Form 10-Q - Quarterly report [Sections 13 or 15(d)]

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2024

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

For the transition period from ___________to ___________

Commission File Number: 000-27055

CANNAPHARMARX, INC.

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

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

Suite 3600

888 - 3rd Street SW

Calgary, Alberta, Canada T2P 5C5

(Address of principal executive offices)

403-637-0420

(Issuer’s Telephone Number)

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

None

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

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

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

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

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

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

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

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

The number of shares of the registrant’s common stock issued and outstanding as of August 14, 2024, was 662,501,405 shares.

CANNAPHARMARX, INC.

June 30, 2024

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION

Item 1	Financial Statements (unaudited)	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation	21
Item 3	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4	Controls and Procedures	30

	PART II. OTHER INFORMATION

Item 1	Legal Proceedings	31
Item 1A	Risk Factors	31
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3	Defaults Upon Senior Securities	32
Item 4	Mine Safety Disclosures	32
Item 5	Other Information	32
Item 6	Exhibits	32
	Signatures	33

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CANNAPHARMAX, INC.

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS


	June 30, 2024 (Unaudited)			December 31, 2023

ASSETS

Current assets
Cash	$	9,145		$	650
Goods and services tax receivable		80,088			61,524
Accounts receivable		190,150			–
Inventory		1,241,816			1,133,668
Total current assets		1,521,199			1,195,842

Non-current assets
Property, plant and equipment, net		159,579			161,540
Right-of-use building, net		5,514,860			5,870,141
Investments		4,518,127			4,518,127
Total assets	$	11,713,765		$	11,745,650

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities
Accounts payable and accrued liabilities	$	8,651,952		$	8,781,169
Accrued interest		1,143,932			523,680
Accrued legal settlement		190,000			190,000
Deferred revenue		432,893			–
Notes payable		3,551,177			3,333,925
Convertible notes - net of discount		1,148,114			1,520,858
Derivative liability		645,298			1,264,388
Loan payable - related party		3,216,704			2,155,484
Liability for right-of-use building, current portion		179,255			190,177
Obligation to issue shares		3,588,613			204,220
Total current liabilities		22,747,938			18,163,901

Non-current liability
Liability for right-of-use building		5,634,350			5,734,962
Total liabilities	$	28,382,288		$	23,898,863

STOCKHOLDERS’ DEFICIT
Preferred stock series A, $1.00 par value, 100,000 shares authorized, 74,416 and 84,416 issued and outstanding as at June 30, 2024 and December 31, 2023, respectively	$	74,416		$	84,416
Preferred stock series B, $1.00 par value, 3,000,000 shares authorized, 455,000 and 2,455,000 shares issued and outstanding as at June 30, 2024 and December 31, 2023, respectively		455,000			2,455,000
Preferred stock series C, $1.00 par value, 100,000 shares authorized, 100,000 shares issued and outstanding as at June 30, 2024 and December 31, 2023		100,000			750,000
Common stock, $0.0001 par value; 5,000,000,000 shares authorized, 662,501,405 and 440,752,302 issued and outstanding as at June 30, 2024 and December 31, 2023, respectively		66,250			44,075
Treasury stock, $0.0001 par value 6,230,761 shares as at June 30, 2024 and December 31, 2023		623			597
Additional paid-in capital		80,122,590			75,826,669
Accumulated deficit		(97,631,722	)		(91,278,353	)
Accumulated other comprehensive income (loss)		144,320			(35,617	)
Total stockholders’ deficit		(16,668,523	)		(12,153,213	)
Total liabilities and stockholders’ deficit	$	11,713,765		$	11,745,650

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

CANNAPHARMAX, INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023

Revenue	$	–		$	–		$	25,839		$	–

Cost of goods sold		–			–			463,248			–

Gross loss		–			–			(437,409	)		–

Operating expenses
Depreciation		64,237			73,955			87,278			147,354
General and administrative		(6,400	)		271,254			202,149			520,953
Payroll and consulting fees		37,966			332,342			135,565			655,482
Professional fees		249,662			170,134			272,147			196,335
Rent		1,097			10			2,209			2,603
Stock-based compensation		–			45,244			–			90,489
Total operating expenses		346,562			892,939			699,348			1,613,216
Loss from operations		(346,562	)		(892,939	)		(1,136,757	)		(1,613,216	)

Other income (expenses)
Change in the fair value of derivative liability		8,655,422			(592,326	)		619,090			(356,070	)
Change in the fair value of obligation to issue shares		(673,514	)		–			(3,384,393	)		–
Interest expense		(733,718	)		(355,295	)		(1,310,141	)		(814,640	)
Loss on the extinguishment of debt		(1,368,000	)		(39,024	)		(690,712	)		(429,471	)
Loss on impairment of investment		–			–			–			(78,760	)
Loss on impairment of inventory		(171,364	)		–			(450,456	)		–
Total other income (expenses)		5,708,826			(986,645	)		(5,216,612	)		(1,678,941	)
Net income (loss)		5,362,264			(1,879,584	)		(6,353,369	)		(3,292,157	)
Foreign currency translation adjustment	$	58,605		$	(163,244	)	$	179,937		$	(168,900	)
Net comprehensive income (loss)		5,420,869			(2,042,828	)		(6,173,432	)		(3,461,057	)

Basic and diluted income (loss) per share of common stock	$	0.01		$	(0.01	)	$	(0.01	)	$	(0.01	)

Weighted average number of common stock outstanding		657,980,212			299,656,064			587,642,342			293,897,326

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

CANNAPHARMAX, INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited)


	Six months ended June 30,
	2024			2023

Operating activities
Net loss	$	(6,353,369	)		(3,292,157	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of convertible note discount		–			162,392
Depreciation		87,278			11,930
Change in the fair value of derivative liability		(619,090	)		356,070
Change in the fair value of obligation to issue shares		3,384,393			–
Interest expense		1,310,141			–
Loss on extinguishment of debt		690,712			429,471
Loss on impairment of investment		–			78,760
Loss on impairment of inventory		450,456			–
Stock-based compensation		–			90,489
Changes in operating assets and liabilities:
Cash overdraft		–			39,686
Goods and services tax receivable		(18,564	)		(18,475	)
Accounts receivable		(190,150	)		–
Prepaid expenses		–			68,906
Inventory		(558,604	)		–
Other assets		–			6,042
Accounts payable and accrued liabilities		505,057			436,509
Accrued expense related party		–			389,843
Accrued interest		(97,598	)		146,624
Deferred revenue		432,893			–
Net cash used in operating activities		(976,445	)		(1,093,910	)

Investing activity
Purchases of property, plant and equipment		–			(74,700	)
Net cash used in investing activity		–			(74,700	)

Financing activities
Issuance of warrants		87,768			–
Proceeds from note payable		220,002			–
Proceeds from loan payable - related party		1,061,220			740,158
Proceeds from convertible notes		67,232			213,750
Repayment of convertible notes		(451,282	)		–
Net cash provided by financing activities		984,940			953,908

Effects of exchange rates on cash		–			212,383
Net change in cash		8,495			(2,317	)
Cash, beginning of period		650			2,317
Cash, end of period	$	9,145			–

Supplemental disclosure of cash flow information:
Cash interest paid	$	–			–

Supplemental disclosure of non-cash flow investing and financing activities:
Cancellation of preferred stock series B	$	2,000,000		$	–
Conversion of convertible loans into common stock	$	16,436		$	–
Conversion of preferred stock series A into common stock	$	1,250		$	–
Common stock issued to convert convertible notes and accrued interest into equity	$	–		$	571,040

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

CANNAPHARMAX, INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

Preferred stock
series A

Preferred stock
series B

Preferred stock
series C

Common stock

Number

of shares

Value

of shares

Value

of shares

Value

of shares

Value

Balance, December 31, 2022

84,416

2,475,000

–

274,124,622

27,412

Conversion of preferred stock series B to common stock

–

(20,000

)

(20,000

)

–

20,000

Conversion of convertible notes to common stock

–

20,619,992

2,062

Stock based compensation related to warrant issuances

–

Change in foreign currency translation

–

Net loss

–

Balance, March 31, 2023

84,416

2,455,000

–

294,764,614

29,476

Conversion of convertible notes to common stock

–

6,097,561

610

Stock based compensation

–

Foreign currency translation adjustment

–

Net loss

–

Balance, June 30, 2023

84,416

2,455,000

–

300,862,175

30,086


	Treasury stock					Additional					Accumulated other comprehensive			Total
	Number					paid-in		Accumulated			income			stockholders’
	of shares		Value			capital		deficit			(loss)			deficit
Balance, December 31, 2022		133,200	$	(13	)	$	74,523,642	$	(94,695,339	)	$	240,426		$	(17,344,456	)
Conversion of preferred stock series B to common stock		–		–			19,998		–			–			–
Conversion of convertible notes to common stock		–		–			504,953		–			–			507,015
Stock based compensation related to warrant issuances		–		–			45,245		–			–			45,245
Change in foreign currency translation		–		–			–		–			(5,656	)		(5,656	)
Net loss		–		–			–		(1,412,573	)		–			(1,412,573	)
Balance, March 31, 2023		133,200	$	(13	)	$	75,093,838	$	(96,107,912	)	$	234,770		$	(18,210,425	)
Conversion of convertible notes to common stock		–		–			63,415		–			–			64,025
Stock based compensation		–		–			45,244		–			–			45,244
Foreign currency translation adjustment		–		–			–		–			(163,244	)		(163,244	)
Net loss		–		–			–		(1,879,584	)		–			(1,879,584	)
Balance, June 30, 2023		133,200	$	(13	)	$	75,202,497	$	(97,987,496	)	$	71,526		$	(20,143,984	)

(continued)

Preferred stock
series A

Preferred stock
series B

Preferred stock
series C

Common stock

Number

of shares

Value

of shares

Value

of shares

Value

of shares

Value

Balance, December 31, 2023

84,416

2,455,000

100,000

750,000

440,752,302

44,075

Cashless issue of common stock

–

4,895,849

4,489

Conversion of preferred stock series A to common stock

(10,000

)

(10,000

)

–

12,500,000

1,250

Cancellation of preferred stock series B

–

(2,000,000

)

(2,000,000

)

–

Conversion of convertible notes to common stock

–

101,496,114

10,150

Issuance of warrants for convertible notes

–

Adjustment to issuance of preferred stock series C for LTB investment

–

(650,000

)

–

Change in foreign currency translation

–

Net loss

–

Balance, March 31, 2024

74,416

455,000

100,000

559,644,265

59,964

Conversion of convertible notes to common stock

102,857,140

6,286

Adjustment of treasury stock to par value

–

Foreign currency translation adjustment

–

Net income

–

Balance, June 30, 2024

74,416

455,000

100,000

662,501,405

66,250


	Treasury stock				Additional						Accumulated other comprehensive			Total
	Number				paid-in			Accumulated			income			stockholders’
	of shares		Value		capital			deficit			(loss)			deficit
Balance, December 31, 2023		6,230,761	$	597	$	75,826,669		$	(91,278,353	)	$	(35,617	)	$	(12,153,213	)
Cashless issue of common stock		–		–		(4,489	)		–			–			–
Conversion of preferred stock series A to common stock		–		–		8,750			–			–			–
Cancellation of preferred stock series B		–		–		2,000,000			–			–			–
Conversion of convertible notes to common stock		–		–		120,204			–			–			130,354
Issuance of warrants for convertible notes		–		–		87,768			–			–			87,768
Adjustment to issuance of preferred stock series C for LTB investment		–		–		650,000			–			–			–
Change in foreign currency translation		–		–		–			–			121,332			121,332
Net loss		–		–		–			(11,715,633	)		–			(11,715,633	)
Balance, March 31, 2024		6,230,761	$	597	$	78,688,902		$	(102,993,986	)	$	85,715		$	(23,529,392	)
Conversion of convertible notes to common stock		–		–		1,433,714			–			–			1,440,000
Adjustment of treasury stock to par value		–		26		(26	)		–			–			–
Foreign currency translation adjustment		–		–		–			–			58,605			58,605
Net income		–		–		–			5,362,264			–			5,362,264
Balance, June 30, 2024		6,230,761	$	623	$	80,122,590		$	(97,631,722	)	$	144,320		$	(16,668,523	)

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

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

CannaPharmaRX Inc. (“CPRX” or the “Company”) was originally incorporated in the state of Colorado in August 1998 as Network Acquisitions, Inc. The Company focuses its business efforts on evaluation, negotiation, acquisition, and development of cannabis cultivation projects in Canada.

On January 6, 2022, the Company entered into a 20-year operating lease with Formosa Mountain Ltd. for the use of a leased facility located in Cremona, Alberta, Canada. The facility was built in 2015 and was previously operating as a cannabis production facility until it was decommissioned, and the license cancelled by the previous owner making the facility ready for sale in 2020.

CPRX recommissioned the 55,000 square foot facility which contains 11 growing rooms and 10 drying and packing rooms into a new indoor cannabis farm during 2022. The Company received an operating license from Health Canada on December 9, 2022, and a cannabis license from the Canada Revenue Agency (“CRA”) on December 22, 2022.

