U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

~~Quarterly Report Under~~

~~the Securities Exchange Act of~~☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended ☒March 31, 2022

☐ ~~Quarterly~~TRANSITION REPORT ~~PURSUANT to Section~~UNDER SECTION 13 orOR 15(d) ~~of the Securities Exchange Act of 1934~~OF THE EXCHANGE ACT

For the ~~quarterly period ended~~ ~~September 30, 2021~~

☐~~Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

~~For the transaction~~transition period from ~~_____________~~___________ to ~~_____________~~_______________

Commission File Number: 333-251016

CANNAPHARMARX, ~~INC~~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~~3^rd Street SW

Calgary, Alberta, Canada T2P5C5

(Address of principal executive offices)

949-652-6838

(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 only class of common stock issued and outstanding as of ~~November 12, 2021,~~May 14, 2022, was ~~105,743,055~~ 175,464,799shares.

TABLE OF CONTENTS

		Page No.

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	14

	Unaudited Condensed Consolidated Balance Sheets as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~	1

	~~Unaudited Consolidated Statement of Operations for the Three and Nine months ended September 30,~~ 2021 ~~and 2020~~	2

	~~Unaudited Consolidated Statement of Cash Flows for the Nine months ended September 30, 2021 and 2020~~	3

	~~Unaudited Consolidated Statements of Stockholders Equity (Deficit)~~	4

	Unaudited Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2022 and 2020	5

	Unaudited Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2022 and 2020	6

	Unaudited Condensed Consolidated Statements of Stockholders Equity (Deficit)	7

	Notes to Unaudited Condensed Consolidated Financial Statements	89

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation	2325

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2931

Item 4.	Controls and Procedures	2932

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3033

Item 1A.	Risk Factors	3134

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3134

Item 3.	Defaults Upon Senior Securities	3134

Item 4.	Mine Safety Disclosures	3134

Item 5.	Other Information	3134

Item 6.	Exhibits	3234

	Signatures	3335

Forward Looking Statements

This Report includes statements that are, or may be deemed to be, “forward-looking statements,” as defined in the Private Securities Reform Act of 1995. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “projects,” “expects,” “intends,” “may,” “will,” “seeks” or “should” or, in each case, their negative or other variations or comparable terminology, or in relation to discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this Quarterly Report and include statements regarding Issuer’s current intentions, beliefs or expectations concerning, among other things, the Issuer’s future plans for the Project, results of operations, financial condition, prospects, growth, strategies and the markets in which the Issuer intends to operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not an assurance of future performance. The Issuer’s actual results of operations and financial condition may differ materially from those suggested by the forward-looking statements contained in this document. In addition, even if the Issuer’s future results of operations and financial condition are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods. The information in this Quarterly Report identifies important factors that could cause such differences (including, but not limited to, a change in overall economic conditions in the United States, a change in the Issuer’s financial condition, changes in tax law or the interpretation thereof, interest rate fluctuations and other market conditions, and the effect of new legislation or government directives).

Forward-looking statements include, but are not limited to, information concerning possible or assumed future results of the Issuer’s operations set forth under the section entitled “Business of the Issuer”. Such statements, estimates and projections reflect various assumptions by the Issuer concerning anticipated results and are subject to significant business, financing, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Issuer and are based upon assumptions with respect to future business decisions that are subject to change. Accordingly, there can be no assurance that such statements, estimates and projections will be realized or that actual results will not vary considerably from those anticipated, expected or projected. The Issuer, its accountants, its legal advisers and its agents or affiliates do not make any representations as to the accuracy or completeness of such statements, estimates and projections, or that any forecasts will be achieved.

The Issuer is not obliged to, and does not intend to, update or revise any forward-looking statements made in this Quarterly Report whether as a result of new information, future events or otherwise. All subsequent written forward-looking statements attributable to the Issuer, or persons acting on behalf of the Issuer, are expressly qualified in their entirety by the cautionary statements contained throughout this Quarterly Report. As a result of these risks, prospective investors of the Convertible Bonds should not place undue reliance on these forward-looking statements. Neither the forward-looking statements nor the underlying assumptions have been verified or audited by any third party.

ii3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CANNAPHARMARX, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

~~(Unaudited)~~(unaudited)

September 30, December 31,
2021 2020
ASSETS
Current assets
Cash $ 112,822 $ 334,969
HST Receivable 1,585 551
Prepaid expenses 167,199 132,031
Total current assets 281,606 467,551
Construction in progress 0 1,566,316
Office equipment 6,755 2,435
Investments 6,750,779 6,711,289
Total Assets $ 7,039,140 $ 8,747,591

LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses $ 3,123,200 $ 3,584,999
Accrued interest 43,900 96,477
Accrued legal settlement 190,000 190,000
Notes payable 8,122,451 8,728,749
Convertible notes - net of discount 845,076 997,558
Derivative liability 982,429 3,676,649
Loan payable - related party 19,757 274,758
Total current liabilities 13,326,813 17,549,190
Accrued legal settlement payable in cash - noncurrent portion 0 0

Total Liabilities 13,326,813 17,549,190

Commitments and contingencies 0 0

Stockholders' Equity
Preferred stock, Series A, $1.00 par value, 100,000 shares authorized, 65,429 and 60,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 65,429 60,000
Preferred Stock Series B, $1.00 par value, 3,000,000 shares authorized 475,000 and -0- shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 475,000 475,000
Common stock, $0.0001 par value; 300,000,000 shares authorized, 95,348,472 and 46,986,794 issued and outstanding as of September 30, 2021 and December 30, 2020, respectively 9,535 4,699
Treasury stock, 133,200 and -0- shares as of September 30, 2021 and December 31, 2020, respectively (13 ) (13 )
Additional paid in capital 72,321,722 68,336,249
Retained earnings (deficit) (78,828,860 ) (77,331,820 )
Accumulated other comprehensive income (loss) (330,486 ) (345,714 )
Total Stockholders' Equity (Deficit) (6,287,673 ) (8,801,599 )
Total Liabilities and Stockholders' Equity $ 7,039,140 $ 8,747,591

March 31, December 31,
2022 2021
ASSETS
Current assets
Cash $ 79,676 $ 27,767
HST Receivable 5,895 1,771
Total current assets 85,571 29,538
Property, plant and equipment, net 21,756 6,032
Right of use building, net 5,727,811 0
Investments 78,760 78,760
Total Assets $ 5,913,898 $ 114,330

LIABILITIES & STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable and accrued expenses $ 3,693,470 $ 3,129,257
Accrued interest 65,131 194,407
Accrued legal settlement 190,000 190,000
Liability for right of use building -short term 211,497 0
Notes payable 8,339,578 8,223,888
Convertible notes -net of discount 949,765 775,448
Derivative liability 1,092,526 507,494
Loan payable - related party 19,757 19,757
Total current liabilities 14,561,724 13,040,251

