note was $335,749 (December 31, 2024 - $275,000). As at September 30, 2025, the accrued interest on the note was $3,318 (December 31, 2024 - $59,129). |

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|:---|:---|
| ·  | *<u>Koze convertible note ("Koze CN"):</u>* |
|  | The Company has a convertible note with Koze, bearing interest at 24%. <br>As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $68,555 and $75,714, respectively, were extinguished. A new note, Koze CN, of $126,275 bearing 6% interest, compounding annually, was recognized resulting in a gain of $17,995 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $2,639 and $10,865, respectively. During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $1,985 and $1,985, respectively. As at September 30, 2025, the outstanding balance on the note was $128,260 (December 31, 2024 - $275,000). As at September 30, 2025, the accrued interest on the note was $1,269 (December 31, 2024 - $66,117). |

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<u>Loans payable to Mr. Tal</u>

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| ·  | *<u>Mr. Tal LTB:</u>* |
|  | On November 22, 2023, the Company entered into a promissory note of $450,000 with Mr. Tal as part of the LTB transaction, bearing interest at 13% per annum. Originally due on November 22, 2024, the maturity date for this note was extended to December 31, 2025, by agreement with Koze.<br>As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $438,296 and $89,768, respectively, were extinguished. A new note ("Mr. Tal LTB") of $507,422 bearing 6% interest, compounding annually, was recognized resulting in a gain of $20,641 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded payments to the note of $27,729 and $39,433, respectively (2024 - $nil and $nil, respectively). During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $9,805 and $38,436, respectively (2024 - $14,745 and $43,915, respectively). During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $7,501 and $7,501, respectively. As at September 30, 2025, the outstanding balance on the note was $487,194 (December 31, 2024 - $450,000). As at September 30, 2025, the accrued interest on the note was $4,966 (December 31, 2024 - $56,298). |

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|:---|:---|
| ·  | *<u>Mr. Tal convertible note ("Mr. Tal CN"):</u>* |
|  | The Company has a convertible note with Mr. Tal, bearing interest at 24%.<br>As a result of the Debt Modification, principal and accrued interest outstanding related to the note as of August 7, 2025 of $212,555 and $121,427, respectively, were extinguished. A new note, Mr. Tal CN, of $294,850 bearing 6% interest, compounding annually, was recognized resulting in a gain of $39,132 from extinguishment, recorded directly to additional paid-in capital.<br>During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $7,211 and $32,718, respectively (2024 - $12,753 and $39,382, respectively). During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $4,634 and $4,634, respectively. As at September 30, 2025, the outstanding balance on the note was $299,484 (December 31, 2024 - $212,555). As at September 30, 2025, the accrued interest on the note was $2,960 (December 31, 2024 - $91,669). |

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<u>Promissory note with Formosa</u>

On January 1, 2025, the Company entered into a promissory note with Formosa in the amount of $1,930,000, bearing interest at 5% per annum, with respect to a one-time adjustment made to lease-related rent expense due to a clarification in the interpretation of the lease terms for the Facility.

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

During the three and nine months ended September 30, 2025, the Company recorded interest expense related to the note of $26,459 and $75,120, respectively (2024 - $nil and $nil, respectively). During the three and nine months ended September 30, 2025, the Company recorded imputed interest expense related to the note of $29,520 and $29,520, respectively (2024 - $nil and $nil, respectively). As at September 30, 2025, the outstanding balance on the note was $1,805,227 (December 31, 2024 - $nil). As at September 30, 2025, the accrued interest on the note was $17,881 (December 31, 2024 - $nil).

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A summary of the accrued interest of the Company's loans payable to related parties as at September 30, 2025 and December 31, 2024 is as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Koze LTB | $**29981** | $- |
| Koze A | **11391** |  |
| Koze B | **47593** |  |
| Koze C | **3318** |  |
| Koze CN | **1269** | 66117 |
| Mr. Tal LTB | **4966** | 56298 |
| Mr. Tal CN | **2960** | 91669 |
| Promissory note with Formosa | **17881** | - |
|  | $**119359** | $214084 |

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*<u>Royalty payable</u>*

Pursuant to the Royalty Agreement, as of September 30, 2025, the royalty amount payable to Koze was $287,035 (CAD $399,581) (2024 - $nil).