On February 21, 2023, the Company entered into a supply agreement with Y.S.A. Holdings Ltd (“Y.S.A.”), an Israeli corporation, whereby the Company will supply 450kg of cannabis biomass in the form of dried flowers and dried trim per annum to Y.S.A over a two-year period. No biomass has been delivered to Y.S.A as at the date of this Report.

Preliminary discussions with export partners would set conditional per gram pricing at approximately $3.30 Canadian dollars (“CAD”) per gram. This price would be based on achieving satisfactory test results associated to tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”) content of the dried flower.

Basis of presentation

The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification, the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“US GAAP”).

All figures are in United States (“US”) dollars (“USD”) unless indicated otherwise.

Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of 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 provision of income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as at the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

Cash

The Company considers all its cash in bank accounts and its highly liquid temporary cash investments with an original maturity of three months or less to be cash and cash equivalents. On June 30, 2024, the Company had cash of $9,145 (December 31, 2023 - $650).

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

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

Comprehensive income or loss

ASC 220 Comprehensive Income establishes standards for the reporting and display of comprehensive income and its components in the financial statements. As at June 30, 2024, and December 31, 2023, the Company determined that it had items that represented components of comprehensive income and therefore has included a statement of comprehensive income in the financial statements.

Inventory

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

Leases

The Company recognizes right-of-use assets and corresponding liabilities for leases with terms greater than 12 months or leases that contain a purchase option that is reasonably certain to be exercised as either operating or finance leases at the inception of an agreement where it is determined that a lease exists. This classification of operating or finance lease determines the presentation of corresponding expenses over the lifetime of the lease.

Finance lease assets represent the right to use an underlying asset for the lease term, and finance lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are recognized based on the present value of future payments over the lease term at commencement date. A collateralized incremental borrowing rate based on the information available at commencement date, including lease term, is used in determining the present value of future payments. This incremental borrowing rate is updated in the event of a lease modification such as a renewal or option that adds time and payments to a lease. A lease term generally does not include an option to extend or terminate the lease, unless there is a reasonable certainty that the option will be exercised. Fixed payments may contain predetermined fixed rent escalations. The Company recognizes the expense related to finance leases using the effective interest rate method from the commencement date to the end of the lease term. Certain lease contracts contain non-lease components such as maintenance, utilities, fuel and other services. The Company recognizes both the lease and non-lease component for each right-of-use asset.

Short-term leases (that have an initial term less than 12 months or that are cancellable by the lessor and lessee without significant penalties) are expensed as they are incurred.

Derivative financial instruments

Terms of convertible and other promissory notes are reviewed to determine whether they contain embedded derivative instruments that are required to be accounted for separately from the host contract and recorded on the balance sheet at fair value. The fair value of derivative instruments is required to be revalued at each reporting date, with corresponding changes in fair value recorded in the current period operating results. Derivative liabilities arose due to the issuance of variably priced convertible notes. For the six months ended June 30, 2024, the Company had derivative liabilities of $645,298 (December 31, 2023 - $1,264,388).

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

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

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

Revenue Recognition

The Company recognizes revenue from the sale of products in accordance with ASC 606, “Revenue Recognition” following the five steps procedure:

Step 1: Identify the contract(s) with customers - The invoice has been generated and provided to the customer.

Step 2: Identify the performance obligations in the contract - The performance obligations of delivery of products are stated in the invoice.

Step 3: Determine the transaction price - The transaction price has been identified in the invoice.

Step 4: Allocate the transaction price to performance obligations - The Company has allocated the transaction price to performance obligation in the invoice.

Step 5: Recognize revenue when the entity satisfies a performance obligation - The Company has shipped out the product and, therefore, satisfied the performance obligation. The risk of loss is passed to the customers at the point of shipment.

Foreign currency translation

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

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

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

These translation adjustments are reflected in accumulated other comprehensive income, a separate component of the Company's stockholders' deficit.

Harmonized sales tax

The Canadian Goods and Services Tax (“GST”) is a 5% tax applied to taxable goods and services. GST is a consumption tax paid by the consumer at the point of sale The vendor or seller collects the tax proceeds from consumers by adding the GST rate to the cost of goods and services. They then remit the total collected tax, less input tax credits for GST paid to vendors, to the government periodically.

The GST is in effect Canada-wide, although is sometimes combined with a Provincial Sales Tax and referred to as a Harmonized Sales Tax. The GST is collected by the Canada Revenue Agency, which remits the appropriate amounts to the participating provinces.

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

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

Stock-based compensation

The Company has adopted ASC Topic 718 Compensation - Stock Compensation, which establishes a fair value method of accounting for stock-based compensation plans. In accordance with guidance now incorporated in ASC Topic 718, the fair value of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on a straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The fair value of share purchase warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The Company had no stock options outstanding as at June 30, 2024 or December 31, 2023.

Long-lived assets

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

Fair values of assets and liabilities

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

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

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

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

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

Financial instruments

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

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

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

Income taxes

The Company accounts for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Earnings (loss) per share

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

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

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

Recently issued accounting pronouncements

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

NOTE 2 - GOING CONCERN AND LIQUIDITY

As at June 30, 2024, the Company had cash of $9,145 (December 31, 2023 - $650), a working capital deficiency totaling $21,226,739 (December 31, 2023 - $16,968,059), and an accumulated deficit of $97,631,722 (December 31, 2023 - $91,278,353).

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 limited 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 stockholders. 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.

NOTE 3 - INVENTORY

A summary of the Company’s inventory as at June 30, 2024, and December 31, 2023 is as follows:

Schedule of inventory
	2024		2023

Finished goods	$	586,093	$	472,361
Work in process		655,723		661,307
Total inventory	$	1,241,816	$	1,133,668

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

During the three and six months ended June 30, 2024, the Company recorded a loss on inventory impairment of $171,364 (2023 - $nil) and $450,456 (2023 - $nil), respectively, related to inventory.

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

A summary of the Company’s property, plant and equipment as at June 30, 2024 is as follows:


	Gross carrying amount		Accumulated depreciation			Net book value
Computers, office and plant equipment	$	221,666	$	(62,087	)	$	159,579

A summary of the Company’s property, plant and equipment as at December 31, 2023 is as follows:

		Gross carrying amount				Accumulated depreciation				Net book value
Computers, office and plant equipment		$	209,449			$	(47,909	)		$	161,540

For the three and six months ended June 30, 2024, the Company recorded depreciation expense of $8,139 (2023 - $5,850) and $15,909 (2023 - $11,679) respectively, related to these fixed assets.

As at June 30, 2024, the Company capitalized a total of $87,367 (2023 - $nil) of depreciation expense to inventory (Note 5). For the three and six months ended June 30, 2024, this comprised $7,656 (2023 - $nil) and $14,934 (2023 - $nil), respectively, of the total depreciation expense associated with these fixed assets.

NOTE 5 - RIGHT-OF-USE BUILDING

A summary of the Company’s right-of-use building asset at June 30, 2024 and December 31, 2023 is as follows:

Schedule of right-of-use building asset
	2024			2023
Gross carrying amount	$	6,254,630		$	6,472,637
Accumulated depreciation		(739,770	)		(602,496	)
Net book value	$	5,514,860		$	5,870,141

For the three and six months ended June 30, 2024, the Company recorded depreciation expense on the right-of-use building of $78,807 (2023 - $80,301) and $158,736 (2023 - $160,024), respectively.

As at June 30, 2024, the Company capitalized a total of $87,367 (2023 - $nil) of depreciation expense to inventory (Note 4). For the three and six months ended June 30, 2024, this comprised $15,053 (2023 - $nil) and $72,433 (2023 - $nil), respectively, of the total depreciation expense associated with these fixed assets.

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

NOTE 6 - INVESTMENTS

On November 22, 2023, the Company closed a deal with LTB Management, LLC (“LTB”) whereby the Company obtained 100 Class B units of LTB in exchange for total consideration of $4,518,127, comprised of 27,224,962 warrants with a fair value of $162,129, each entitling the holder to purchase one share of common stock of the Company at $0.02 per share until November 22, 2028; $3,000,000 in promissory notes payable (Note 8) to the sellers; 100,000 Class C preferred shares with a fair value of $750,000, each convertible into 1,250 common shares; and contingent consideration recorded as an obligation to issue shares with a fair value of $605,998.

Contingent consideration includes a quarterly true up of the sellers’ preferred share proportional ownership to 33% of the outstanding shares of the Company’s common stock, and an earn out whereby the sellers 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 June 30, 2024, the Company has an obligation to issue an additional 205,064 (December 31, 2023 - 96,104) Class C preferred shares to the sellers under the true up, valued at $3,588,613 (December 31, 2023 - $204,220).

NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable are initially recognized at the transaction price and subsequently measured at the undiscounted amount of cash or other consideration expected to be paid. Accrued expenses are recognized based on the expected amount required to settle the obligation or liability.

A summary of the Company’s accounts payable and accrued liabilities as at June 30, 2024, and December 31, 2023 is as follows:


	2024		2023
Accounts payable and accrued expenses	$	8,651,952	$	8,781,169
Accrued legal settlement (a)		190,000		190,000
Total accounts payable and accrued liabilities	$	8,841,952	$	8,971,169

(a)

The Company has previously been a party to an action filed by Gary M. Cohen, a former officer and director of the Company in 2014. In March 2015, the Company entered into a settlement agreement with Mr. Cohen wherein the Company agreed to repurchase 2,250,000 shares of its common stock from Mr. Cohen in consideration for $350,000. Mr. Cohen passed away while there was a remaining balance of $190,000 remaining to be paid in accordance with the settlement agreement. The Company has taken the position that his death has discharged any obligation the Company might have to make the balance of the payments. The Company has not received any demand for payment or otherwise been involved in any attempt to collect this balance for a period of greater than two years prior to the date of this 10-Q Report.

NOTE 8 - NOTES PAYABLE

A summary of the Company’s notes payable as at June 30, 2024, and December 31, 2023 is as follows:

Schedule of notes payable
	2024		2023
Notes payable	$	218,780	$	–
CEBA loan		43,837		45,365
Promissory notes (secured investors)		288,560		288,560
Promissory notes (LTB Transaction)		3,000,000		3,000,000
Total notes payable	$	3,551,177	$	3,333,925

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

Notes payable

On April 9, 2024, the Company entered into a note payable agreement (“Note A”) bearing interest at 12% per annum and maturing within 12 months from the date of issuance with a private individual in the amount of $100,000. During the three and six months ended June 30, 2024, the Company recorded $nil (2023 - $nil) and $2,630 (2023 - $nil), respectively, in interest expense on Note A.

On May 10, 2024 and May 31, 2024, the Company entered into notes payable agreements (“Note B” and “Note C”, respectively) bearing interest at 10% per annum and maturing within 12 months from the date of issuance with a second private individual in the amounts of $50,001 ($68,326 CAD) and $70,001 ($95,460 CAD), respectively. During the three and six months ended June 30, 2024, the Company recorded $nil (2023 - $nil) and $699 (2023 - $nil), respectively, in interest expense on Note B, and $nil (2023 - $nil) and $575 (2023 - $nil), respectively, in interest expense on Note C.

CEBA loan

Due to the global COVID 19 outbreak, the Government of Canada introduced the Canada Emergency Business Account (“CEBA”) program. The Company participated in this program and received $60,000 CAD. The loan was interest-free until January 18, 2024 at which time it was converted to a non-amortizing term loan with the full principal repayment due on December 31, 2026. As at June 30, 2024 and December 31, 2023 the Company’s CEBA Loan balance is $43,857 ($60,000 CAD) and $45,365 ($60,000 CAD), respectively. During the three and six months ended June 30, 2024, the Company recorded $437 (2023 - $nil) and $986 (2023 - $nil), respectively, in interest expense on the CEBA loan.

Promissory notes (secured investors)

During the year ended December 31, 2021, the Company entered into promissory note agreements with secured investors for non-interest-bearing notes maturing within 12 months with a total value of $238,560 ($300,000 CAD). These notes are secured by a general security agreement over all present and after acquired property, assets, and undertakings. As at June 30, 2024, and December 31, 2023, the notes are past due and owing in the amount of $288,560 ($300,000 CAD) and $288,560 ($300,000 CAD), respectively.

Promissory notes (LTB Transaction)

On November 22, 2023, the Company closed a deal with LTB Management, LLC (“LTB”) whereby the Company obtained 100 Class B units of LTB in exchange for consideration of 27,224,962 warrants, each entitling the holder to purchase one share of common stock of the Company at $0.02 per share until November 22, 2028; $3,000,000 in promissory notes payable to the sellers; and 100,000 Class C preferred shares, each convertible into 1,250 common shares (Note 6). The promissory notes bear interest at 13% per annum and mature on November 22, 2024. During the three and six months ended June 30, 2024, the Company recorded $97,233 (2023 - $nil) and $194,466 (2023 - $nil), respectively on the LTB promissory notes.