Liability for right of use building long-term 5,639,264 0

Total Liabilities 20,200,988 13,040,251

Commitments and contingencies – –

Stockholders' Equity
Preferred stock, Series A, $1.00 par value, 100,000 shares authorized, 58,180 and 67,191 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively 58,180 67,191
Preferred Stock Series B, $1.00 par value, 3,000,000 shares authorized 475,000 and 475,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively 475,000 475,000
Common stock, $0.0001 par value; 300,000,000 shares authorized, 168,460,301 and 125,509,810 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively 16,846 12,551
Treasury stock, 133,200 and 133,200 shares as of March 31, 2022 and December 31, 2021, respectively (13 ) (13 )
Additional paid in capital 73,891,856 73,055,579
Retained earnings (deficit) (88,236,301 ) (86,164,319 )
Accumulated other comprehensive income (loss) (492,658 ) (371,909 )
Total Stockholders' Equity (Deficit) (14,287,090 ) (12,925,920 )
Total Liabilities and Stockholders' (Equity) $ 5,913,898 $ 114,330
The accompanying notes are an integral part of these consolidated financial statements.
4
CANNAPHARMARX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

Three Months Three Months
Ended Ended
March 31, March 31,
2022 2021
Revenue $ 0 $ 0

Operating Expenses:
General and administrative 139,435 42,848
Amortization and depreciation 74,064 408
Stock based compensation 45,245 96,700
Rent 4,739 9,478
Professional fees 177,404 418,603
Payroll and consulting fees 274,671 153,309
Total operating expenses 715,558 721,345
Income (loss) from operations (715,558 ) (721,345 )

Other income (expense)
Interest (expense) (451,148 ) (428,872 )
Gain or (loss) on the extinguishment of debt (320,243 ) (282,289 )
Change in the fair value of derivative liability (585,033 ) 2,630,480
Other income (expense) net (1,356,424 ) 1,919,319
Income (loss) before provision for income taxes (2,071,982 ) 1,197,974
Provision (credit) for income tax 0 0
Net income (loss) (2,071,982 ) 1,197,974

Basic earnings (loss) per common share $ (0.01 ) $ 0.02
Diluted earnings (loss) per common share $ (0.01 ) $ 0.02

Basic weighted average number of shares outstanding 149,215,596 48,043,065
Diluted weighted average number of shares outstanding 149,215,596 48,043,065

Comprehensive loss:
Net income (loss) $ (2,071,982 ) $ 1,197,974
Foreign currency translation adjustment (120,750 ) (96,578 )
Comprehensive income (loss) $ (2,192,732 ) $ 1,101,396

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

15

CANNAPHARMARX, INC.
~~CONSOLIDATED~~UNAUDITED CONDENSED STATEMENTS OF ~~OPERATIONS~~CONSOLIDATED CASH FLOWS
~~(Unaudited)~~(unaudited)

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2021 2020 2021 2020

Revenue $ 0 $ 0 $ 0 $ 0

Operating Expenses:
General and administrative 170,906 575,585 679,052 803,835
Acquisition expenses 209,500 68,984 209,500 1,931,621
Amortization and depreciation 762 36,308 1,946 99,450
Stock based compensation 96,700 204,600 290,099 617,758
Travel and entertainment 377 5,471 377 13,413
Rent 4,779 9,011 9,593 26,608
Professional fees 240,215 313,486 954,571 585,610
Consulting fees - related parties 47,964 99,345 143,490 591,989
Total operating expenses 771,203 1,312,790 2,288,628 4,670,284
Income (loss) from operations (771,203 ) (1,312,790 ) (2,288,628 ) (4,670,284 )

Other income (expense)
Interest (expense) (260,106 ) (358,950 ) (1,298,826 ) (1,719,651 )
(Loss) on extinguishment of debt (237,226 ) (201,916 ) (1,226,489 ) (201,916 )
Other income 622,683 0 622,683 0
Change in the fair value of derivative liability (383,753 ) (779,134 ) 2,694,220 (1,748,237 )
Other income (expense) net (258,402 ) (1,340,000 ) 791,588 (3,669,804 )
Income (loss) before provision for income taxes (1,029,605 ) (2,652,790 ) (1,497,040 ) (8,340,088 )
Provision (credit) for income tax 0 0 0 0
Net income (loss) $ (1,029,605 ) $ (2,652,790 ) $ (1,497,040 ) $ (8,340,088 )

Basic and diluted earnings(loss) per common share $ (0.01 ) $ (0.07 ) $ (0.02 ) $ (0.20 )

Weighted average number of shares outstanding 84,415,273 39,720,700 63,364,348 42,583,650

Comprehensive loss:
Net income (loss) $ (1,029,605 ) $ (2,652,790 ) $ (1,497,040 ) $ (8,340,088 )
Foreign currency translation adjustment 188,848 (53,706 ) 15,228 (107,499 )
Comprehensive income (loss) $ (840,757 ) $ (2,706,496 ) $ (1,481,812 ) $ (8,447,587 )

Three Months Three Months
Ended Ended
March 31, March 31,
2022 2021
Cash Flows From Operating Activities:
Net income (loss) $ (2,071,982 ) $ 1,197,974
Adjustments to reconcile net income to net cash provided by (used for) operating activities
Stock-based compensation expense 45,245 96,700
Amortization of debt discount 100,971 287,544
Loss on the extinguishment of debt 320,243 282,289
Beneficial conversion feature of convertible notes 227,386 0
Change in the fair value of derivatives 585,033 (2,630,480 )
Depreciation 942 408
Changes in operating assets and liabilities
(Increase)/decrease in prepaid expenses 0 (277,582 )
HST Receivable (4,098 ) (922 )
Accrued interest 16,633 54,945
Right of use asset (5,727,811 ) –
Loan payable related party 0 0
Accrued expense related party 47,387 (93,618 )
Lease liabilities for right of use asset 5,850,761 –
Accounts payable and accrued expense 234,106 283,491
Net cash provided by (used for) operating activities (375,184 ) (799,251 )

Cash Flows From Investing Activities:
Purchase of fixed assets (16,578 ) (6,314 )
Purchase of private company equity 0 (39,490 )
Net cash provided by (used for) investing activities (16,578 ) (45,804 )

Cash Flows From Financing Activities:
Proceeds from the sale of preferred stock 0 (39,441 )
Proceeds from convertible loans, net of repayments 0 53,500
Proceeds from notes payable, net of repayment 476,250 238,560
Proceeds from the sale of common stock in private placements 40,015 244,104
Net cash provided by (used for) financing activities 516,265 496,723

Effect of exchange rates on cash and cash equivalents (72,594 ) 43,441
Net Increase (Decrease) In Cash 51,909 (304,891 )
Cash At the Beginning of the Period 27,767 334,969
Cash At the End of the Period 79,676 30,078

Supplemental disclosure of cash flow information:
Cash paid for interest $ 0 $ 0
Cash paid for income taxes $ 0 $ 0