*<u>Obligation to issue shares</u>*

As at September 30, 2025, the Company has an obligation to issue an additional 166,277 Class C preferred shares to each of Mr. Tal and Koze (December 31, 2024 - 150,799 each) as part of the LTB transaction, valued at $779,355 for each party (December 31, 2024 - $1,827,005 each).

**Critical accounting estimates**

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

In preparing these financial statements, the Company is exposed to the same sources of estimation uncertainty as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

**Recently issued accounting pronouncements**

<u>New accounting standards adopted</u>

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

<u>New accounting standards not yet adopted</u>

In November 2024, the FASB issued ASU No. 2024-03, Income Statement Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires an entity to disclose the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. It also requires an entity to include certain amounts that are already required to be disclosed under current GAAP in the same disclosure. Additionally, it requires an entity to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and to disclose the total amount of selling expenses and, in annual reporting periods, an entity's definition of selling expenses. The amendments in the ASU are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. Management is currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

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**Off-Balance Sheet Arrangements**

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

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

The Company is classified as a smaller reporting company and is not required to provide the information under this item pursuant to Regulation S-K.

**ITEM 4. CONTROLS AND PROCEDURES**

**Disclosure controls and procedures**

*<u>Controls and procedures</u>*

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

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

Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as of September 30, 2025, at reasonable assurance levels.

*<u>Inherent limitations</u>*

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

*<u>Changes in internal control over financial reporting</u>*

There were no changes in our internal control over financial reporting during the nine months ended September 30, 2025, which were identified in conjunction with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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**Management Report on Internal Control over Financial Reporting**

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

· pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

· provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and the receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the Company's assets that could have a material effect on the financial statements.

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

Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2025. In making this assessment, our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013).

Based on its assessment, management has concluded that as of September 30, 2025, our disclosure controls and procedures and internal control over financial reporting were not effective and that a material weakness existed in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a Company's annual or interim financial statements will not be prevented or detected on a timely basis.

Management has identified deficiencies in operating effectiveness that, in combination, represent a material weakness in internal control over financial reporting as follows:

· Due to recent management and staff turnover, accurate information and records were not consistently maintained within our records and there were instances where documentation to support certain transactions was difficult to obtain or unobtainable. These deficiencies represent a material weakness in our internal control over financial reporting.

Because of the material weakness identified, management has concluded that its internal control over financial reporting was not effective as of September 30, 2025. We are in the process of developing and implementing remediation plans to address the material weakness described above.

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**PART II. OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

**Ataraxia Canada, Inc.**

As part of our acquisition of Alternative Medical Solutions Inc. ("AMS") in 2018, we assumed an action filed against AMS by Ataraxia Canada, Inc. ("Ataraxia"), alleging breach of contract, specifically, breach of a non-binding term sheet providing for Ataraxia to acquire controlling interest in AMS. Ataraxia is seeking $15 million in damages. A Statement of Claim was prepared by Ataraxia, as plaintiff, and circulated to AMS, as defendant, on August 2, 2018, under the Ontario Superior Court of Justice (Court file no. CV-17-580157). The parties have engaged in discussions with respect to a potential settlement of this matter. Counsel has advised that it believes it is premature to speculate on any outcome of this litigation, including the likelihood of a settlement or any potential liability at this time.

Our agreement to acquire AMS contained a provision requiring us to diligently defend against the claims brought forth in, and assume full and complete control of, the Ataraxia litigation, provided that we will not enter into any compromise or settlement in respect of the Ataraxia litigation without the prior written consent of the sellers, which consent is not to be unreasonably withheld, conditioned or delayed. The sellers are obligated to cooperate fully and make available to us all pertinent information and witnesses under their control, make such assignments and take such other steps as in the opinion of our counsel are reasonably necessary to enable us to defend against the claims brought forth in the Ataraxia litigation.

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

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

**Bristol Capital Investors, LLC**

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

We do not believe that this situation presents a probability of material risk and therefore a loss contingency is not reflected in our consolidated financial statements.