NOTE 9 - CONVERTIBLE NOTES AND DERIVATIVE LIABILITY

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

Schedule of convertible notes
Balance, net of note discount, December 31, 2022	$	1,141,060
Proceeds received		439,501
Value of conversion of notes to 166,607,680 common shares		(222,096	)
Note discount		162,393
Balance, net of note discount, December 31, 2023		1,520,858
Proceeds received		213,448
Value of conversion of notes to 204,353,254 common shares		(134,910	)
Repayment		(451,282	)
Balance, June 30, 2024	$	1,148,114

During the three and six months ended June 30, 2024, the Company recorded a loss on conversion of $1,368,000 (2023 - $39,024) and $690,712 (2023 - $429,471), respectively, and interest expense of $35,028 (2023 - $48,347) and $57,947 (2023 - $74,310), respectively.

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

A summary of the terms and conditions of the convertible notes outstanding which have a derivative component as at June 30, 2024 is as follows:


Maturity Date	Interest Rate	Conversion price	Principal at inception		Principal outstanding
				$		$
Jan. 7, 2021	8%	75% of the lowest 20-day share price before the conversion date		100,000		100,000
Dec. 11, 2022	24%	Lowest of the 60-day share price before the conversion date		231,250		212,555
Dec. 11, 2022	24%	Lowest of the 60-day share price before the conversion date		231,250		212,555
May 5, 2024	12%	Lesser of $0.0025 or 70% of lowest 5-day share price before the conversion date		60,000		60,000
				622,500		585,110

As at June 30, 2024, the Company had $289,915 (December 31, 2023 - $348,577) in accrued interest on these notes, recorded in accounts payable and accrued liabilities.

As at the date of this 10-Q Report, all convertible notes were past their maturity date. Additionally, as a result of the late filing of previous 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 time the face value of all convertible notes outstanding and recorded an accrued liability for penalties amounting to $1,303,452, which has been recorded in accounts payable and accrued liabilities. As at June 30, 2024, the accrued liability for penalties was reduced to $735,002 due to the settlement of certain convertible notes.

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

A summary of Company’s derivative liabilities as at June 30, 2024 is as follows:

Schedule of derivative liabilities
Balance, derivative liability, December 31, 2023	$	1,264,388
Changes in fair value of derivative liability		(619,090	)
Balance, June 30, 2024	$	645,298

As at June 30, 2024 the Company had derivative liabilities of $645,298 (December 31, 2023 - $1,264,388).

A summary of the Company’s weighted average inputs used in the Black-Scholes option pricing model for derivative liabilities valuation as at June 30, 2024 is as follows:


		2024
Stock price		$0.011
Exercise price		$0.008
Risk-free interest rate		4.00%
Expected volatility		297.90%
Expected life		1.00 years
Expected annual dividend yield		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 stock to estimate the future volatility of its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected 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

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

NOTE 10 - RELATED PARTY TRANSACTIONS

A summary of the Company’s related party liabilities as at June 30, 2024, and December 31, 2023 is as follows:

Schedule of related party liabilities
	2024		2023
Loan payable - related party	$	3,216,704	$	2,155,484
Liability for right-of-use building, current portion		179,255		190,177
Liability for right-of-use building		5,634,350		5,734,962
Total loan payable, related parties	$	9,030,309	$	8,080,623

The loan payable - related party is comprised of a $13,459 interest-free loan from the Company's former CEO; a $914,090 promissory note from a shareholder of the Company who is the principal of Koze Investments, LLC (“Koze”); and a $2,289,155 promissory note from a shareholder of the Company who is the principal of Koze whereby on May 25, 2023, Koze agreed to advance up to $2,000,000 to the Company in funding to pay for certain documented Company expenses. The promissory notes with Koze bear interest at 24% compounded monthly. As at June 30, 2024, the accrued interest on the promissory notes amounted to $346,654.

Effective January 1, 2022, the Company entered into a lease agreement with Formosa Mountain Ltd., whose principal shareholder is also the principal shareholder of Koze, to lease a cannabis production facility in Cremona, Alberta, Canada. The facility is a 55,000 square foot, 6,000 kg per year plant, built in 2015. The lease payments are $82,500 CAD per month increasing by 5% each year. The lease has a 20-year term. As at June 30, 2024, and December 31, 2023, the Company was in arrears by $1,947,206 ($2,575,374 CAD) and $1,534,478 ($2,029,500 CAD), respectively, on its monthly lease payment. The amount in arrears is included in accounts payable and accrued liabilities (Note 7).

Effective February 1, 2023, the Company entered into a lease agreement to lease one office at Suite 3600, 888 5^th Avenue SW, Calgary, Alberta, Canada, T2P 3R7. The rent is $500 CAD per month. This space was provided by a company to which Mr. Orman, one of the Company’s directors, serves as a director. During the three and six months ended June 30, 2024, the Company incurred rent expense in total of $1,097 (2023 - $10) and $2,209 (2023 - $2,603), respectively.

NOTE 11 - LIABILITY FOR RIGHT-OF-USE BUILDING

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

Schedule of operating lease liabilities
	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023

Interest expense	$	244,426	$	240,953	$	490,475		478,230
Depreciation	$	78,807	$	80,301	$	158,736		160,024
Finance lease-related expenses included in accounts payable and accrued liabilities	$	199,413	$	196,280	$	398,827		392,560

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

NOTE 12 - STOCKHOLDERS’ DEFICIT

Preferred stock

The Company is authorized to issue up to 10,000,000 shares of one or more series of preferred stock at a par value of $1.00 per share. The Board of Directors may, without stockholder approval, determine the dividend rates, redemption prices, preferences on liquidation or dissolution, conversion rights, voting rights, and any other preferences.

Series A preferred stock

In April 2018, the Company issued 60,000 shares of its series A convertible preferred stock (“Series A Stock”) for $1.00 per share to certain investors who then became members of management and the Board of Directors. Each share of Series A Stock 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 stock and each vote is on an as-converted basis. In addition, the holders of outstanding Series A Stock will only be entitled to receive dividends upon declaration by the Board of Directors of a dividend payable on the Company’s common stock, whereupon the holders of the Series A Stock will receive a dividend on the number of shares of common stock into which each share of Series A Stock is convertible.

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

During the three months ended March 31, 2024, 10,000 shares of Series A Stock were converted into common stock. There were no conversions during the year ended December 31, 2023. As at June 30, 2024 and December 31, 2023, 74,416 and 84,416 shares, respectively, of Series A Stock were issued and outstanding.

Series B preferred stock

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

Each Common Warrant is exercisable to purchase one share of common stock at the election of the holder at an exercise price of $2.00 per share, which offering is to be offered only to “accredited investors,” as that term is defined in Rule 501 of Regulation D of the Securities and Exchange Commission regulations. As at December 31, 2020, the Company had accepted $475,000 in subscriptions in this offering.

During the three months ended March 31, 2024, the Company cancelled 2,000,000 shares of Series B Preferred Stock originally issued during the year ended December 31, 2022 as a deposit on the acquisition of LTB. During the six months ended June 30, 2023, 20,000 Series B Stock was converted into common stock at $0.0001 per common share.

As at June 30, 2024, 455,000 (December 31, 2023 - 2,455,000) shares of Series B Stock and Common Warrants were issued and outstanding.

Series C preferred stock

In March 2023, the Company issued 100,000 shares of its Series C preferred stock (“Series C Stock”) in connection with the investment in LTB (Note 6). The shares of Series C Stock are each convertible into 1,250 shares of the Company’s common stock.

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

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

As at June 30, 2024 and December 31, 2023, 100,000 shares of Series C Stock were issued and outstanding.

Common stock

The Company is authorized to issue 5,000,000,000 shares of common stock at a par value $0.0001 per share. As at June 30, 2024, 662,501,405 (December 31, 2023 - 440,752,302) shares of common stock were issued and outstanding.

Stock purchase warrants

A summary of the Company’s stock purchase warrant activity is as follow:


		Number of stock purchase warrants			Weighted average exercise price

Stock purchase warrants outstanding December 31, 2022	#		1,497,778		$	0.79
Stock purchase warrants issued			27,224,962			0.02
Stock purchase warrants outstanding December 31, 2023	#		28,722,740		$	0.06
Stock purchase warrants granted			17,222,200			0.01
Stock purchase warrants redeemed			(5,000,000	)		(0.03	)
Stock purchase warrants outstanding June 30, 2024	#		40,944,940		$	0.05

A summary of the Company’s number of stock purchase warrants outstanding and exercisable for period ended June 30, 2024 is as follows:


		Number of stock purchase warrants		Weighted average exercise price		Weighted average remaining life (Years)
July 2, 2024	#		1,020,000	$	1.02		0.01
May 10, 2026	#		477,778	$	0.30		1.86
February 15, 2028	#		12,222,200	$	0.01		3.63
November 22, 2028	#		27,224,962	$	0.02		4.40

During the six months ended June 30, 2024, 17,222,200 stock purchase warrants were issued. During the year ended December 31, 2023, 27,224,962 stock purchase warrants, each entitling the holder to purchase one common stock of the Company at $0.02 per share, with a termination date of November 22, 2028, were issued in respect of the LTB transaction (Note 3) and 17,222,200 stock purchase warrants, each entitling the holder to purchase one common stock of the Company at $0.01 per share, with a termination date of February 15, 2028.

During the year ended December 31, 2023, the Company corrected an error in the accounting treatment associated with the stock purchase warrants that were issued during the year ended December 31, 2019 as origination fees associated with a promissory note and loan granted during that year. The value of the stock purchase warrants should have been expensed upon issuance. The correction of the error resulted in a $271,470 increase to additional paid-in capital and an equivalent decrease to opening accumulated deficit for the year ended December 31, 2023.

CANNAPHARMARX, INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

NOTE 13 - INCOME TAX

As at December 31, 2023, the Company had approximately $93,000,000 of federal net operating loss carryforwards (“NOLS”) in the United States. State net operating loss carryforwards begin to expire in 2034. Due to the change in ownership provisions of the Internal Revenue Code, the availability of the Company’s net operating loss carryforwards could be subject to annual limitations against taxable income in future periods which could substantially limit the eventual utilization of such carryforwards. The Company has not analyzed the historical or potential impact of its equity financings on beneficial ownership and therefore no determination has been made whether the net operating loss carryforward is subject to any IRC Section 382 limitation. To the extent there is a limitation, there could be a substantial reduction in the deferred tax asset with an offsetting reduction in the valuation allowance. As at December 31, 2023, the Company had approximately $900,000 of Canadian non-capital losses which begin to expire in 2037. As at June 30, 2024 and 2023, the Company has no unrecognized income tax benefits.

The tax years from 2014 and forward remain open to examination by federal and state authorities due to net operating loss and credit carryforwards. The Company is currently not under examination by the Internal Revenue Service or any other taxing authorities. Since the company has never been profitable, the Company has established a full valuation allowance against the deferred tax asset associated with the NOLS.

NOTE 14 - GENERAL AND ADMINISTRATIVE

A summary of the Company’s general and administrative expenses for the three and six months ended June 30, 2024 and 2023 is as follows:


	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024		2023

Advertising and promotion	$	–		$	–		$	1,461		10,000
Insurance		–			(31,221	)		25,562		–
Interest and bank charges		238			2,635			661		5,039
Office and administrative		(19,065	)		6,862			72,969		64,341
Plant supplies		–			222,930			26,340		358,026
Repairs and maintenance		5,701			23,508			30,565		32,588
Taxes		–			45,646			–		45,646
Exchange gain or loss		102			–			102		–
Transfer agent fees		3,211			894			4,411		5,313
Utilities		3,413			–			40,078		–
	$	(6,400	)	$	271,254		$	202,149		520,953

NOTE 15 - COMMITMENTS AND CONTINGENCIES

NOTE 16 - SUBSEQUENT EVENT

Management has performed an evaluation of subsequent events from June 30, 2024 through to the date of issuance of these financial statements and has determined that it does not have any material subsequent events to disclose in these financial statements.

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 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 in our Transition Report on Form 10-K for the year ended December 31, 2023.

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, 2023 as filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 25, 2024 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:

	·	our ability to successfully commercialize our products and services on a large enough scale to generate profitable operations;
	·	our ability to maintain and develop relationships with customers and suppliers;
	·	our ability to successfully integrate acquired businesses or new brands;
	·	the impact of competitive products and pricing;
	·	supply constraints or difficulties;
	·	the retention and availability of key personnel;
	·	general economic and business conditions;
	·	substantial doubt about our ability to continue as a going concern;
	·	our need to raise additional funds in the future;
	·	our ability to successfully recruit and retain qualified personnel in order to continue our operations;
	·	our ability to successfully implement our business plan;
	·	our ability to successfully acquire, develop or commercialize new products and equipment;
	·	intellectual-property claims brought by third parties; and
	·	the impact of any industry regulation.

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 to update 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.

During the three and six months ended June 30, 2024 the Company had $nil (2023 - $nil) and $25,839 (2023 - $nil) of revenues from operations. Loss from operations for the three and six months ended June 30, 2024 was $346,562 (2023 - $892,939) and $1,136,757 (2023 - $1,613,216). Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

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.

As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “CannaPharmaRX”, 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”).