Supplemental disclosure of non-cash investing and financing activities:
Common stock issued as a financing expense on convertible notes $ 17,000 $ 0
Common stock issued to convert convertible notes and accrued interest into equity $ 501,905 $ 508,919

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

26

~~CANNAPHARMARX, INC.~~
~~STATEMENTS OF CONSOLIDATED CASH FLOWS~~
~~(Unaudited)~~

Nine Months Nine Months
Ended Ended
September 30, September 30,
2021 2020
Cash Flows From Operating Activities:
Net income (loss) $ (1,497,040 ) $ (8,340,088 )
Adjustments to reconcile net income to net cash provided by (used for) operating activities
Stock-based compensation expense 290,099 617,758
Amortization of intangible assets 0 98,304
Advertising expense paid with common stock 211,200 554,000
Common stock issued in connection with financing 51,010 0
Amortization of debt discount 954,024 1,704,907
Loss on the extinguishment of debt 1,226,489 0
Change in the fair value of derivatives (2,694,220 ) 1,748,237
Depreciation 1,946 1,146
Changes in operating assets and liabilities
(Increase)/decrease in prepaid expenses (35,170 ) 1,824,558
HST Receivable (1,035 ) 26,954
Accrued interest (52,538 ) 74,623
Loan payable related party 0 (15,158 )
Accounts payable/loan payable related party 0 198,780
Accrued expense related party 42,726 442,951
Accounts payable and accrued expense (584,859 ) 230,706
Net cash provided by (used for) operating activities (2,087,367 ) (832,322 )

Cash Flows From Investing Activities:
Purchase of fixed assets (6,232 ) 0
Net impact from sale of AMS building excluding mortgage payoff 539,376 0
Purchase of private company equity (39,490 ) 0
Changes in intangible assets 0 95,681
Net cash provided by (used for) investing activities 493,654 95,681

Cash Flows From Financing Activities:
Proceeds from the sale of preferred stock 410,000 0
Proceeds from convertible loans, net of repayments 427,086 945,000
Proceeds from notes payable, net of repayment 238,560 (3,566 )
Proceeds from the sale of common stock in private placements 291,064 0
Proceeds (repayment of related party loans), net (255,001 ) (15,158 )
Net cash provided by (used for) financing activities 1,111,709 926,276

Effect of exchange rates on cash and cash equivalents 259,857 52,132
Net Increase (Decrease) In Cash (482,004 ) 189,635
Cash At The Beginning Of The Period 334,969 1,547
Cash At The End Of The Period 112,822 243,314

Supplemental disclosure of cash flow information:
Cash paid for interest $ 0 $ 14,744
Cash paid for income taxes $ 0 $ 0

Supplemental disclosure of non-cash investing and financing activities:
Common stock issued as a financing expense on convertible notes $ 51,010 $ 0
Common stock issued for advertising expense $ 211,200 $ 554,000
Common stock issued related to investment in Great Northern Cannabis $ 0 $ 2,478,422
Common stock issued to convert convertible notes and accrued interest into equity $ 918,611 $ 306,750
~~The accompanying notes are an integral part of these consolidated financial statements.~~
3
CANNAPHARMARX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)

Preferred Stock Series A Preferred Stock Series B Common Stock
Shares Value Shares Value Shares Value
Balance, December 31, 2019 60,000 $ 60,000 475,000 $ 475,000 36,486,999 $ 3,649

Net loss – – –

Change in foreign currency translation

Common stock issued in connection with convertible notes 153,940 15

Beneficial conversion features of convertible notes

Stock-based compensation related to warrant issuances

Balance, March 31, 2020 60,000 $ 60,000 475,000 $ 475,000 36,640,939 $ 3,664

Change in foreign currency translation

Net loss – – –

Shares issued for services 300,000 30

Stock-based compensation related to warrant issuances

Shares received from share exchange with GN 5,507,400 551

Balance, June 30, 2020 60,000 $ 60,000 475,000 $ 475,000 42,448,339 $ 4,245

Change in foreign currency translation

Net loss – – –

Shares issued for services 200,000 20

Beneficial conversion feature of note discount

Warrant exercise 25,000 3

Stock based compensation related to warrant issuances

Return of common shares related to note payoff (153,940 ) (15 )

Convertible note conversion to common stock 135,000 14

Balance, September 30, 2020 60,000 $ 60,000.00 475,000 $ 475,000.00 42,654,399 $ 4,265

Preferred Stock Series A Preferred Stock Series B Common Stock
Shares Value Shares Value Shares Value
Balance, December 31, 2020 60,000 $ 60,000 475,000 $ 475,000 46,986,794 $ 4,699

Net loss

Change in foreign currency translation

Conversion of Series A Preferred to common (200 ) (200 ) - - 250,000 25

Conversion of convertible notes to common shares 1,442,101 144

Sale of common stock in a private placement 860,000 86

Beneficial conversion feature of convertible notes

Stock based compensation related to warrant issuance

Balance, March 31, 2021 59,800 $ 59,800 475,000 $ 475,000 49,538,895 $ 4,954
(continued)

Treasury Stock Paid in Accumulated Accumulated other comprehensive Equity/
Shares Value Capital deficit income (loss) Deficit
Balance, December 31, 2020 133,200 $ (13 ) $ 68,336,249 $ (77,331,820 ) $ (345,714 ) $ (8,801,601 )

Net loss 1,197,974 1,197,974

Change in foreign currency translation (96,578 ) (96,578 )

Conversion of Series A Preferred to common - - 175

Conversion of convertible notes to common shares 474,715 474,859

Sale of common stock in a private placement 244,018 244,104

Beneficial conversion feature of convertible notes 34,205 34,205

Stock based compensation related to warrant issuance 96,700 96,700

Balance, March 31, 2021 133,200 $ (13 ) $ 69,186,061 $ (76,133,846 ) $ (442,293 ) $ (6,850,337 )

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

47

CANNAPHARMARX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (continued)
(unaudited)

Preferred Stock Series A Preferred Stock Series B Common Stock
Shares Value Shares Value Shares Value
Balance at December 31, 2021 67,191 $ 67,191 475,000 $ 475,000 125,509,810 $ 12,551

Net income (loss)

Change in foreign currency translation

Conversion of Series A Preferred to common stock (9,011 ) (9,011 ) - - 11,263,750 1,126

Conversion of convertible notes to common shares 28,186,741 2,819

Sale of common stock in private placement 2,500,000 250

Issuance of common stock for services

Commitment shares issued with convertible note 1,000,000 100

Beneficial conversion feature of convertible notes

Stock based compensation related to warrant issuances

Balance, March 31, 2022 58,180 $ 58,180 475,000 $ 475,000 168,460,301 $ 16,846
(continued)

Treasury Stock Paid in Retained earnings Accumulated other comprehensive Equity/
Shares Value Capital (Deficit) income (loss) Deficit
Balance, December 31, 2019 133,200 $ (13 ) $ 61,619,415 $ (57,441,549 ) $ 137,696 $ 4,854,198