**Deloitte LLP**

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

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**Former Executives**

Former executives John Cassels and Andrew Steedman (collectively the "plaintiffs") have filed a lawsuit against the Company alleging wrongful termination, related misconduct, and unpaid compensation. The plaintiffs seek $3 million in compensatory damages and an additional $3 million in punitive damages. As of September 30, 2025, the Company maintains an accrual of approximately $917,000 for unpaid salaries owed to the plaintiffs for services rendered from April 2019 through June 2023. No additional loss contingency has been recorded, as the lawsuit remains in its early stages and the ultimate outcome is uncertain. The Company actively monitors this matter and will update its assessment as additional information becomes available.

**Cease Trade Order (CTO)**

In 2023, the British Columbia Securities Commission (BCSC) issued a Cease Trade Order (CTO) against the Company due to the Company's failure to file certain continuous disclosure documents under Canadian securities laws. The CTO restricts the trading in its securities in Canada, including share issuances and conversions of convertible instruments. The Company has filed an application to revoke the CTO with the BCSC and received a follow-up inquiry on May 13, 2025. There is no assurance the CTO will be lifted promptly.

**Astor Street LLC**

Astor Street LLC was issued two promissory notes by the Company in January 2021 and granted a security interest in all present and after acquired assets of the Company. Astor Street LLC commenced a claim to recover the amounts owing for CAD $312,303 in April 2022, obtained default judgment in the amount of CAD $314,273 in March 2023. On September 30, 2025, Astor Street LLC took steps to seize assets belonging to the Company. The Company is currently assessing the validity of the claim and default judgment, and whether it is necessary to come to a negotiated resolution. As of September 30, 2025, the amounts payable for promissory notes to Astor Street LLC included in notes payable was $215,502 (CAD $300,000) (December 31, 2024 - $219,000 (CAD $300,000)).

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

**ITEM 1A. RISK FACTORS**

There have been no material changes to the Company's "Risk Factors" set forth in its Annual Report on Form 10-K for the year ended December 31, 2024.

**ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

No equity transactions occurred during the nine months ended September 30, 2025.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

None.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable

**ITEM 5. OTHER INFORMATION**

During the nine months ended September 30, 2025, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