OVERVIEW AND HISTORY

CannaPharmaRX Inc. (“CPRX” or the “Company”) was originally incorporated in the state of Colorado in August 1998 as Network Acquisitions, Inc. and changed its name to Cavion Technologies, Inc. (“Cavion”) in February 1999. The Company focuses its business efforts on evaluation, negotiation, acquisition, and development cannabis cultivation projects in Canada.

On January 6, 2022, the Company entered into a 20-year operating lease with Formosa Mountain Ltd., whose principal shareholder is also the principal shareholder of Koze, to lease a 55,000 square foot cannabis production facility in Cremona, Alberta, Canada. CPRX recommissioned the facility into a new indoor cannabis farm with 11 growing rooms and 10 drying and packing rooms during 2022.

Under the new license the Company commenced production during the year ended December 31, 2023.

PLAN OF OPERATION

The Company received an operating license from Health Canada on December 9, 2022, and a cannabis license from the Canada Revenue Agency (“CRA”) on December 22, 2022.

We anticipate developing a consistent cadence of growing, harvesting, cultivating, and delivering world class products on a regular basis and expects to begin to see a strong and accelerated revenue increase during the 2024 fiscal year (“FY2024”). Our production facility is expected to be operating at maximum capacity during FY2024, achieving regular plantings with staggered production so that we are constantly harvesting and delivering high-quality products to multiple sources. Our focus continues to be on international sales with high gross margin products, resulting in greater profitability using our state-of-the-art production facility to grow on demand against purchase contracts using smart inventory management which will contribute to higher turnover and regular deliveries. We will continue to collaborate with international partners on multiple continents and develop proprietary online, data-driven technology.

Our FY2024 growth goals include delivering the first of several harvests during the first and second quarter; increasing our strategic partner network; receiving our European Union license for Good Manufacturing Practices (“GMP”) to allow us to expand distribution; expanding our customer network; becoming a world leader in unique genetic strains with a current catalogue of over 500 desirable strains developed and owned by CPRX; and continuing to improve our balance sheet.

In support of these goals:

	·	On February 21, 2023, the Company entered into a supply agreement with Y.S.A. Holdings Ltd (“Y.S.A.”), an Israeli corporation, whereby the Company will supply 450kg of cannabis biomass in the form of dried flowers and dried trim per annum to Y.S.A over a two-year period. No biomass has been delivered to Y.S.A as at the date of this Report.
	·	On February 16, 2024, the Company announced that we finalized a strategic supply agreement with Cantek Holdings, an Israeli corporation, whereby the Company will supply 1,000kgs of product annually.
	·	On February 23, 2024, the Company announced that we successfully obtained our Israel Medical Cannabis (“IMC”) Good Agricultural Practices (“GAP”) and Good Agricultural and Collection Practices (“GACP”) certifications. The IMC-GAP and IMC-GACP certifications are the standard for cannabis certification in Israel and are required for CPRX to sell cannabis in Israel, a world leader in the medical cannabis industry.
	·	On March 5, 2024, the Company announced that we finalized a supply agreement with ICAN Green S.A. de C.V. (“ICAN”), a division of ICAN Investing Group LLC to supply product for distribution in the Latin Americas with a primary focus on Mexico and Panama. The agreement is subject to certain minimum required annual levels of purchases by ICAN.
	·	On March 11, 2024, the Company shipped its first product to a Canadian LP for distribution within Canada.
	·	On March 12, 2024, the Company announced completion of its first five grows and harvests are ready for sale, with testing of the new grows underway with an independent certified laboratory to confirm that the products meet standards for distribution throughout Canada and internationally.
	·	On April 2, 2024, the Company announced repayment of its convertible notes with 1800 Diagonal Lending, LLC and Janbella Group, LLC with cash generated from debt financing with a private lender.

Recent Funding

During the six months ended June 30, 2024, the Company:

	·	issued $213,488 in new convertible debentures to accredited investors with immediate maturity and interest rates of 10%, and converted $62,910 of the outstanding convertible notes into Common Shares;
	·	entered into a $100,000 note payable agreement with a private individual bearing interest at 12% per annum and maturing April 9, 2025; and
	·	entered into two additional notes payable agreements for $50,001 ($68,326 CAD) and $70,001 ($95,460 CAD), respectively, with a second private individual, each bearing interest at 10% per annum, the $50,001 note payable maturing on May 10, 2024 and the $70,001 note payable on May 31, 2024.

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

Going Concern

Substantial doubt exists as to our ability to continue as a going concern based on the fact that we do not have adequate working capital to finance our day-to-day operations. For the three and six months ended June 30, 2024, the Company reported $nil (2023 - $nil) and $25,839 (2023 - $nil), respectively, in revenue.

The Company’s deficit of $97,631,722 as at June 30, 2024 indicates substantial uncertainty about 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 stock. Management’s ability to implement its plans and continue as a going concern may be dependent upon raising additional capital. 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 further 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 stockholders. Obtaining commercial 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 JUNE 30, 2024 AND 2023

The Company has commenced actively marketing products approved by Health Canada.

During the three months ended June 30, 2024 and 2023, the Company’s financial results are as follows:

Revenue

During the three months ended June 30, 2024 and 2023, the Company reported revenue of $nil. The Company received orders of product during the three months ended June 30, 2024, but did not recognize revenue due to shipping of product occurring subsequent to period end. Product sales commenced during 2024 and therefore the Company reported no revenue in the prior year comparable quarter.

Cost of Goods Sold

During the three months ended June 30, 2024 and 2023, the Company reported cost of goods sold of $nil. The Company received orders of product during the three months ended June 30, 2024, but did not recognize cost of sales due to shipping of product occurring subsequent to period end. Product sales commenced during 2024 and therefore the Company reported no cost of sales in the prior year comparable quarter.

Gross Loss

During the three months ended June 30, 2024 and 2023, the Company reported a gross loss of $nil.

Operating Expenses

The summary of the Company’s operating expenses for the three months ended June 30, 2024 and 2023 is as follows:

	2024			2023

Amortization and depreciation	$	64,237		$	73,955
General and administrative		(6,400	)		271,254
Payroll and consulting fees		37,966			332,342
Professional fees		249,662			170,134
Rent		1,097			10
Stock based compensation		–			45,244
	$	346,562		$	892,939

During the three months ended June 30, 2024 and 2023, the Company’s operating expenses consisted primarily of amortization and depreciation, general and administrative expenses, payroll and consulting fees, and professional fees associated with the costs for services or employees in finance, accounting, sales, administrative activities and the compliance of a public company. Overall operating expenses for the three months ended June 30, 2024 were $346,562 compared to operating expenses of $892,939 in the prior year comparable period, a decrease of $546,377. The decrease is primarily attributable the following:

	·	A $9,718 decrease to amortization and depreciation primarily due to allocation of the majority of the 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 $277,654 decrease to general and administrative expenses due primarily to an overall decrease in discretionary and extraneous spending, and to allocation of a portion of the expenses to inventory.
	·	A $294,376 reduction in payroll and consulting fees due primarily to a change in management resulting in a reduction in payroll accruals for officers, and to allocation of a portion of the expenses to inventory.
	·	A $79,528 increase in professional fees due primarily to transition of accounting and assurance services to new providers resulting in initial cost increases.

Other income (expense)

The summary of the Company’s other income (expense) for the three months ended June 30, 2024 and 2023 is as follows:

	2024			2023

Change in the fair value of derivative liability	$	8,655,422		$	(592,326	)
Change in the fair value of obligation to issue shares		(673,514	)		–
Interest expense		(733,718	)		(355,295	)
Loss on extinguishment of debt		(1,368,000	)		(39,024	)
Loss on impairment of inventory		(171,364	)		–
	$	5,708,826		$	(986,645	)

Other income (expense) was $5,708,826 for the three months ended June 30, 2024 compared to $986,645 in the prior year comparable period, resulting in an increase of expenses of $6,695,471. The increase is primarily attributable the following:

	·	A $9,247,748 increase in change of fair value of derivative liability primarily due to the increase of the Company’s share price which resulted in a change in the stock price input and volatility input used in the Black Scholes option pricing model, which resulted in a substantial increase in fair value at period end.
	·	A $673,514 decrease in change in the fair value of obligation to issue shares primarily due to the increase of the Company’s share price which resulted in a change in inputs into the valuation model related to the obligation to issue shares, increasing the fair value at period end.
	·	A $378,423 increase in interest expense primarily due to additional debt taken on by the Company at a 24% rate of interest in order to continue operations.
	·	A $1,328,976 increase in the loss on extinguishment of debt primarily due to a reversal of an accrual for penalties upon the settlement of certain convertible notes and settlement through conversion of certain convertible notes.
	·	A $171,364 increase in loss on impairment of inventory primarily due to lower net realizable value attributed to early batches of product as a result of suboptimal THC levels.

Net Loss

As a result of the foregoing, during the three months ended June 30, 2024, the Company recorded a net income of $5,362,264 or $0.01 per share compared to a net loss of $1,879,584 or $0.01 in the prior year comparable period.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

The Company has commenced actively marketing products approved by Health Canada.

During the six months ended June 30, 2024 and 2023, the Company’s financial results are as follows:

Revenue

During the six months ended June 30, 2024 and 2023, the Company reported revenue of $25,839 and $nil, respectively, due to the commencement of product sales during the current quarter. The Company received additional orders of product during the six months ended June 30, 2024, but did not recognize revenue due to shipping of product occurring subsequent to period end.

Cost of Goods Sold

During the six months ended June 30, 2024 and 2023, the Company reported cost of goods sold of $463,248 and $nil, respectively, due to the commencement of product sales during the current quarter. The Company received additional orders of product during the six months ended June 30, 2024, but did not recognize cost of sales due to shipping of product occurring subsequent to period end.

Gross Loss

During the six months ended June 30, 2024 and 2023, the Company reported a gross loss of $437,409 and $nil, respectively.

Operating Expenses

The summary of the Company’s operating expenses for the six months ended June 30, 2024 and 2023 is as follows:

	2024		2023

Amortization and depreciation	$	87,278	$	147,354
General and administrative		202,149		520,953
Payroll and consulting fees		135,565		655,482
Professional fees		272,147		196,335
Rent		2,209		2,603
Stock based compensation		–		90,489
	$	699,348	$	1,613,216

During the six months ended June 30, 2024 and 2023, the Company’s operating expenses consisted primarily of amortization and depreciation, general and administrative expenses, payroll and consulting fees, and professional fees associated with the costs for services or employees in finance, accounting, sales, administrative activities and the compliance of a public company. Overall operating expenses for the six months ended June 30, 2024 were $699,348 compared to operating expenses of $1,613,216 in the prior year comparable period, a decrease of $913,868. The decrease is primarily attributable the following:

	·	A $60,076 decrease to amortization and depreciation primarily due to allocation of the majority of the expense to inventory during the current period and to an overall decrease in depreciation expense due to fixed assets reaching or nearing the end of their useful lives.
	·	A $318,804 decrease to general and administrative expenses primarily due to a reduction in advertising and promotion expenditures, to an overall decrease in discretionary and extraneous spending, and to allocation of a portion of the expenses to inventory.
	·	A $519,917 reduction in payroll and consulting fees primarily due to a change in management resulting in a reduction in payroll accruals for officers, and to the allocation of a portion of the expenses to inventory.
	·	A $75,812 increase in professional fees due primarily to transition of accounting and assurance services to new providers resulting in initial cost increases, particularly related to the annual audit of the Company and the Q1 2024 review engagement.

Other income (expense)

The summary of the Company’s other income (expense) for the six months ended June 30, 2024 and 2023 is as follows:

	2024			2023

Change in the fair value of derivative liability	$	619,090		$	(356,070	)
Change in the fair value of obligation to issue shares		(3,384,393	)		–
Interest expense		(1,310,141	)		(814,640	)
Loss on extinguishment of debt		(690,712	)		(429,471	)
Loss on impairment of inventory		(450,456	)		–
Loss on impairment of investment		–			(78,760	)
	$	(5,216,612	)	$	(1,678,941	)

Other income (expense) was $5,216,612 for the six months ended June 30, 2024 compared to $1,678,941 in the prior year comparable period, resulting in an increase in next expense of $3,537,671. The increase is primarily attributable the following:

	·	A $975,160 increase in change of fair value of derivative liability primarily due to the increase of the Company’s share price which resulted in a change in the stock price input and volatility input used in the Black Scholes option pricing model, which resulted in a substantial increase in fair value at period end.
	·	A $3,384,393 increase in change in the fair value of obligation to issue shares primarily due to the increase of the Company’s share price which resulted in a change in inputs into the valuation model related to the obligation to issue shares, increasing the fair value at period end.
	·	A $495,501 increase in interest expense primarily due to additional debt taken on by the Company at a 24% rate of interest in order to continue operations.
	·	A $261,241 increase in the loss on extinguishment of debt primarily due to reversal of an accrual for penalties upon the settlement of certain convertible notes and settlement through conversion of certain convertible notes.
	·	A $450,456 increase in loss of impairment of inventory primarily due to lower net realizable value attributed to early batches of product as a result of suboptimal THC levels.