Net loss – – (4,214,818 ) – (4,214,818 )

Change in foreign currency translation (67,273 ) (67,273 )

Common stock issued in connection with convertible notes 130,834 130,849

Beneficial conversion features of convertible notes 438,000 438,000

Stock-based compensation related to warrant issuances 206,579 206,579

Balance, March 31, 2020 133,200 $ (13 ) $ 62,394,828 $ (61,656,367 ) 70,423 $ 1,347,534

Change in foreign currency translation 13,481 13,481

Net loss – – (1,472,479 ) – (1,472,479 )

Shares issued for services 152,970 153,000

Stock-based compensation related to warrant issuances 206,579 206,579

Shares received from share exchange with GN 2,477,871 2,478,422

Balance, June 30, 2020 133,200 $ (13 ) $ 65,232,248 $ (63,128,846 ) $ 83,904 $ 2,726,536

Change in foreign currency translation (53,706 ) (53,706 )

Net loss – – (2,652,790 ) – (2,652,790 )

Shares issued for services 400,980 401,000

Beneficial conversion feature of note discount 649,527 649,527

Warrant exercise 9,998 10,000

Stock based compensation related to warrant issuances 204,600 204,600

Return of common shares related to note payoff (130,834 ) (130,849 )

Convertible note conversion to common stock 306,737 306,750

Balance, September 30, 2020 133,200 $ (13 ) $ 66,673,255 $ (65,781,637 ) $ 30,197 $ 1,461,067

Treasury Stock Paid in Accumulated Other comprehensive Equity/
Shares Value Capital Deficit income (loss) Deficit
Balance at December 31, 2021 133,200 $ (13 ) $ 73,055,579 $ (86,164,319 ) $ (371,909 ) $ (12,925,920 )

Net income (loss) (2,071,982 ) (2,071,982 )

Change in foreign currency translation (120,750 ) (120,750 )

Conversion of Series A Preferred to common stock 7,885 –

Conversion of convertible notes to common shares - - 499,096 501,915

Sale of common stock in private placement 39,765 40,015

Issuance of common stock for services

Commitment shares issued with convertible note 16,900 17,000

Beneficial conversion feature of convertible notes 227,386 227,386

Stock based compensation related to warrant issuances 45,245 45,245

Balance, March 31, 2022 133,200 $ (13 ) $ 73,891,856 $ (88,236,301 ) $ (492,658 ) $ (14,287,090 )

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

5
~~CANNAPHARMARX, INC.~~
~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY~~ ~~(continued)~~

Preferred Stock Series A Preferred Stock Series B Common Stock
Shares Value Shares Value Shares Value
Balance at December 31, 2020 60,000 $ 60,000 475,000 $ 475,000 46,986,794 $ 4,699

Net income (loss) – – –

Change in foreign currency translation

Conversion of Series A Preferred to common stock (200 ) (200 ) 250,000 25

Conversion of convertible notes to common shares 1,442,101 144

Sale of common stock in private placement 860,000 86

Loss on loan conversions

Beneficial conversion feature of convertible notes

Stock based compensation related to warrant issuances

Balance, March 31, 2021 59,800 $ 59,800 475,000 $ 475,000 49,538,895 $ 4,954

Net income (loss) – – –

Change in foreign currency translation

Purchase of Series A Preferred 1,760 1,760

Conversion of Series A Preferred to common stock (3,380 ) (3,380 ) 4,225,000 423

Conversion of convertible notes to common shares 17,531,700 1,753

Sale of common stock in private placement 400,000 40

Loss on loan conversions

Issuance of common stock for services 1,800,000 180

Commitment shares issued with convertible note 265,000 27

Beneficial conversion feature of convertible notes

Stock based compensation related to warrant issuances

Balance, June 30, 2021 58,180 $ 58,180 475,000 $ 475,000 73,760,595 $ 7,376

Net income (loss) – – –

Change in foreign currency translation

Purchase of Series A Preferred 14,733 14,733

Conversion of Series A Preferred to common stock (7,484 ) (7,484 ) 9,355,000 936

Conversion of convertible notes to common shares 11,607,877 1,161

Loss on loan conversions

Issuance of common stock for services 600,000 60

Commitment shares issued with convertible note 25,000 3

Beneficial conversion feature of convertible notes

Stock based compensation related to warrant issuances

Balance, September 30, 2021 65,429 $ 65,429 475,000 $ 475,000 95,348,472 $ 9,535
~~The accompanying notes are an integral part of these consolidated financial statements.~~
6
~~CANNAPHARMARX, INC.~~
~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY~~ ~~(continued)~~

Treasury Stock Paid in Retained earnings Other comprehensive Equity/
Shares Value Capital (Deficit) income (loss) Deficit
Balance at December 31, 2020 133,200 $ (13 ) $ 68,336,249 $ (77,331,820 ) $ (345,714 ) $ (8,801,599 )

Net income (loss) – – 1,197,974 – 1,197,974

Change in foreign currency translation (96,578 ) (96,578 )

Conversion of Series A Preferred to common stock 175 –

Conversion of convertible notes to common shares 192,426 192,570

Sale of common stock in private placement 244,018 244,104

Loss on loan conversions 282,289 282,289

Beneficial conversion feature of convertible notes 34,205 34,205

Stock based compensation related to warrant issuances 96,700 96,700

Balance, March 31, 2021 133,200 $ (13 ) $ 69,186,061 $ (76,133,846 ) $ (442,293 ) $ (6,850,337 )

Net income (loss) – – (1,665,409 ) – (1,665,409 )

Change in foreign currency translation (77,042 ) (77,042 )

Purchase of  Series A Preferred 53,240 55,000

Conversion of Series A Preferred to common stock 2,958 –

Conversion of convertible notes to common shares 762,600 764,353

Sale of common stock in private placement 46,920 46,960

Loss on loan conversions 706,974 706,974

Issuance of common stock for services 188,820 189,000

Commitment shares issued with convertible note 50,059 50,085

Beneficial conversion feature of convertible notes 289,426 289,426

Stock based compensation related to warrant issuances 96,700 96,700

Balance, June 30, 2021 133,200 $ (13 ) $ 71,383,756 $ (77,799,255 ) $ (519,334 ) $ (6,394,290 )

Net income (loss) – – (1,029,605 ) – (1,029,605 )

Change in foreign currency translation 188,848 188,848

Purchase of Series A Preferred 340,267 355,000

Conversion of Series A Preferred to common stock 6,549 –

Conversion of convertible notes to common shares 153,098 154,258

Loss on loan conversions 237,226 237,226

Issuance of common stock for services 22,140 22,200

Commitment shares issued with convertible note 923 925

Beneficial conversion feature of convertible notes 81,066 81,066

Stock based compensation related to warrant issuances 96,700 96,700

Balance, September 30, 2021 133,200 $ (13 ) $ 72,321,722 $ (78,828,860 ) $ (330,486 ) $ (6,287,673 )
~~The accompanying notes are an integral part of these consolidated financial statements.~~
78

CANNAPHARMARX, INC.
NOTES TO ~~UNAUDITED~~ CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
~~For the Three and Nine Month Interim Periods Ended September 30,~~FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 ~~and 2020~~

NOTE 1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

CannaPharmaRx, Inc. (the “Company”) is a Delaware corporation. In November 2018 it formed an Ontario corporation, Hanover CPMD Acquisition Corporation, to facilitate the acquisition described below. As of the date of this Report, the Company intends to engage in acquisitions or joint ventures with a company or companies that will allow it to become a national or internationally branded cannabis cultivation company, or otherwise engage in the cannabis industry. Management is engaged in seeking out and evaluating businesses for acquisition. However, if an opportunity in another industry arises the Company will review that opportunity as well.

