10.     Related Party Transactions and Balances

During the three months ended March 31, 2025, the Company expensed $152,473 (March 31, 2024: $97,361) in management service fee for services provided by the current key officers of the company.

The breakdown of the related party balance as of March 31, 2025 of $9,872,687 (December 31, 2024: $9,854,719) is below:

Debt purchase by CL Investors Inc.

On June 15, 2020, the Company and its subsidiaries, entered into a Debt Agreement with CLI explained in Note 1. The Canary Debt, Term, repayment schedule, security and options are set forth in Note 1.As of March 31, 2025, $3,478 (CAD $5,000) is still outstanding from CLI.

Interest expense charged for the three months ended in the amount of $90,780 (CAD $130,282) is included in interest and bank charges on the unaudited condensed consolidated interim statement of operations and comprehensive loss and accrued interest in the amount of $509,398 (CAD 732,315) is included in accounts payable and accrued liabilities on the unaudited condensed consolidated interim balance sheet.

The repayment schedule of the minimum principal payments is shown below:

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During the period ended March 31, 2025, the Company made a repayments of $521,700 to CLI loan.

The Company has reclassified the entire outstanding balance of the loan to current liabilities. At this stage the Company is under discussions to formalize the arrangements with the lender to revise the terms of the loans.

The Debt Agreement Amendment and CLI Warrants are explained in Note 1. Refer to Note 13 for additional details on the CLI Warrants. The combined impact of both transactions resulted in a debt issuance cost of $251,518. This debt issuance cost will be amortized over the term of the debt on a straight-line basis. As at March 31, 2025, the balance is $17,243 which is current while $nil is non-current.

Shareholder loan

One of the Company’s shareholders provided a loan to the Company. The loan is secured by all assets owned by the Company and its subsidiaries including leasehold improvements and matures on May 31, 2025 and therefore is presented as current. The loan was provided in five tranches and the latest amendment increased the maximum loan amount by $626,040 (CAD 900,000) while the rest of terms remained unchanged. During the period March 31, 2025 the company made a repayment of $557,440 (CAD 800,000). The specific details of each tranche of the loan are shown below:

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Interest expense charged for the three months ended March 31, 2025 in the amount of $158,224 (CAD $227,072) is included in interest and bank charges on the unaudited condensed consolidated interim statement of operations and comprehensive loss and accrued interest in the amount of $318,831 (CAD 458,354) is included in accounts payable and accrued liabilities on the unaudited condensed consolidated balance sheet.

A Tenth Amending Agreement to the shareholder loan, previously filed as Exhibit 10.36, was executed on August 16, 2024, by and between Jerry Zarcone, the Company and its subsidiaries (“Tenth Amendment”), which extends the term of each of the First, Second, Third, Fourth, and Fifth Tranche, to a maturity date of May 31, 2025, or such earlier date as demanded by Mr. Zarcone.

Outstanding management service fee

The balance owing to key officers of the Company is $636,814 (December 31, 2024: $610,266).

Balances outstanding related to subsidiaries

During the year ended December 31, 2019, the Company settled with the loan holders provided to the Company’s subsidiary, CannaKorp. The total amount subject to settlement was $817,876 which includes accrued interest and accrued payroll. The company settled by paying $954,374 as consideration of cash, 920,240 shares (recorded in shares to be issued) and warrants of 920,240 shares with an exercise price of $0.15 per share. This resulted in a settlement loss of $136,498. These warrants expired during the year ended December 31, 2021. Of the total settlement amount, as of March 31, 2025 and December 31, 2024, $65,000 was outstanding to be paid. This amount includes late payment penalties of $25,000. During the period ended March 31, 2025, all of the warrants expired, none were exercised.

Balances outstanding related to directors

During the three months ended March 31, 2025, the Company has purchased $nil of consulting services from GTA Angel Group which is owned by the Company’s CEO’s brother. The balance outstanding as of March 31, 2025 is $23,581 and is included in accounts payable and accrued liabilities.

The Company subleases its principal executive office premise from Norlandam Marketing Inc., a company owned by one of the directors. During the quarter ended March 31, 2021, the premises were subleased to a third party that makes rent payments directly to Norlandam Marketing Inc. The balance outstanding as of March 31, 2025 and December 31, 2024 is $nil.