Net Loss

As a result of the foregoing, during the six months ended June 30, 2024, the Company recorded a net loss of $6,353,369 or $0.01 per share compared to a net loss of $3,292,157 or $0.01 in the prior year comparable period.

LIQUIDITY AND CAPITAL RESOURCES

The summary of the Company’s cash flows for the six months ended June 30, 2024 and 2023 is as follows:

	2024			2023

Cash used in operating activities	$	(976,445	)	$	(1,093,910	)
Cash used in investing activities		–			(74,700	)
Cash provided by financing activities		984,940			953,908
	$	8,495		$	(214,702	)

As of June 30, 2024, the Company had $9,145 in cash as compared to $650 in the previous comparable period.

Cash flows from operating activities

Cash used in operating activities for the six months ended June 30, 2024 decreased by $117,465 compared to the prior year comparable period primarily due to cash management techniques employed to reduce the overall spend in the current quarter.

Cash flows from investing activities

Cash used in investing activities for the six months ended June 30, 2024 decreased by $74,700 compared to the prior year comparable period due to a reduction in purchases of property, plant and equipment in the current quarter.

Cash flows from financing activities

Cash provided by financing activities for the six months ended June 30, 2024 increased by $31,032 compared to the prior year comparable period primarily due to $451,282 from repayment of convertible notes, partially offset by an increase of $321,062 in proceeds from related party loans and an increase in proceeds from notes receivable of $220,002.

In general, based on historical losses, the Company will be required to continue raising operating capital through debt and equity.

Currently, the Company has no committed source for any funds to allow completion of any of our proposed acquisitions or projects in progress. No representation is made that any funds will be available when needed. In the event funds cannot be raised as required, we may not be able to carry out our business plan. Our inability to obtain funding for our projects will have a negative impact on our anticipated results of operations.

Subsequent Event

Inflation

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the six-month period ended June 30, 2024.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

Recently Issued Accounting Pronouncements

Management has reviewed all other recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of our operations.

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 - Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, 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 at 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 Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Based on this evaluation, and evidenced by our late filing of the December 31, 2023 10-K, our CEO and CFO concluded that our disclosure controls and procedures were not effective as at December 31, 2023 at the reasonable assurance level.

We have implemented new procedures for the period ended June 30, 2024 to mitigate this ineffectiveness and will continue to monitor their effectiveness. We believe that our financial statements presented in this Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.

Inherent Limitations - Our management, including our Chief Executive Officer and Chief Financial Officer, do 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.

Changes in Internal Control over Financial Reporting - Other than an emphasis on timely filing, there were no changes in our internal control over financial reporting during the period ended June 30, 2024, 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.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As part of our acquisition of AMS, 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 shall 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 more fully described in” Part I, Item 1,” Business, above 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.

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^st CV1 3696). The lawsuit alleges that CPRX breached the Amended and Restated Limited Liability Company Membership Purchase Agreement it had entered into with Bristol Capital Investors, LLC (BCI) to purchase BCI’s interest in Ramon Road Production Campus, LLC (RRPC), 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. CPRX intends to vigorously defend against BCI’s lawsuit, going forward. The parties conducted a court-ordered mediation, and the parties are engaging in on-going discussions.

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

ITEM 1A. RISK FACTORS

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

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

During the six months ended June 30, 2024, the Company issued 204,353,254 common shares pursuant to conversions of convertible debt to common stock. The Company also exchanged 10,000 shares of Preferred A Stock for 12,500,000 shares of common stock, and executed a cashless exercise of approximately 5,000,000 warrants for 4,895,849 shares of common stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable

ITEM 5. OTHER INFORMATION

During the six and six months ended June 30, 2024, 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.

ITEM 6. EXHIBITS

Exhibit No.		Description

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).

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 August 14, 2024.

	CannaPharmaRx, Inc.


	By:	/s/ Dean Medwid
		Dean Medwid,
		Principal Executive Officer


	By:	/s/ Oliver Foeste
		Oliver Foeste, Principal Financial Officer

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Dean Medwid, certify that:

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

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;

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;

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:

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;

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;

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

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

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):

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

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.

Dated: August 14, 2024

/s/ Dean Medwid

Dean Medwid, Chief Executive Officer (Principal Executive Officer)

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:

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

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.

Dated: August 14, 2024

/s/ Oliver Foeste

Oliver Foeste, Chief Financial Officer (Principal Financial Officer)

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 months period ended June 30, 2024, as filed with the Securities and Exchange Commission on June 24, 2024 (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:

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

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

Dated: August 14, 2024

/s/ Dean Medwid

Dean Medwid, Chief Executive Officer (Principal Executive Officer)

Dated: August 14, 2024

/s/ Oliver Foeste

Oliver Foeste, Chief Financial Officer (Principal Financial Officer)

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2024	Aug. 14, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	000-27055
Entity Registrant Name	CANNAPHARMARX, INC.
Entity Central Index Key	0001081938
Entity Tax Identification Number	27-4635140
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	Suite 3600
Entity Address, Address Line Two	888 - 3rd Street SW
Entity Address, City or Town	Calgary
Entity Address, State or Province	AB
Entity Address, Country	CA
Entity Address, Postal Zip Code	T2P 5C5
City Area Code	403
Local Phone Number	637-0420
Title of 12(b) Security	Common Stock
Trading Symbol	CPMD
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		662,501,405

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current assets
Cash	$ 9,145	$ 650
Goods and services tax receivable	80,088	61,524
Accounts receivable	190,150	0
Inventory	1,241,816	1,133,668
Total current assets	1,521,199	1,195,842
Non-current assets
Property, plant and equipment, net	159,579	161,540
Right-of-use building, net	5,514,860	5,870,141
Investments	4,518,127	4,518,127
Total assets	11,713,765	11,745,650
Current liabilities
Accounts payable and accrued liabilities	8,651,952	8,781,169
Accrued interest	1,143,932	523,680
Accrued legal settlement	190,000	190,000
Deferred revenue	432,893	0
Notes payable	3,551,177	3,333,925
Convertible notes - net of discount	1,148,114	1,520,858
Derivative liability	645,298	1,264,388
Loan payable - related party	3,216,704	2,155,484
Liability for right-of-use building, current portion	179,255	190,177
Obligation to issue shares	3,588,613	204,220
Total current liabilities	22,747,938	18,163,901
Non-current liability
Liability for right-of-use building	5,634,350	5,734,962
Total liabilities	28,382,288	23,898,863
STOCKHOLDERS’ DEFICIT
Common stock, $0.0001 par value; 5,000,000,000 shares authorized, 662,501,405 and 440,752,302 issued and outstanding as at June 30, 2024 and December 31, 2023, respectively	66,250	44,075
Treasury stock, $0.0001 par value 6,230,761 shares as at June 30, 2024 and December 31, 2023	623	597
Additional paid-in capital	80,122,590	75,826,669
Accumulated deficit	(97,631,722)	(91,278,353)
Accumulated other comprehensive income (loss)	144,320	(35,617)
Total stockholders’ deficit	(16,668,523)	(12,153,213)
Total liabilities and stockholders’ deficit	11,713,765	11,745,650
Series A Preferred Stock [Member]
STOCKHOLDERS’ DEFICIT
Preferred stock value	74,416	84,416
Series B Preferred Stock [Member]
STOCKHOLDERS’ DEFICIT
Preferred stock value	455,000	2,455,000
Series C Preferred Stock [Member]
STOCKHOLDERS’ DEFICIT
Preferred stock value	$ 100,000	$ 750,000

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS (Parenthetical)	Dec. 31, 2023 $ / shares shares
Common Stock, Par or Stated Value Per Share \| $ / shares	$ 0.0001
Common Stock, Shares Authorized	5,000,000,000
Common Stock, Shares, Outstanding	440,752,302
[custom:TreasureStockParOrStatedValuePerShare-0] \| $ / shares	$ 0.0001
Treasury Stock, Common, Shares	6,230,761
Series A Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share \| $ / shares	$ 1.00
Preferred Stock, Shares Authorized	100,000
Preferred Stock, Shares Outstanding	84,416
Series B Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share \| $ / shares	$ 1.00
Preferred Stock, Shares Authorized	3,000,000
Preferred Stock, Shares Outstanding	2,455,000
Series C Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share \| $ / shares	$ 1.00
Preferred Stock, Shares Authorized	100,000
Preferred Stock, Shares Outstanding	100,000

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement [Abstract]
Revenue	$ 0	$ 0	$ 25,839	$ 0
Cost of goods sold	0	0	463,248	0
Gross loss	0	0	(437,409)	0
Operating expenses
Depreciation	64,237	73,955	87,278	147,354
General and administrative	(6,400)	271,254	202,149	520,953
Payroll and consulting fees	37,966	332,342	135,565	655,482
Professional fees	249,662	170,134	272,147	196,335
Rent	1,097	10	2,209	2,603
Stock-based compensation	0	45,244	0	90,489
Total operating expenses	346,562	892,939	699,348	1,613,216
Loss from operations	(346,562)	(892,939)	(1,136,757)	(1,613,216)
Other income (expenses)
Change in the fair value of derivative liability	8,655,422	(592,326)	619,090	(356,070)
Change in the fair value of obligation to issue shares	(673,514)	0	(3,384,393)	0
Interest expense	(733,718)	(355,295)	(1,310,141)	(814,640)
Loss on the extinguishment of debt	(1,368,000)	(39,024)	(690,712)	(429,471)
Loss on impairment of investment	0	0	0	(78,760)
Loss on impairment of inventory	(171,364)	0	(450,456)	0
Total other income (expenses)	5,708,826	(986,645)	(5,216,612)	(1,678,941)
Net income (loss)	5,362,264	(1,879,584)	(6,353,369)	(3,292,157)
Foreign currency translation adjustment	58,605	(163,244)	179,937	(168,900)
Net comprehensive income (loss)	$ 5,420,869	$ (2,042,828)	$ (6,173,432)	$ (3,461,057)
Basic income (loss) per share of common stock	$ 0.01	$ (0.01)	$ (0.01)	$ (0.01)
Diluted income (loss) per share of common stock	$ 0.01	$ (0.01)	$ (0.01)	$ (0.01)
Weighted average number of common stock outstanding, Basic	657,980,212	299,656,064	587,642,342	293,897,326
Weighted average number of common stock outstanding, Diluted	657,980,212	299,656,064	587,642,342	293,897,326

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Operating activities
Net loss	$ (6,353,369)	$ (3,292,157)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of convertible note discount	0	162,392
Depreciation	87,278	11,930
Change in the fair value of derivative liability	(619,090)	356,070
Change in the fair value of obligation to issue shares	3,384,393	0
Interest expense	1,310,141	0
Loss on extinguishment of debt	690,712	429,471
Loss on impairment of investment	0	78,760
Loss on impairment of inventory	450,456	0
Stock-based compensation	0	90,489
Changes in operating assets and liabilities:
Cash overdraft	0	39,686
Goods and services tax receivable	(18,564)	(18,475)
Accounts receivable	(190,150)	0
Prepaid expenses	0	68,906
Inventory	(558,604)	0
Other assets	0	6,042
Accounts payable and accrued liabilities	505,057	436,509
Accrued expense related party	0	389,843
Accrued interest	(97,598)	146,624
Deferred revenue	432,893	0
Net cash used in operating activities	(976,445)	(1,093,910)
Investing activity
Purchases of property, plant and equipment	0	(74,700)
Net cash used in investing activity	0	(74,700)
Financing activities
Issuance of warrants	87,768	0
Proceeds from note payable	220,002	0
Proceeds from loan payable - related party	1,061,220	740,158
Proceeds from convertible notes	67,232	213,750
Repayment of convertible notes	(451,282)	0
Net cash provided by financing activities	984,940	953,908
Effects of exchange rates on cash	0	212,383
Net change in cash	8,495	(2,317)
Cash, beginning of period	650	2,317
Cash, end of period	9,145	0
Supplemental disclosure of cash flow information:
Cash interest paid	0	0
Supplemental disclosure of non-cash flow investing and financing activities:
Cancellation of preferred stock series B	2,000,000	0
Conversion of convertible loans into common stock	16,436	0
Conversion of preferred stock series A into common stock	1,250	0
Common stock issued to convert convertible notes and accrued interest into equity	$ 0	$ 571,040