History

The Company was originally incorporated in the State of Colorado in August 1998 under the name “Network Acquisitions, Inc.” It changed its name to Cavion Technologies, Inc. in February 1999 and subsequently to Concord Ventures, Inc. in October 2006. On December 21, 2000, the Company filed for protection under Chapter 11 of the United States Bankruptcy Code. In connection with the filing, on February 16, 2001, the Company sold its entire business, and all of its assets, for the benefit of its creditors. After the sale, the Company still had liabilities of $8.4 million and was subsequently dismissed by the Court from the Chapter 11 reorganization, effective March 13, 2001, at which time the last of the Company’s then remaining directors resigned. On March 13, 2001, the Company had no business or source of income, no assets, no employees or directors, outstanding liabilities of approximately $8.4 million, and had terminated its duty to file reports under securities law. In February 2008, after filing of a Form 10 registration statement pursuant to the Securities Exchange Act of 1934, as amended, we were re-listed on the OTC Bulletin Board.

In April 2010, the Company re-domiciled in Delaware under the name CCVG, Inc. (“CCVG”). Effective December 31, 2010, the Company completed an Agreement and Plan of Merger and Reorganization (the “Reorganization") which provided for the merger of two of the Company’s wholly-owned subsidiaries. As a result of this reorganization, the Company’s name became “Golden Dragon Inc.,” which became the surviving publicly quoted parent holding company.

On May 9, 2014, the Company entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with CannaPharmaRx, Inc., a Colorado corporation (“Canna Colorado”), and David Cutler, a former President, Chief Executive Officer, Chief Financial Officer, and director of the Company. Under the Share Purchase Agreement, Canna Colorado purchased 1,421,120 restricted shares of the Company’s common stock from Mr. Cutler and an additional 9,000,000 common shares directly from the Company.

In October 2014, the Company changed its legal name to “CannaPharmaRx, Inc.”

In April 2016, the Company ceased operations. As a result, the Company was then considered a “shell” company as defined under the Securities Exchange Act of 1934, as amended, as defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.

Effective December 31, 2018, the Company and Hanover CPMD Acquisition Corp. (“CPMD Hanover”) a newly formed, wholly-owned subsidiary, entered into a Securities Purchase Agreement with Alternative Medical Solutions, Inc., an Ontario, Canada corporation (“AMS”), its shareholders, wherein the Company acquired all of the issued and outstanding securities of AMS. AMS is a corporation organized under the laws of the Province of Ontario, ~~Canada.~~Canada

89

The facility is a 48,750 square foot marijuana grow facility built on a 6.7-acre parcel of land located in Hanover, Ontario Canada. The exterior construction of the building has been completed however, no interior construction has begun.
On January 6, 2021, the Company executed an Agreement of Purchase and Sale through its wholly-owned subsidiary, Alternative Medical Solutions Inc. for the sale of the lands and premises located at Hanover, Ontario, Canada. The price is $2,000,000 CAD. As a result, and in anticipation of the closing, the Company recorded an impairment of goodwill and fixed assets relating to the property of $~~7,962,694~~ at December 31, 2020. This property is security for a $1,000,000 US Note with Koze Investments, LLC by way of a first-ranking charge. This transaction closed on July 9, 2021 and the note was repaid in full as principal of $~~1,000,000~~ ~~principal plus accrued interest of $124,735~~ ~~and penalties of $475,265. The note was discharged accordingly.~~

As a result of the completion of the acquisition of AMS on December 31, 2019, the Company no longer fits the definition of a “shell company,” as defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act. It filed the required disclosure on Form 8-K/A with the SEC on February 14, 2019, advising that it was no longer a shell company pursuant to the aforesaid Rule.

Effective February 25, 2019, the Company acquired 3,936,500shares and 2,500,000 Warrants to purchase 2,500,000 shares of Common Stock of GN Ventures, ~~Ltd,~~Ltd., Alberta, Canada, f/k/a Great Northern Cannabis, Ltd. (“GN”), in exchange for an aggregate of 7,988,963 shares of its Common Stock, from a former shareholder of GN who is now the Company’s President and CEO. ~~While no assurances can be provided, the Company believes this is the initial step in its efforts to acquire all or a significant portion of the issued and outstanding stock of GN.~~ In May 2020, the Company exchanged 5,507,400 of its shares for3,671,597shares of GN.

GN owns a 60,000 square foot cannabis cultivation and grow facility located on 38 acres in Stevensville, Ontario, Canada. Because the Company is a minority shareholder of GN and GN is a privately held company, the Company cannot confirm that the information it currently has on GN’s operations is complete or fully reliable. GN estimates annual total production capacity from the Stevensville facility of up to ~~12,500~~5,000 kilograms of cannabis. GN believes the Stevensville facility to be complete, and GN’s subsidiary, 9869247 Canada Limited, received a license to cultivate from the Canadian Ministry of Health on July 5, 2019. As a result, in October 2019, GN commenced cultivation activities and began generating revenues during the first calendar quarter of 2020. The Company expects that it will obtain additional information on the business activities of GN as it has renewed discussions to acquire additional interests and is performing its due diligence procedures.

~~Effective June 11, 2019,~~On January 1, 2022, the Company entered into a ~~Securities Purchase Agreement~~20 year finance lease with Sunniva, Inc, a British Columbia, Canada corporation (“Sunniva”) wherein the Company agreed to acquire all of the issued and outstanding securities of Sunniva’s wholly-owned subsidiaries Sunniva Medical Inc. (“SMI”) and 1167025 B.C. LTD (“1167025”) for CAD $16.0 million in cash and a note in the principal amount of CAD $4.0 million. These companies are the current owners of the Sunniva Canada Campus, which includes construction assetsFormosa Mountain Ltd., for a ~~planned 759,000 square-foot greenhouse located on an approximately 114-acre property~~cannabis production facility in ~~Okanagan Falls, British Columbia.~~
~~On June 8, 2020, the Company received~~Cremona, Alberta, Canada. The facility is a ~~notice~~55,000 square foot, 6,000 kg per year plant, built in 2015. The licensing process is currently underway, and production and sales are anticipated in Q3 of ~~termination of this Purchase Agreement, as amended, from Sunniva. As a result, the Company incurred a charge of $1,881,126~~ due to the write-off of its deposit to Sunniva, banking fees, and prepaid expenses associated with the failed acquisition of Sunniva. The Company is in discussions with Sunniva, as well as an investment banker who received deposits from the Company, about recovering all or a portion of its deposits, banking fees, and prepaid expenses.2022.

