8.     Related Party Transactions and Balances

During the six months ended June 30, 2026, the Company expensed $177,926 (June 30, 2025: $240,364) in management service fee for services provided by the current key officers of the company.

The breakdown of the related party balance as of June 30, 2026 of $10,229,180 (December 31, 2025: $10,361,576) 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 June 30, 2026, $3,519 (CAD $5,000) is still outstanding from CLI.

Interest expense charged for the six months ended in the amount of $191,271 (CAD $263,458) 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 $980,857 (CAD 1,393,856) 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 June 30, 2026, the Company made no payments to the CLI loan.

The Company has classified the entire outstanding balance of the loan as a current liability because the note is in default and is due on demand. 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 11 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 were amortized over the term and have been fully amortized as of the balance sheet date. As at June 30, 2026, the balance is $nil.

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 August 31, 2026 and therefore is presented as non-current. The loan was provided in six tranches and the latest amendment increased the maximum loan amount by $626,040 (CAD 900,000) while the rest of terms remained unchanged. The specific details of each tranche of the loan are shown below:

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Interest expense charged for the six months ended June 30, 2026 in the amount of $382,936 (CAD $527,460) 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 $697,857 (CAD 991,697) is included in accounts payable and accrued liabilities on the unaudited condensed consolidated balance sheet.

The Eleventh Amending Agreement to the shareholder loan, was executed on August 11, 2025, by and between Jerry Zarcone (the “Lender”), the Company and its subsidiaries (“Eleventh Amendment”), which extended the term of each of the First, Second, Third, Fourth, and Fifth Tranche, to a maturity date of August 31, 2026, or such earlier date as demanded by Mr. Zarcone. Effective January 25, 2026, the Company and Lender entered into a Twelfth Amending Agreement pursuant to which Lender advanced the Company an additional CDN$330,000.00 (the “Sixth Tranche”) under the shareholder loan. The Sixth Tranche carries interest at the rate of 3.0416% per month (43.26% per annum) and is subject to a Lender’s fee of CDN$33,000.00 which was deducted and paid from the Sixth Tranche. The maturity date of the Sixth Tranche is December 31, 2026. At Company’s request, and Lender’s sole option, Lender may advance up to an additional CDN$500,000.00, subject to a Lender’s fee of ten percent (10%) of the amount of the additional advance, bearing the same interest rate and maturity date as the Sixth Tranche.

Outstanding management service fee

The balance owing to key officers of the Company is $636,688 (December 31, 2025: $659,189).

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 June 30, 2026 and December 31, 2025, $65,000 was outstanding to be paid. This amount includes late payment penalties of $25,000. During the period ended June 30, 2026, all of the warrants expired, none were exercised.

Balances outstanding related to directors

During the six months ended June 30, 2026, 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 June 30, 2026 is $23,855 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 June 30, 2026 and December 31, 2025 is $nil.