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - USD ($)	Preferred Stock Series A [Member]	Preferred Stock Series B [Member]	Preferred Stock Series C [Member]	Common Stock [Member]	Treasury Stock, Common [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Beginning balance, value at Dec. 31, 2022	$ 84,416	$ 2,475,000		$ 27,412	$ (13)	$ 74,523,642	$ (94,695,339)	$ 240,426	$ (17,344,456)
Cashless issue of common stock, shares at Dec. 31, 2022	84,416	2,475,000		274,124,622	133,200
Conversion of preferred stock series B to common stock		$ (20,000)		$ 2		19,998
[custom:ConversionOfPreferredStockSeriesBToCommonStockShares]		(20,000)		20,000
Conversion of convertible notes to common stock				$ 2,062		504,953			507,015
Cashless issue of common stock, shares				20,619,992
Stock based compensation related to warrant issuances						45,245			45,245
Foreign currency translation adjustment								(5,656)	(5,656)
Net income							(1,412,573)		(1,412,573)
Ending balance, value at Mar. 31, 2023	$ 84,416	$ 2,455,000		$ 29,476	$ (13)	75,093,838	(96,107,912)	234,770	(18,210,425)
Cashless issue of common stock, shares at Mar. 31, 2023	84,416	2,455,000		294,764,614	133,200
Beginning balance, value at Dec. 31, 2022	$ 84,416	$ 2,475,000		$ 27,412	$ (13)	74,523,642	(94,695,339)	240,426	(17,344,456)
Cashless issue of common stock, shares at Dec. 31, 2022	84,416	2,475,000		274,124,622	133,200
Net income									(3,292,157)
Ending balance, value at Jun. 30, 2023	$ 84,416	$ 2,455,000		$ 30,086	$ (13)	75,202,497	(97,987,496)	71,526	(20,143,984)
Cashless issue of common stock, shares at Jun. 30, 2023	84,416	2,455,000		300,862,175	133,200
Beginning balance, value at Mar. 31, 2023	$ 84,416	$ 2,455,000		$ 29,476	$ (13)	75,093,838	(96,107,912)	234,770	(18,210,425)
Cashless issue of common stock, shares at Mar. 31, 2023	84,416	2,455,000		294,764,614	133,200
Conversion of convertible notes to common stock				$ 610		63,415			64,025
Cashless issue of common stock, shares				6,097,561
Stock based compensation						45,244			45,244
Foreign currency translation adjustment								(163,244)	(163,244)
Net income							(1,879,584)		(1,879,584)
Ending balance, value at Jun. 30, 2023	$ 84,416	$ 2,455,000		$ 30,086	$ (13)	75,202,497	(97,987,496)	71,526	(20,143,984)
Cashless issue of common stock, shares at Jun. 30, 2023	84,416	2,455,000		300,862,175	133,200
Beginning balance, value at Dec. 31, 2023	$ 84,416	$ 2,455,000	$ 750,000	$ 44,075	$ 597	75,826,669	(91,278,353)	(35,617)	(12,153,213)
Cashless issue of common stock, shares at Dec. 31, 2023	84,416	2,455,000	100,000	440,752,302	6,230,761
Cashless issue of common stock				$ 4,489		(4,489)
Cashless issue of common stock, shares				4,895,849
Conversion of preferred stock series A to common stock	$ (10,000)			$ 1,250		8,750
Cashless issue of common stock, shares	(10,000)			12,500,000
Cancellation of preferred stock series B		$ (2,000,000)				2,000,000
[custom:CancellationOfPreferredStockSeriesBShares]		(2,000,000)
Conversion of convertible notes to common stock				$ 10,150		120,204			130,354
Cashless issue of common stock, shares				101,496,114
Issuance of warrants for convertible notes						87,768			87,768
Adjustment to issuance of preferred stock series C for LTB investment			(650,000)			650,000
Foreign currency translation adjustment								121,332	121,332
Net income							(11,715,633)		(11,715,633)
Ending balance, value at Mar. 31, 2024	$ 74,416	$ 455,000	$ 100,000	$ 59,964	$ 597	78,688,902	(102,993,986)	85,715	(23,529,392)
Cashless issue of common stock, shares at Mar. 31, 2024	74,416	455,000	100,000	559,644,265	6,230,761
Beginning balance, value at Dec. 31, 2023	$ 84,416	$ 2,455,000	$ 750,000	$ 44,075	$ 597	75,826,669	(91,278,353)	(35,617)	(12,153,213)
Cashless issue of common stock, shares at Dec. 31, 2023	84,416	2,455,000	100,000	440,752,302	6,230,761
Net income									(6,353,369)
Ending balance, value at Jun. 30, 2024	$ 74,416	$ 455,000	$ 100,000	$ 66,250	$ 623	80,122,590	(97,631,722)	144,320	(16,668,523)
Cashless issue of common stock, shares at Jun. 30, 2024	74,416	455,000	100,000	662,501,405	6,230,761
Beginning balance, value at Mar. 31, 2024	$ 74,416	$ 455,000	$ 100,000	$ 59,964	$ 597	78,688,902	(102,993,986)	85,715	(23,529,392)
Cashless issue of common stock, shares at Mar. 31, 2024	74,416	455,000	100,000	559,644,265	6,230,761
Conversion of convertible notes to common stock				$ 6,286		1,433,714			1,440,000
Cashless issue of common stock, shares				102,857,140
Adjustment of treasury stock to par value					26	(26)
Foreign currency translation adjustment								58,605	58,605
Net income							5,362,264		5,362,264
Ending balance, value at Jun. 30, 2024	$ 74,416	$ 455,000	$ 100,000	$ 66,250	$ 623	$ 80,122,590	$ (97,631,722)	$ 144,320	$ (16,668,523)
Cashless issue of common stock, shares at Jun. 30, 2024	74,416	455,000	100,000	662,501,405	6,230,761

Pay vs Performance Disclosure - USD ($)	3 Months Ended				6 Months Ended
Pay vs Performance Disclosure - USD ($)	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ 5,362,264	$ (11,715,633)	$ (1,879,584)	$ (1,412,573)	$ (6,353,369)	$ (3,292,157)

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Insider Trading Arrangements [Line Items]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

All figures are in United States (“US”) dollars (“USD”) unless indicated otherwise.

Use of estimates

Cash

Comprehensive income or loss

Inventory

Leases

Short-term leases (that have an initial term less than 12 months or that are cancellable by the lessor and lessee without significant penalties) are expensed as they are incurred.

Derivative financial instruments

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

Revenue Recognition

The Company recognizes revenue from the sale of products in accordance with ASC 606, “Revenue Recognition” following the five steps procedure:

Step 1: Identify the contract(s) with customers - The invoice has been generated and provided to the customer.

Step 2: Identify the performance obligations in the contract - The performance obligations of delivery of products are stated in the invoice.

Step 3: Determine the transaction price - The transaction price has been identified in the invoice.

Step 4: Allocate the transaction price to performance obligations - The Company has allocated the transaction price to performance obligation in the invoice.

Foreign currency translation

These translation adjustments are reflected in accumulated other comprehensive income, a separate component of the Company's stockholders' deficit.

Harmonized sales tax

Stock-based compensation

Long-lived assets

Fair values of assets and liabilities

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

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

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

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

Financial instruments

Income taxes

Earnings (loss) per share

Recently issued accounting pronouncements

GOING CONCERN AND LIQUIDITY

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GOING CONCERN AND LIQUIDITY

NOTE 2 - GOING CONCERN AND LIQUIDITY

INVENTORY

6 Months Ended

Jun. 30, 2024

Inventory Disclosure [Abstract]

INVENTORY

NOTE 3 - INVENTORY

A summary of the Company’s inventory as at June 30, 2024, and December 31, 2023 is as follows:

Schedule of inventory
	2024		2023

Finished goods	$	586,093	$	472,361
Work in process		655,723		661,307
Total inventory	$	1,241,816	$	1,133,668

During the three and six months ended June 30, 2024, the Company recorded a loss on inventory impairment of $171,364 (2023 - $nil) and $450,456 (2023 - $nil), respectively, related to inventory.

PROPERTY, PLANT AND EQUIPMENT

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

A summary of the Company’s property, plant and equipment as at June 30, 2024 is as follows:


	Gross carrying amount		Accumulated depreciation			Net book value
Computers, office and plant equipment	$	221,666	$	(62,087	)	$	159,579

A summary of the Company’s property, plant and equipment as at December 31, 2023 is as follows:

		Gross carrying amount				Accumulated depreciation				Net book value
Computers, office and plant equipment		$	209,449			$	(47,909	)		$	161,540

For the three and six months ended June 30, 2024, the Company recorded depreciation expense of $8,139 (2023 - $5,850) and $15,909 (2023 - $11,679) respectively, related to these fixed assets.

RIGHT-OF-USE BUILDING

6 Months Ended

Jun. 30, 2024

Right-of-use Building

RIGHT-OF-USE BUILDING

NOTE 5 - RIGHT-OF-USE BUILDING

A summary of the Company’s right-of-use building asset at June 30, 2024 and December 31, 2023 is as follows:

Schedule of right-of-use building asset
	2024			2023
Gross carrying amount	$	6,254,630		$	6,472,637
Accumulated depreciation		(739,770	)		(602,496	)
Net book value	$	5,514,860		$	5,870,141

For the three and six months ended June 30, 2024, the Company recorded depreciation expense on the right-of-use building of $78,807 (2023 - $80,301) and $158,736 (2023 - $160,024), respectively.

INVESTMENTS

6 Months Ended

Jun. 30, 2024

Investments, All Other Investments [Abstract]

INVESTMENTS

NOTE 6 - INVESTMENTS

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

A summary of the Company’s accounts payable and accrued liabilities as at June 30, 2024, and December 31, 2023 is as follows:


	2024		2023
Accounts payable and accrued expenses	$	8,651,952	$	8,781,169
Accrued legal settlement (a)		190,000		190,000
Total accounts payable and accrued liabilities	$	8,841,952	$	8,971,169

(a)

NOTES PAYABLE

6 Months Ended

Jun. 30, 2024

Notes Payable

NOTES PAYABLE

NOTE 8 - NOTES PAYABLE

A summary of the Company’s notes payable as at June 30, 2024, and December 31, 2023 is as follows:

Schedule of notes payable
	2024		2023
Notes payable	$	218,780	$	–
CEBA loan		43,837		45,365
Promissory notes (secured investors)		288,560		288,560
Promissory notes (LTB Transaction)		3,000,000		3,000,000
Total notes payable	$	3,551,177	$	3,333,925

Notes payable

CEBA loan

Promissory notes (secured investors)

Promissory notes (LTB Transaction)

CONVERTIBLE NOTES AND DERIVATIVE LIABILITY

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

CONVERTIBLE NOTES AND DERIVATIVE LIABILITY

NOTE 9 - CONVERTIBLE NOTES AND DERIVATIVE LIABILITY

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

Schedule of convertible notes
Balance, net of note discount, December 31, 2022	$	1,141,060
Proceeds received		439,501
Value of conversion of notes to 166,607,680 common shares		(222,096	)
Note discount		162,393
Balance, net of note discount, December 31, 2023		1,520,858
Proceeds received		213,448
Value of conversion of notes to 204,353,254 common shares		(134,910	)
Repayment		(451,282	)
Balance, June 30, 2024	$	1,148,114

A summary of the terms and conditions of the convertible notes outstanding which have a derivative component as at June 30, 2024 is as follows:


Maturity Date	Interest Rate	Conversion price	Principal at inception		Principal outstanding
				$		$
Jan. 7, 2021	8%	75% of the lowest 20-day share price before the conversion date		100,000		100,000
Dec. 11, 2022	24%	Lowest of the 60-day share price before the conversion date		231,250		212,555
Dec. 11, 2022	24%	Lowest of the 60-day share price before the conversion date		231,250		212,555
May 5, 2024	12%	Lesser of $0.0025 or 70% of lowest 5-day share price before the conversion date		60,000		60,000
				622,500		585,110

As at June 30, 2024, the Company had $289,915 (December 31, 2023 - $348,577) in accrued interest on these notes, recorded in accounts payable and accrued liabilities.

A summary of Company’s derivative liabilities as at June 30, 2024 is as follows:

Schedule of derivative liabilities
Balance, derivative liability, December 31, 2023	$	1,264,388
Changes in fair value of derivative liability		(619,090	)
Balance, June 30, 2024	$	645,298

As at June 30, 2024 the Company had derivative liabilities of $645,298 (December 31, 2023 - $1,264,388).

A summary of the Company’s weighted average inputs used in the Black-Scholes option pricing model for derivative liabilities valuation as at June 30, 2024 is as follows:


		2024
Stock price		$0.011
Exercise price		$0.008
Risk-free interest rate		4.00%
Expected volatility		297.90%
Expected life		1.00 years
Expected annual dividend yield		0.00%

RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2024

RELATED PARTY TRANSACTIONS

NOTE 10 - RELATED PARTY TRANSACTIONS

A summary of the Company’s related party liabilities as at June 30, 2024, and December 31, 2023 is as follows:

Schedule of related party liabilities
	2024		2023
Loan payable - related party	$	3,216,704	$	2,155,484
Liability for right-of-use building, current portion		179,255		190,177
Liability for right-of-use building		5,634,350		5,734,962
Total loan payable, related parties	$	9,030,309	$	8,080,623

LIABILITY FOR RIGHT-OF-USE BUILDING

6 Months Ended

Jun. 30, 2024

Liability For Right-of-use Building

LIABILITY FOR RIGHT-OF-USE BUILDING

NOTE 11 - LIABILITY FOR RIGHT-OF-USE BUILDING

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

Schedule of operating lease liabilities
	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023

Interest expense	$	244,426	$	240,953	$	490,475		478,230
Depreciation	$	78,807	$	80,301	$	158,736		160,024
Finance lease-related expenses included in accounts payable and accrued liabilities	$	199,413	$	196,280	$	398,827		392,560

STOCKHOLDERS’ DEFICIT

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

STOCKHOLDERS’ DEFICIT

NOTE 12 - STOCKHOLDERS’ DEFICIT

Preferred stock

Series A preferred stock

Series B preferred stock

As at June 30, 2024, 455,000 (December 31, 2023 - 2,455,000) shares of Series B Stock and Common Warrants were issued and outstanding.