COVID-19

~~On March 11, 2020,~~The global pandemic related to an outbreak of the ~~World Health Organization~~novel coronavirus disease (“~~WHO”~~COVID-19”) ~~declared the Covid-19 outbreak~~has cast uncertainty on each of these assumptions. There can be no assurance that they continue to be ~~a global pandemic. In addition to~~valid. The situation is dynamic and the ~~devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions~~ultimate duration and ~~volatility in the global financial markets. Most US states and many countries have issued policies intended to stop or slow the further spread~~magnitude of the ~~disease.~~
9
Covid-19 and the U.S. response to the pandemic are significantly affecting the economy. There are no comparable events that provide guidance as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effectimpact of ~~the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the effects~~COVID-19 on the economy and the ~~markets we serve,~~financial effect on our business remain unknown at this time. These impacts could include, amongst others, an impact on our ability to obtain debt or equity financing, impairment of investments, net realizable value of inventory, impairments in the value of our long-lived assets, or potential future decreases in revenue or profitability of our ongoing operations.

Basis of Presentation

The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is 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 (“GAAP”) in the United States. Certain amounts in prior periods have been reclassified to conform to the current presentation.

All figures are in U.S. dollars 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 purchase price allocation of acquired businesses, impairment of long-lived assets and goodwill, valuation of financial instruments, 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 of 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.

10
Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of ~~three months~~the year or less to be cash equivalents. On ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020,~~2021, the ~~Company~~Company's cash and cash equivalents totaled $~~112,822~~79,676 and $~~334,969,~~27,767 respectively.

Comprehensive Gain or Loss

ASC 220 “Comprehensive Income,” establishes standards for the reporting and display of comprehensive income and its components in the financial statements. As of ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020,~~2021, 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.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position.

10
Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risk. 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 liabilities is required to be revalued at each reporting date, with corresponding changes in fair value recorded in the current period operating results. These derivative liabilities arose in 2022 and 2021 due to the issuance of variably priced convertible notes. For the periods ended ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020,~~2021, the Company had derivative liabilities of $~~982,429~~1,092,526 and $~~3,676,649~~507,494 , respectively. ~~These derivative liabilities decreased in 2021 due to the price movement of the Company’s common stock, and a lower amount of convertible notes with derivative features, outstanding.~~

Beneficial Conversion Features

In accordance with FASB ASC 470-20, “Debt with Conversion and Other Options” the Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt or preferred stock instruments that have conversion features at fixed rates that are in-the-money when issued. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The intrinsic value is generally calculated at the commitment date as the difference between the conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible. If certain other securities are issued with the convertible security, the proceeds are allocated among the different components. The portion of the proceeds allocated to the convertible security is divided by the contractual number of the conversion shares to determine the effective conversion price, which is used to measure the BCF. The effective conversion price is used to compute the intrinsic value. The value of the BCF is limited to the basis that is initially allocated to the convertible security.

Foreign Currency Translation

The functional currency and the reporting currency of ~~CannaPharmaRx~~CannaPharmaRx’s US operations is United States dollars, (“USD”). The functional currency of the Company’s Canadian operations in Canadian dollars (“CAD”), Management has 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.
11

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, United States dollars, 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' equity in the statement of stockholders' equity. These translation adjustments are reflected in accumulated other comprehensive income, a separate component of the Company's stockholders' equity.

Harmonized Sales Tax

The Harmonized Sales Tax (“HST”) is a combination of the Canadian Goods and Services Tax (“GST”) and Provincial Sales Tax (“PST”) that is applied to taxable goods and services. By fusing sales tax at the federal level with sales tax at the provincial level, the participating provinces harmonized both taxes into a single federal-provincial sales tax. HST is a consumption tax paid by the consumer at the point of sale (POS). The vendor or seller collects the tax proceeds from consumers by adding the HST rate to the cost of goods and services. They then remit the total collected tax to the government periodically.

11
The HST is in effect in five of the ten Canadian provinces: New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island. The HST is collected by the Canada Revenue Agency (CRA), which remits the appropriate amounts to the participating provinces. The HST may differ across these five provinces, as each province will set its own PST rates within the HST. In provinces and territories which have not enacted the HST, the CRA collects only the 5% goods and services tax. The current rate in Ontario is 13%.

~~Capital Assets- Construction In Progress~~
~~As of September 30, 2021, and December 31, 2020, the Company had $~~0 ~~and $1,566,316~~ in construction in progress (“CIP”), respectively, comprised entirely of the building acquired relating to the acquisition of AMS, which was sold during the quarter ended September 30, 2021. The Company did not record any depreciation expense on CIP for the periods ended September 30, 2021, and September 30, 2020.
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 cost 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 ~~the~~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 stock warrants was determined at the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option 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 at ~~September 30, 2021.~~March 31, 2022.
Goodwill and Intangible Assets
Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisitions is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist of customer relationships and non-compete agreements. Their useful lives range from 10 to 15 years. The Company’s indefinite-lived intangible assets consist of trade names.
12
Goodwill and indefinite-lived assets are not amortized but are subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures, and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.
Determining the fair value of a reporting unit is judgmental and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans, and future market conditions, among others. There can be no assurance that the Company’s estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform an impairment test before scheduled annual impairment tests.
The Company had 0 goodwill recorded at March 31, 2022.

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.

The Company evaluated the recoverability of its long-lived assets on March 31, 2022, and on December 31, ~~2020~~2021, respectively on its subsidiaries with material amounts on their respective balance sheets and determined that an impairment of $146,084 in land had occurred.

The Company had a net balance at ~~September 30, 2021~~March 31, 2022 of $~~6,755~~21,756 relating to plant and office equipment.

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.

13
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.

12
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.

The Company may also be required, from time to time, to measure certain other financial assets at fair value on a nonrecurring basis. These adjustments to fair value usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets. ~~During the period ended December 31, 2020, the Company wrote down its fixed assets at the Hanover facility of approximately $186,000~~ ~~which was included in the impairment charge of goodwill and intangibles noted above.~~

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.

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.

Income (Loss) Per Share

Income (loss) per share is presented in accordance with Accounting Standards Update (“ASU”), Earning per Share~~(Topic~~ (Topic 260) which requires the presentation of both basic and diluted earnings per share (“EPS”) on the income statements. Basic EPS would exclude any dilutive effects of options, warrants, and convertible securities but does include the restricted shares of common stock issued. 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. 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 calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.