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**ITEM 6. EXHIBITS**

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| | |
|:---|:---|
| [2.1](http://www.sec.gov/Archives/edgar/data/1081938/000168316823008658/canna_ex0201.htm) | [Amended and Restated Membership Interest Purchase Agreement, dated November 22, 2023](http://www.sec.gov/Archives/edgar/data/1081938/000168316823008658/canna_ex0201.htm) |
| [3.1](http://www.sec.gov/Archives/edgar/data/1081938/000107258814000014/ex3-1b.txt) | [Bylaws adopted 12/31/10](http://www.sec.gov/Archives/edgar/data/1081938/000107258814000014/ex3-1b.txt) |
| [3.2](http://www.sec.gov/Archives/edgar/data/1081938/000107258814000106/ex3-1.txt) | [Certificate of Amendment of Certificate of Incorporation dated 10/22/14](http://www.sec.gov/Archives/edgar/data/1081938/000107258814000106/ex3-1.txt) |
| [3.3](http://www.sec.gov/Archives/edgar/data/1081938/000165495425004122/canna_ex33.htm) | [Certificate of Designation of Preferences, Rights and Limitation of Series C Convertible Preferred Stock](http://www.sec.gov/Archives/edgar/data/1081938/000165495425004122/canna_ex33.htm) |
| [4.1](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex41.htm) | [Letter Agreement between the Company and Koze Investments, LLC and Amir Tal regarding Allocation of Revenue from IMC Cannabis Transaction dated March 17, 2025](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex41.htm) |
| [4.2](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex42.htm) | [Security And Royalty Agreement between the Company and Koze Investments, LLC dated March 17, 2025](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex42.htm) |
| [4.3](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex43.htm) | [Amended and Restated Lease dated January 1, 2025](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex43.htm) |
| [4.4](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex44.htm) | [Amendment No. 1 to Amended and Restated Secured Promissory Note; entered into with Koze Investments LLC and Amir Tal](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex44.htm) |
| [4.5](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex45.htm) | [Amendment No. 1 to Amended and Restated Senior Secured Promissory Note; entered into with Koze Investments](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex45.htm) |
| [4.6](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex46.htm) | [Secured Promissory Note dated February 26, 2025](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex46.htm) |
| [4.7](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex47.htm) | [Transfer of 2323414 Alberta Ltd. to Elliot Zemel dated March 17, 2025](http://www.sec.gov/Archives/edgar/data/1081938/000165495425005808/isdr_ex47.htm) |
| [4.8](http://www.sec.gov/Archives/edgar/data/1081938/000165495425009626/canna_ex48.htm) | [Forbearance Agreement 2323414 Alberta (CPMD) - Formosa (June 2025)](http://www.sec.gov/Archives/edgar/data/1081938/000165495425009626/canna_ex48.htm) |
| [4.9](http://www.sec.gov/Archives/edgar/data/1081938/000165495425011655/canna_ex11.htm) | [Letter Agreement (Payment Schedule) - A. Tal](http://www.sec.gov/Archives/edgar/data/1081938/000165495425011655/canna_ex11.htm) |
| [4.10](http://www.sec.gov/Archives/edgar/data/1081938/000165495425011655/canna_ex11.htm) | [Payment Schedule (Payment Schedule) - Koze Investments](http://www.sec.gov/Archives/edgar/data/1081938/000165495425011655/canna_ex11.htm) |
| [31.1](canna_ex311.htm) | [Certification of Chief Executive Officer required by Rule 13a-14(a) under the Exchange Act (filed herewith).](canna_ex311.htm) |
| [31.2](canna_ex312.htm) | [Certification of Chief Financial Officer required by Rule 13a-14(a) under the Exchange Act (filed herewith).](canna_ex312.htm) |
| [32](canna_ex32.htm) | [Certification of Principal Executive, Financial and Accounting Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (filed herewith).](canna_ex32.htm) |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are <br>embedded within the Inline XBRL document) |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101) |

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**SIGNATURES**

Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on November 14, 2025.

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| | |
|:---|:---|
| **CannaPharmaRx, Inc.** | **CannaPharmaRx, Inc.** |
| By: | /s/ Constantine Nkafu |
|  | Constantine Nkafu, |
|  | Chief Executive Officer |
| By: | /s/ Oliver Foeste |
|  | Oliver Foeste, |
|  | Chief Financial Officer |

---

45<br>

## Exhibit 31.1

**EXHIBIT 31.1**

**CERTIFICATION PURSUANT TO**

**18 USC, SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES OXLEY ACT OF 2002**

I, Constantine Nkafu, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CannaPharmaRx, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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|:---|:---|
| Dated: November 14, 2025 | /s/ Constantine Nkafu |
|  | Constantine Nkafu, Chief Executive Officer |

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## Exhibit 31.2

**EXHIBIT 31.2**

**CERTIFICATION PURSUANT TO**

**18 USC, SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES OXLEY ACT OF 2002**

I, Oliver Foeste, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CannaPharmaRx, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | |
|:---|:---|
| Dated: November 14, 2025 | /s/ Oliver Foeste |
|  | Oliver Foeste, Chief Financial Officer (Principal Financial Officer) |

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## Ex-32

**EXHIBIT 32**

**CERTIFICATION PURSUANT TO**

**18 USC, SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with this quarterly report of CannaPharmaRx Inc. (the "Company") on Form 10-Q for the three and nine months period ended September 30, 2025, as filed with the Securities and Exchange Commission on May 16, 2025 (the "Report"), we, the undersigned, in the capacities and on the date indicated below, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

1. The Report fully complies with the requirements of Rule 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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| | |
|:---|:---|
| Dated: November 14, 2025 | /s/ Constantine Nkafu |
|  | Constantine Nkafu, Chief Executive Officer |
| Dated: November 14, 2025 | /s/ Oliver Foeste |
|  | Oliver Foeste, Chief Financial Officer (Principal Financial Officer) |

---