Series C preferred stock

As at June 30, 2024 and December 31, 2023, 100,000 shares of Series C Stock were issued and outstanding.

Common stock

Stock purchase warrants

A summary of the Company’s stock purchase warrant activity is as follow:


		Number of stock purchase warrants			Weighted average exercise price

Stock purchase warrants outstanding December 31, 2022	#		1,497,778		$	0.79
Stock purchase warrants issued			27,224,962			0.02
Stock purchase warrants outstanding December 31, 2023	#		28,722,740		$	0.06
Stock purchase warrants granted			17,222,200			0.01
Stock purchase warrants redeemed			(5,000,000	)		(0.03	)
Stock purchase warrants outstanding June 30, 2024	#		40,944,940		$	0.05

A summary of the Company’s number of stock purchase warrants outstanding and exercisable for period ended June 30, 2024 is as follows:


		Number of stock purchase warrants		Weighted average exercise price		Weighted average remaining life (Years)
July 2, 2024	#		1,020,000	$	1.02		0.01
May 10, 2026	#		477,778	$	0.30		1.86
February 15, 2028	#		12,222,200	$	0.01		3.63
November 22, 2028	#		27,224,962	$	0.02		4.40

INCOME TAX

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAX

NOTE 13 - INCOME TAX

GENERAL AND ADMINISTRATIVE

6 Months Ended

Jun. 30, 2024

General And Administrative

GENERAL AND ADMINISTRATIVE

NOTE 14 - GENERAL AND ADMINISTRATIVE

A summary of the Company’s general and administrative expenses for the three and six months ended June 30, 2024 and 2023 is as follows:


	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024		2023

Advertising and promotion	$	–		$	–		$	1,461		10,000
Insurance		–			(31,221	)		25,562		–
Interest and bank charges		238			2,635			661		5,039
Office and administrative		(19,065	)		6,862			72,969		64,341
Plant supplies		–			222,930			26,340		358,026
Repairs and maintenance		5,701			23,508			30,565		32,588
Taxes		–			45,646			–		45,646
Exchange gain or loss		102			–			102		–
Transfer agent fees		3,211			894			4,411		5,313
Utilities		3,413			–			40,078		–
	$	(6,400	)	$	271,254		$	202,149		520,953

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 15 - COMMITMENTS AND CONTINGENCIES

SUBSEQUENT EVENT

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

SUBSEQUENT EVENT

NOTE 16 - SUBSEQUENT EVENT

NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

All figures are in United States (“US”) dollars (“USD”) unless indicated otherwise.

Use of estimates

Use of estimates

Cash

Cash

Comprehensive income or loss

Comprehensive income or loss

Inventory

Inventory

Leases

Leases

Short-term leases (that have an initial term less than 12 months or that are cancellable by the lessor and lessee without significant penalties) are expensed as they are incurred.

Derivative financial instruments

Derivative financial instruments

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

Revenue Recognition

Revenue Recognition

The Company recognizes revenue from the sale of products in accordance with ASC 606, “Revenue Recognition” following the five steps procedure:

Step 1: Identify the contract(s) with customers - The invoice has been generated and provided to the customer.

Step 2: Identify the performance obligations in the contract - The performance obligations of delivery of products are stated in the invoice.

Step 3: Determine the transaction price - The transaction price has been identified in the invoice.

Step 4: Allocate the transaction price to performance obligations - The Company has allocated the transaction price to performance obligation in the invoice.

Foreign currency translation

Foreign currency translation

These translation adjustments are reflected in accumulated other comprehensive income, a separate component of the Company's stockholders' deficit.

Harmonized sales tax

Harmonized sales tax

Stock-based compensation

Stock-based compensation

Long-lived assets

Long-lived assets

Fair values of assets and liabilities

Fair values of assets and liabilities

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

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

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

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

Financial instruments

Financial instruments

Income taxes

Income taxes

Earnings (loss) per share

Earnings (loss) per share

Recently issued accounting pronouncements

Recently issued accounting pronouncements

INVENTORY (Tables)

6 Months Ended

Jun. 30, 2024

Inventory Disclosure [Abstract]

Schedule of inventory

Schedule of inventory
	2024		2023

Finished goods	$	586,093	$	472,361
Work in process		655,723		661,307
Total inventory	$	1,241,816	$	1,133,668

PROPERTY, PLANT AND EQUIPMENT (Tables)

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

Schedule of property, plant and equipment


	Gross carrying amount		Accumulated depreciation			Net book value
Computers, office and plant equipment	$	221,666	$	(62,087	)	$	159,579

A summary of the Company’s property, plant and equipment as at December 31, 2023 is as follows:

		Gross carrying amount				Accumulated depreciation				Net book value
Computers, office and plant equipment		$	209,449			$	(47,909	)		$	161,540

RIGHT-OF-USE BUILDING (Tables)

6 Months Ended

Jun. 30, 2024

Right-of-use Building

Schedule of right-of-use building asset

Schedule of right-of-use building asset
	2024			2023
Gross carrying amount	$	6,254,630		$	6,472,637
Accumulated depreciation		(739,770	)		(602,496	)
Net book value	$	5,514,860		$	5,870,141

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

Schedule of accounts payable and accrued liabilities


	2024		2023
Accounts payable and accrued expenses	$	8,651,952	$	8,781,169
Accrued legal settlement (a)		190,000		190,000
Total accounts payable and accrued liabilities	$	8,841,952	$	8,971,169

(a)

NOTES PAYABLE (Tables)

6 Months Ended

Jun. 30, 2024

Notes Payable

Schedule of notes payable

Schedule of notes payable
	2024		2023
Notes payable	$	218,780	$	–
CEBA loan		43,837		45,365
Promissory notes (secured investors)		288,560		288,560
Promissory notes (LTB Transaction)		3,000,000		3,000,000
Total notes payable	$	3,551,177	$	3,333,925

CONVERTIBLE NOTES AND DERIVATIVE LIABILITY (Tables)

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Schedule of convertible notes

Schedule of convertible notes
Balance, net of note discount, December 31, 2022	$	1,141,060
Proceeds received		439,501
Value of conversion of notes to 166,607,680 common shares		(222,096	)
Note discount		162,393
Balance, net of note discount, December 31, 2023		1,520,858
Proceeds received		213,448
Value of conversion of notes to 204,353,254 common shares		(134,910	)
Repayment		(451,282	)
Balance, June 30, 2024	$	1,148,114

Schedule of terms and conditions of the convertible notes outstanding


Maturity Date	Interest Rate	Conversion price	Principal at inception		Principal outstanding
				$		$
Jan. 7, 2021	8%	75% of the lowest 20-day share price before the conversion date		100,000		100,000
Dec. 11, 2022	24%	Lowest of the 60-day share price before the conversion date		231,250		212,555
Dec. 11, 2022	24%	Lowest of the 60-day share price before the conversion date		231,250		212,555
May 5, 2024	12%	Lesser of $0.0025 or 70% of lowest 5-day share price before the conversion date		60,000		60,000
				622,500		585,110

Schedule of derivative liabilities

Schedule of derivative liabilities
Balance, derivative liability, December 31, 2023	$	1,264,388
Changes in fair value of derivative liability		(619,090	)
Balance, June 30, 2024	$	645,298

Schedule of weighted average inputs for derivative liabilities valuation


		2024
Stock price		$0.011
Exercise price		$0.008
Risk-free interest rate		4.00%
Expected volatility		297.90%
Expected life		1.00 years
Expected annual dividend yield		0.00%

RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2024

Schedule of related party liabilities

Schedule of related party liabilities
	2024		2023
Loan payable - related party	$	3,216,704	$	2,155,484
Liability for right-of-use building, current portion		179,255		190,177
Liability for right-of-use building		5,634,350		5,734,962
Total loan payable, related parties	$	9,030,309	$	8,080,623

LIABILITY FOR RIGHT-OF-USE BUILDING (Tables)

6 Months Ended

Jun. 30, 2024

Liability For Right-of-use Building

Schedule of operating lease liabilities

Schedule of operating lease liabilities
	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023

Interest expense	$	244,426	$	240,953	$	490,475		478,230
Depreciation	$	78,807	$	80,301	$	158,736		160,024
Finance lease-related expenses included in accounts payable and accrued liabilities	$	199,413	$	196,280	$	398,827		392,560

STOCKHOLDERS’ DEFICIT (Tables)

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Schedule of stock purchase warrant activity


		Number of stock purchase warrants			Weighted average exercise price

Stock purchase warrants outstanding December 31, 2022	#		1,497,778		$	0.79
Stock purchase warrants issued			27,224,962			0.02
Stock purchase warrants outstanding December 31, 2023	#		28,722,740		$	0.06
Stock purchase warrants granted			17,222,200			0.01
Stock purchase warrants redeemed			(5,000,000	)		(0.03	)
Stock purchase warrants outstanding June 30, 2024	#		40,944,940		$	0.05

Schedule of stock purchase warrants outstanding and exercisable


		Number of stock purchase warrants		Weighted average exercise price		Weighted average remaining life (Years)
July 2, 2024	#		1,020,000	$	1.02		0.01
May 10, 2026	#		477,778	$	0.30		1.86
February 15, 2028	#		12,222,200	$	0.01		3.63
November 22, 2028	#		27,224,962	$	0.02		4.40

GENERAL AND ADMINISTRATIVE (Tables)

6 Months Ended

Jun. 30, 2024

General And Administrative

Schedule of general and administrative expenses


	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024		2023

Advertising and promotion	$	–		$	–		$	1,461		10,000
Insurance		–			(31,221	)		25,562		–
Interest and bank charges		238			2,635			661		5,039
Office and administrative		(19,065	)		6,862			72,969		64,341
Plant supplies		–			222,930			26,340		358,026
Repairs and maintenance		5,701			23,508			30,565		32,588
Taxes		–			45,646			–		45,646
Exchange gain or loss		102			–			102		–
Transfer agent fees		3,211			894			4,411		5,313
Utilities		3,413			–			40,078		–
	$	(6,400	)	$	271,254		$	202,149		520,953

NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
Cash and cash equivalents	$ 9,145	$ 650
Derivative liability	$ 645,298	$ 1,264,388
Stock options outstanding	0	0

GOING CONCERN AND LIQUIDITY (Details Narrative) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents	$ 9,145	$ 650
Working capital	21,226,739	16,968,059
Accumulated deficit	$ 97,631,722	$ 91,278,353

INVENTORY (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Inventory Disclosure [Abstract]
Finished goods	$ 586,093	$ 472,361
Work in process	655,723	661,307
Total inventory	$ 1,241,816	$ 1,133,668

INVENTORY (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
INVENTORY (Details Narrative) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Inventory Disclosure [Abstract]
Loss on inventory impairment	$ 171,364	$ 0	$ 450,456	$ 0

PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Abstract]
Computers, office and plant equipment, gross	$ 221,666	$ 209,449
Computers, office and plant equipment, accumulated depreciation	(62,087)	(47,909)
Computers, office and plant equipment, net	$ 159,579	$ 161,540

PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Property, Plant and Equipment [Line Items]
Inventory, Gross	$ 87,367	$ 0	$ 87,367	$ 0
Computers Office And Plant Equipment [Member]
Property, Plant and Equipment [Line Items]
Depreciation expense	8,139	5,850	15,909	11,679
Depreciation expense on fixed assets	$ 7,656	$ 0	$ 14,934	$ 0

RIGHT-OF-USE BUILDING (Details) - Formosa Mountain Limited [Member] - Building [Member] - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Gross carrying amount	$ 6,254,630	$ 6,472,637
Accumulated depreciation	(739,770)	(602,496)
Net book value	$ 5,514,860	$ 5,870,141

RIGHT-OF-USE BUILDING (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
RIGHT-OF-USE BUILDING (Details Narrative) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Property, Plant and Equipment [Line Items]
Inventory, Gross	$ 87,367	$ 0	$ 87,367	$ 0
Building [Member]
Property, Plant and Equipment [Line Items]
Depreciation expense	78,807	80,301	158,736	160,024
Depreciation Expense on Reclassified Assets	$ 15,053	$ 0	$ 72,433	$ 0

INVESTMENTS (Details Narrative) - USD ($)	Nov. 22, 2023	Jun. 30, 2024	Dec. 31, 2023
Obligation to issue an additional shares		205,064	96,104
Obligation to issue shares		$ 3,588,613	$ 204,220
Klonetics Inc [Member]
Ownership percentage		33.00%
LTB Management [Member]
Investment shares, owned	100
Payment of investment	$ 4,518,127
Warrants received, shares	27,224,962
Warrants received, value	$ 162,129
Promissory note payable	$ 3,000,000
LTB Management [Member] \| Class C Preferred Stock [Member]
Stock issued for acquisition, shares	100,000
Stock issued for acquisition, value	$ 750,000

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($)