14
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. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard On November 15, 2019, the FASB has issued ASU 2019-10, which amends the effective dates for three major accounting standards. The ASU defers the effective dates for the credit losses, derivatives, and lease standards for certain companies. Since the Company ~~adopted ASC 842 on January 1, 2019. However,~~is classified as a small reporting company and has a calendar-year end companies the Company eligible for deferring the adoption of ASC 842 to December 15, 2021.
In the ~~standard had no impact on the Company’s financial statements since all Company leases are month to month or short-term rental. The Company~~first quarter of fiscal 2022, we adopted ASU ~~2019-12, Income Taxes, Topic 740~~2016-02 using the “Comparatives Under 840 Option” approach to transition. Under this method, financial information related to periods prior to adoption will be as originally reported under the previous standard – ASC 840, Leases. The effects of adopting the new standard (ASC 842, Leases) in fiscal 2022 were recognized as a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal first quarter. We elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification as operating or capital leases. We also elected to combine lease and non-lease components and to exclude short-term leases from our consolidated balance sheets. We did not elect the hindsight practical expedient in determining the lease term for existing leases as of February 3, 2019.
The most significant impact of adoption was the recognition of finance lease assets and finance lease liabilities of $5,727,811 and $5,850,761, respectively. We expect the impact of adoption to be immaterial to our consolidated statements of earnings and consolidated statements of cash flows on ~~January 1, 2021. There is no material impact on the Company’s~~an ongoing basis. As part of our adoption, we also modified our control procedures and processes, none of which materially affected our internal control over financial ~~statements.~~reporting.

1315

NOTE 2. GOING CONCERN AND LIQUIDITY

As of ~~September 30, 2021~~March 31, 2022, and December 31, ~~2020,~~2021, the Company had $~~112,822~~79,676 and $~~334,969~~27,767 cash on hand, respectively, and no revenue-producing business or other sources of income. Additionally, as of ~~September 30, 2021,~~March 31, 2022, the Company had negative working capital totaling $~~13,045,207~~14,476,153 and ~~a total stockholders’~~an accumulated deficit of $~~6,287,673~~88,236,301.

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 its current financial projections, the Company believes it 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 current intention to raise debt and/or 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.~~ ~~DEPOSITS~~
~~As of September 30, 2021, and December 31, 2020, the Company had~~ 0 deposits. On June 8, 2020, the Company received a notice of termination of from Sunniva. The $1,308,830 deposit related to this potential Sunniva acquisition, which was not consummated, was non-refundable and was subsequently written off.
On January 6, 2021, the Company executed an Agreement of Purchase and Sale through its wholly owned subsidiary, Alternative Medical Solutions Inc. for the sale of lands and premises located at Hanover, Ontario, Canada. A description of the property is detailed in Note 1 of these financial statements. The purchase price is $2,000,000 CAD. As a result, and in anticipation of the closing, the Company has recorded an impairment of goodwill and fixed assets relating to the property of $~~7,962,694~~ at December 31, 2020. This property is the security for a $1,000,000 US Note with Koze Investments, LLC by way of a first-ranking charge. At closing, which occurred on July 9, 2021, the Note was retired in full with repayment of $~~1,000,000~~ ~~principal plus accrued interest of $124,735~~ ~~plus $475,265~~ ~~in penalties and as such fully discharged~~

NOTE 4. ~~PREPAID EXPENSES~~
~~The following table sets forth the components of the Company’s prepaid expenses on September 30, 2021, and December 31, 2020:~~
Schedule of prepaid expenses

September 30,
2021

December 31,
2020

Prepaid expenses(a) $ 167,199 $ 132,031

Total $ 167,199 $ 132,031
a) This prepayment remains in trust, from proceeds of the Astor Street, LLC promissory notes, currently being held with the intention of forming part of the initial payment of the pending Cremona acquisition. On March 29, 2021, the Company received the acceptance of our Offer to Purchase certain assets and facilities located in Cremona, Alberta, Canada. The purchase price is $12,550,000 CAD. The Company has paid a $200,000 CAD deposit and closing is expected on April 29, 2021. The 55,200 square foot facility is capable of producing 5,200 kilograms of cannabis biomass per year. The facility previously held Health Canada licenses for cultivation and sales of medical dried flower, as well as extract and edible sales. After closing of the transaction, the Company intends to apply for new Health Canada licenses. Funding for this acquisition is in the due diligence phase.
~~During the three months ended September 30, 2021, the Company expensed $209,500~~ ~~in prepaid financing fees to two lenders that were attempting to obtain financing for the acquisition of Cremona but were unsuccessful in doing so.~~
14
~~NOTE 5.~~3. INVESTMENT

As of ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020,~~2021, the balance of investments was ~~6,750,779~~$78,760 and ~~$6,711,289,~~$78,760 respectively.

On February 25, 2019, the Company acquired 3,936,500 shares and 2,500,000 Warrants to purchase 2,500,000 shares of common stock at a price of CAD$1.00 of GN Ventures, Ltd., Alberta, Canada, f/k/a Great Northern Cannabis, Ltd. (“GN”), in exchange for an aggregate of 7,988,963 shares of the Company’s Common Stock from a former shareholder of GN. On the date of purchase, the Company’s Common Stock was trading at $1.41 which values the purchase at $11,264,438. ~~The~~For balance sheet purposes the Company has treated this purchase using the cost method because the purchase consists of an investment in a private company in which the Company does not have the ability to exercise significant influence over GN’s operating and financial activities. The Company ~~recorded~~conducted an impairment test on December 31, 2019, and determined that an impairment existed resulting in a write-down of the investment by $7,070,841 to ~~a current~~its then-current value of $4,193,597.

On May, 2020, the Company exchanged 5,507,400 of its common shares for 3,671,597common shares of GN. These shares were valued at $0.675 each which represents the value of the GN shares as determined by the Company’s ~~year-end~~year end impairment analysis and were recorded as an investment of $2,478,422. As of December 31, 2020, the Company’s investment in GN was $6,672,019. On December 31, 2021, the Company wrote down its entire investment in GN. This write-down occurred due to the lack of available information forthcoming from GN regarding its current operations.

On October 6, 2020, the Company invested $50,000 CAD ($39,270 USD) in exchange for 83,333 Class A Common Shares at $0.60 CAD per share. The Company entered into a cooperation agreement with Klonetics Plant Science ~~Inc,~~Inc., a Company that engages in the business of genetics research and development, tissue culture propagation, plantlet production, ~~and~~ ready to flower production within the cannabis industry throughout the world. The parties consider it advantageous to pool their respective experience, expertise, ~~knowhow~~know-how and capabilities in the area of land acquisition, financing, development, operations, and respective areas of industry focus. The parties may wish to commence their intended long-term cooperation by pursuing projects in selected areas of focus initially before extending it to a larger scale merger between the parties, which may be discussed at a later date with terms to be determined and agreed to by the parties. ~~CannaPharmaRx will invest up to a maximum percentage of Thirty Percent (30%) of the issued and outstanding shares of Klonetics.~~

On January 15, 2021, the Company invested an additional $50,000CAD ($39,490 USD) in exchange for an additional 83,333Class A Common Shares at $0.60 CAD per share.