Jun. 30, 2024

Dec. 31, 2023

Payables and Accruals [Abstract]

Accounts payable and accrued expenses

$ 8,651,952

$ 8,781,169

Accrued legal settlement (a)

^[1]

190,000

Total accounts payable and accrued liabilities

$ 8,841,952

$ 8,971,169

[1]

NOTES PAYABLE (Details) - Convertible Debentures [Member] - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Notes payable	$ 218,780	$ 0
CEBA loan	43,837	45,365
Promissory notes (secured investors)	288,560	288,560
Promissory notes (LTB Transaction)	3,000,000	3,000,000
Total notes payable	$ 3,551,177	$ 3,333,925

NOTES PAYABLE (Details Narrative)					3 Months Ended		6 Months Ended		12 Months Ended
NOTES PAYABLE (Details Narrative)	May 31, 2024 USD ($)	May 10, 2024 USD ($)	Apr. 09, 2024 USD ($)	Nov. 22, 2023 USD ($) $ / shares shares	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) shares	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($) shares	Jun. 30, 2024 CAD ($)	May 31, 2024 CAD ($)	May 10, 2024 CAD ($)	Dec. 31, 2023 CAD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2021 CAD ($)
Interest expense on loan					$ 35,028	$ 48,347	$ 57,947	$ 74,310
Exchange for consideration \| shares							204,353,254		166,607,680
LTB [Member]
Interest rate				13.00%
Interest expense on loan					97,233	0	$ 194,466	0
LTB [Member] \| Class C Preferred Shares [Member]
Number of shares convertible \| shares				100,000
Warrant [Member] \| LTB [Member]
Exchange for consideration \| shares				27,224,962
Per share \| $ / shares				$ 0.02
Exchange for consideration				$ 3,000,000
CEBA [Member]
Interest expense on loan					437	0	986	0
Loan amount					43,857		43,857		$ 45,365	$ 60,000			$ 60,000
Note A [Member]
Interest rate			12.00%
Notes payable			$ 100,000
Interest expense on loan					0	0	2,630	0
Note B [Member]
Interest rate		10.00%
Notes payable		$ 50,001										$ 68,326
Interest expense on loan					0	0	699	0
Note C [Member]
Interest rate	10.00%
Notes payable	$ 70,001										$ 95,460
Interest expense on loan					0	$ 0	575	$ 0
Secured Investors [Member]
Notes payable														$ 238,560	$ 300,000
Debt in default					$ 288,560		$ 288,560		$ 288,560	$ 300,000			$ 300,000

CONVERTIBLE NOTES AND DERIVATIVE LIABILITY (Details - Schedule of convertible notes) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
Convertible notes, beginning balance	$ 1,520,858	$ 1,141,060
Proceeds received	213,448	439,501
Debt converted, amount converted	(134,910)	(222,096)
Increase (decrease) in note discount		162,393
Note discount	(451,282)
Convertible notes, ending balance	$ 1,148,114	$ 1,520,858

CONVERTIBLE NOTES AND DERIVATIVE LIABILITY (Details - Schedule of convertible notes outstanding)	6 Months Ended
	Jun. 30, 2024 USD ($)
Short-Term Debt [Line Items]
Principal at inception	$ 622,500
Principal outstanding	$ 585,110
Convertible Debt [Member]
Short-Term Debt [Line Items]
Maturity Date	Jan. 07, 2021
Interest Rate	8.00%
Conversion price description	75% of the lowest 20-day share price before the conversion date
Principal at inception	$ 100,000
Principal outstanding	$ 100,000
Convertible Debt 1 [Member]
Short-Term Debt [Line Items]
Maturity Date	Dec. 11, 2022
Interest Rate	24.00%
Conversion price description	Lowest of the 60-day share price before the conversion date
Principal at inception	$ 231,250
Principal outstanding	$ 212,555
Convertible Debt 2 [Member]
Short-Term Debt [Line Items]
Maturity Date	Dec. 11, 2022
Interest Rate	24.00%
Conversion price description	Lowest of the 60-day share price before the conversion date
Principal at inception	$ 231,250
Principal outstanding	$ 212,555
Convertible Debt 3 [Member]
Short-Term Debt [Line Items]
Maturity Date	May 05, 2024
Interest Rate	12.00%
Conversion price description	Lesser of $0.0025 or 70% of lowest 5-day share price before the conversion date
Principal at inception	$ 60,000
Principal outstanding	$ 60,000

CONVERTIBLE NOTES AND DERIVATIVE LIABILITY (Details - Schedule of derivative liabilities)	6 Months Ended
	Jun. 30, 2024 USD ($)
Debt Disclosure [Abstract]
Derivative liability, beginning balance	$ 1,264,388
Change in fair value of derivative liability	(619,090)
Derivative liability, ending balance	$ 645,298

CONVERTIBLE NOTES AND DERIVATIVE LIABILITY (Details 3) - Derivative Liabilities [Member]	6 Months Ended
	Jun. 30, 2024
Measurement Input, Share Price [Member]
Offsetting Assets [Line Items]
Derivatives, determination of fair value	0.011
Measurement Input, Exercise Price [Member]
Offsetting Assets [Line Items]
Derivatives, determination of fair value	0.008
Measurement Input, Risk Free Interest Rate [Member]
Offsetting Assets [Line Items]
Derivatives, determination of fair value	4.00%
Measurement Input, Price Volatility [Member]
Offsetting Assets [Line Items]
Derivatives, determination of fair value	297.90%
Measurement Input, Expected Term [Member]
Offsetting Assets [Line Items]
Derivatives, determination of fair value	1.00 years
Measurement Input, Expected Dividend Rate [Member]
Offsetting Assets [Line Items]
Derivatives, determination of fair value	0.00%

CONVERTIBLE NOTES AND DERIVATIVE LIABILITY (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Debt Instrument [Line Items]
Debt converted, shares issued			204,353,254		166,607,680
Loss on conversion of convertible notes	$ 1,368,000	$ 39,024	$ 690,712	$ 429,471
Interest expense	35,028	$ 48,347	57,947	$ 74,310
Accrued interest	1,143,932		1,143,932		$ 523,680
Accrued liability for penalties on convertible notes	1,303,452		1,303,452
Decrease in accrued liability penalties on convertible notes	735,002		735,002
Derivative liability	645,298		645,298		1,264,388
Convertible Debt [Member]
Debt Instrument [Line Items]
Accrued interest	$ 289,915		$ 289,915		$ 348,577

RELATED PARTY TRANSACTIONS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Related Party Transactions [Abstract]
Loan payable - related party	$ 3,216,704	$ 2,155,484
Liability for right-of-use building, current portion	179,255	190,177
Liability for right-of-use building	5,634,350	5,734,962
Total loan payable, related parties	$ 9,030,309	$ 8,080,623

RELATED PARTY TRANSACTIONS (Details Narrative)	3 Months Ended		6 Months Ended
RELATED PARTY TRANSACTIONS (Details Narrative)	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 CAD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2023 CAD ($)	May 25, 2023 USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Loan payable - related party	$ 3,216,704		$ 3,216,704			$ 2,155,484
Rent expense	1,097	$ 10	2,209	$ 2,603
Cremona Canada Lease [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Accrued Rent	1,947,206		1,947,206		$ 2,575,374	$ 1,534,478	$ 2,029,500
Former Chief Executive Officer [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Loan payable - related party	13,459		13,459
Koze Investments [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Loan payable - related party	914,090		$ 914,090					$ 2,289,155
Debt interest rate			24.00%
Accrued interest	$ 346,654		$ 346,654

LIABILITY FOR RIGHT-OF-USE BUILDING (Details) - USD ($)	3 Months Ended		6 Months Ended
LIABILITY FOR RIGHT-OF-USE BUILDING (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Liability For Right-of-use Building
Interest expense	$ 244,426	$ 240,953	$ 490,475	$ 478,230
Depreciation	78,807	80,301	158,736	160,024
Finance lease-related expenses included in accounts payable and accrued liabilities	$ 199,413	$ 196,280	$ 398,827	$ 392,560

STOCKHOLDERS' DEFICIT (Details - Schedule of stock purchase warrant activity ) - Warrants [Member] - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of stock purchase warrants outstanding at beginning	28,722,740	1,497,778
Weighted average exercise price outstanding at beginning	$ 0.06	$ 0.79
Number of stock purchase warrants issued		27,224,962
Weighted average exercise price issued		$ 0.02
Number of stock purchase warrants granted	17,222,200
Weighted average exercise price granted	$ 0.01
Number of stock purchase warrants issued	(5,000,000)
Weighted average exercise price issued	$ (0.03)
Number of stock purchase warrants outstanding at ending	40,944,940	28,722,740
Weighted average exercise price outstanding at ending	$ 0.05	$ 0.06

STOCKHOLDERS' DEFICIT (Details - Schedule of stock purchase warrants) - Stock Purchase Warrants [Member]	Jun. 30, 2024 $ / shares shares
July 2, 2024 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of stock purchase warrants \| shares	1,020,000
Weighted average exercise price \| $ / shares	$ 1.02
Weighted average remaining life (Years)	3 days
May 10, 2026 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of stock purchase warrants \| shares	477,778
Weighted average exercise price \| $ / shares	$ 0.30
Weighted average remaining life (Years)	1 year 10 months 9 days
February 15, 2028 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of stock purchase warrants \| shares	12,222,200
Weighted average exercise price \| $ / shares	$ 0.01
Weighted average remaining life (Years)	3 years 7 months 17 days
November 22, 2028 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of stock purchase warrants \| shares	27,224,962
Weighted average exercise price \| $ / shares	$ 0.02
Weighted average remaining life (Years)	4 years 4 months 24 days

STOCKHOLDERS’ DEFICIT (Details Narrative) - USD ($)		3 Months Ended	6 Months Ended		12 Months Ended
STOCKHOLDERS’ DEFICIT (Details Narrative) - USD ($)	Mar. 31, 2023	Mar. 31, 2024	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023	Dec. 31, 2020	Apr. 30, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock, shares authorized			5,000,000,000		5,000,000,000
Common stock, par value			$ 0.0001		$ 0.0001
Common stock, shares issued			662,501,405		440,752,302
Common stock, shares outstanding			662,501,405		440,752,302
Issuance of warrants			17,222,200
February 15, 2028 [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Issuance of warrants					17,222,200
Warrant conversion share price					$ 0.01
Warrant termination date					Feb. 15, 2028
LTB Transaction [Member] \| November 22, 2028 [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Issuance of warrants					27,224,962
Warrant conversion share price					$ 0.02
Warrant termination date					Nov. 22, 2028
Correction Of Error [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Adjustment to APIC					$ 271,470
Series A Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred Stock, Shares Authorized					100,000
Preferred stock, par value					$ 1.00		$ 1.00
Preferred stock, shares issued			74,416		84,416		60,000
Stock converted, shares converted		10,000
Preferred stock, shares outstanding			74,416		84,416
Series B Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred Stock, Shares Authorized					3,000,000
Preferred stock, par value					$ 1.00
Stock converted, shares converted				20,000
Preferred stock, shares outstanding			455,000		2,455,000
Common stock warrants subscribed						$ 475,000
Number of preferred shares cancelled		2,000,000
Series B Preferred Stock Member And Warrants [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares issued			455,000		2,455,000
Preferred stock, shares outstanding			455,000		2,455,000
Series C Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred Stock, Shares Authorized					100,000
Preferred stock, par value					$ 1.00
Preferred stock, shares issued			100,000		100,000
Preferred stock, shares outstanding			100,000		100,000
Series C Preferred Stock [Member] \| LTB [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock issued for acquisition, shares	100,000
Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred Stock, Shares Authorized			10,000,000
Preferred stock, par value			$ 1.00

INCOME TAX (Details Narrative) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Effective Income Tax Rate Reconciliation [Line Items]
Net operating loss carryforwards		$ 93,000,000
Unrecognized income tax benefits	$ 0	0
Canadian Non Capital Losses [Member]
Effective Income Tax Rate Reconciliation [Line Items]
Operating loss carryforward		$ 900,000

GENERAL AND ADMINISTRATIVE (Details) - USD ($)	3 Months Ended		6 Months Ended
GENERAL AND ADMINISTRATIVE (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
General and administrative expense	$ (6,400)	$ 271,254	$ 202,149	$ 520,953
Advertising [Member]
General and administrative expense	0	0	1,461	10,000
Insurance [Member]
General and administrative expense	0	(31,221)	25,562	0
Bank Servicing [Member]
General and administrative expense	238	2,635	661	5,039
Administrative Service [Member]
General and administrative expense	(19,065)	6,862	72,969	64,341
Plant Supplies [Member]
General and administrative expense	0	222,930	26,340	358,026
Maintenance [Member]
General and administrative expense	5,701	23,508	30,565	32,588
Taxes [Member]
General and administrative expense	0	45,646	0	45,646
Exchange Gain Or Loss [Member]
General and administrative expense	102	0	102	0
Transfer Agent [Member]
General and administrative expense	3,211	894	4,411	5,313
Public Utilities [Member]
General and administrative expense	$ 3,413	$ 0	$ 40,078	$ 0

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