As of March 31, 2022, the Company’s investment in Klonetics was $78,760.
16
NOTE 6.4. PROPERTY, PLANT, AND EQUIPMENT

The following table sets forth the components of the Company’s property and equipment on ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020:~~  2021:
Property and Equipment
September 30, 2021 December 31, 2020
Gross Carrying Amount Accumulated Depreciation Net Book Value Gross Carrying Amount Accumulated Depreciation Net Book Value
Computers, software, and office equipment $ 11,099 $ (4,344 ) $ 6,755 $ 4,870 $ (2,435 ) $ 2,435
Land 0 0 0 0 0 0
Construction in progress 0 0 0 1,566,316 0 1,566,316
Total fixed assets $ 11,099 $ (4,344 ) $ 6,755 $ 1,571,186 $ (2,435 ) $ 1,568,751
Schedule of property and equipment
March 31, 2022 December 31, 2021
Gross Carrying Amount Accumulated Depreciation Net Book Value Gross Carrying Amount Accumulated Depreciation Net Book Value
Computers, software, and office equipment $ 11,316 $ (6,138 ) $ 5,178 $ 11,154 $ (5,122 ) $ 6,032
Plant equipment 16,578 0 16,578 – 0 –

Total fixed assets $ 27,894 $ (6,138 ) $ 21,756 $ 11,154 $ (5,122 ) $ 6,032
For the ~~periods~~years ended ~~September 30,~~March 31, 2022, and 2021, ~~and 2020,~~ the Company recorded depreciation expense of $~~1,946~~942 and $~~1,146~~408 respectively.

~~As of September 30, 2021, and December 31, 2020, the Company had $-~~0~~- and $1,566,316,~~ respectively, in construction in progress. The facility acquired as part of the AMS acquisition is a 48,750 square foot marijuana grow facility built on a 6.7-acre parcel of land located in Hanover, Ontario Canada. To date, the exterior construction of the building has been completed; however, no interior construction has begun.
15
For construction in-progress assets, no depreciation is recorded until the asset is placed in service. When construction is completed, the asset should be reclassified as building, building improvements, or land improvement and should be capitalized and depreciated. Construction in progress includes all costs related to the construction of a medical cannabis facility. Cost also includes soft costs such as loan fees and interest and consulting fees and related expenses. The facility is not available for use and therefore not being amortized. The Company entered into a Purchase and Sale Agreement with a prospective buyer on January 6, 2021. This transaction closed on July 9, 2021 for proceeds of $2,000,000 CAD. Proceeds were used to retire and discharge the note for a repayment of principal of $1,000,000, interest of $124,735 and penalties of $475,265.

NOTE 7.5. ACCOUNT PAYABLE AND ACCRUED LIABILITIES

Accounts payables are recognized initially 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.

The following table sets forth the components of the Company’s accrued liabilities on ~~September 30, 2021~~March 31, 2022, and December 31, ~~2020.~~ 2021.
Schedule of accounts payable and accrued liabilities

March 31,
2022

December 31,
2021

September 30,
2021

December 31,
2020

Accounts payable and accrued expenses $ 3,123,200 $ 3,584,999 $ 3,693,470 $ 3,129,257
Accrued interest (a) 43,900 96,477 65,131 194,407
Accrued legal settlement (b) 190,000 190,000 190,000 190,000
Total accounts payable and accrued liabilities $ 3,357,100 $ 3,871,476 $ 3,948,601 $ 3,513,664
_____________________
(a) Represents interest accrued on the outstanding convertible notes and other notes - see Note 912, Notes Payables)

(b) The Company had 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 Report.

17
NOTE 8.6. RELATED PARTY TRANSACTIONS

The following table sets forth the components of the Company’s related party liabilities on ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~ 2021.
Schedule of related party transactions

September 30,
2021

December 31,
2020

March 31,
2022

December 31,
2021

Loan payable, related parties(a) $ 19,757 $ 274,758 $ 19,757 $ 19,757

Total loan payable, related parties $ 19,757 $ 274,758 $ 19,757 $ 19,757

(a) Interest-free loan of $19,757 due to former directors.

Effective March 22, 2019, the Company established its principal place of business and leases offices at 3600, 888 – 3rd St SW, Calgary, Alberta, Canada, T2P 5C5. The lease may be terminated by either party on 30 days’ notice. Rent is $2,000 CAD per month effective October 1, 2020 (retroactively reduced from $4,000 per month). This space was provided by a company to which, Mr. Orman, one of the Company’s directors, serves as a Director.

16

NOTE 9.7. CONVERTIBLE NOTES AND DERIVATIVE LIABILITIES

The following tables set forth the components of the Company’s, convertible debentures as of ~~September 30, 2021~~March 31, 2022, and December 31, ~~2020:~~ 2021:
Components of convertible debentures
March 31,
2022 December 31,
2021

Principal value of convertible notes $ 1,243,750 $ 943,017
Note discount (293,985 ) (167,569 )
Total convertible notes, net current $ 949,765 $ 775,448
Components of convertible debentures
September 30,
2021 December 31,
2020
Principal value of convertible notes $ 1,037,083 $ 1,662,000
Note discount (192,007 ) (664,442 )
Total convertible notes, net current $ 845,076 $ 997,558
During the ~~year~~3 months ended March 31, 2022, and March 31, 2021, the Company received proceeds from convertible notes of $476,250 and $53,500, respectively.
December 31, ~~2020, the Company issued a total of 24 notes to accredited investors of which $582,500~~2021 Activity ~~was in the form of unsecured 5% convertible notes, and $595,500~~ ~~was in unsecured 8% convertible notes, and $1,000,500~~ at 10%. Under the terms of each convertible note, the investors received the right to convert their WHAT to common stock commencing the year after the date of issuance ranging from 55%-75%, respectively, of the lowest closing price for the Company’s common stock measured 20 business days prior to conversion. One of the noteholders also received 153,940 “returnable” shares in connection with issuance of the convertible notes. These shares are returnable to the Company if the underlying convertible note ($~~160,000~~) is redeemed before the passage of 180 days. During the three months ended September 30, 2020 the Company repaid the $160,000 Note, received the 153,940 shares back from the noteholder, and converted a $~~100,000~~ ~~note plus accrued interest into~~ ~~135,000~~ ~~Common Shares of the Company.~~

During the year ended December 31, ~~2020~~2021, the Company received proceeds from convertible notes of $530,833.
During the year ended December 31, 2021 the Company recorded $~~257,345~~76,196 in interest expense on ~~these Notes~~its convertible notes and amortized $~~1,690,933~~883,670 of note discount which was charged to interest expense. As of December 31, ~~2020, there was $35,048 in accrued interest on these notes, and $664,442~~ in unamortized note discount related to these notes. As of the date of this Report, there was one note for $100,000 that was past due its maturity date. The Company has not received any notice of default on these notes and continues to accrue interest on these notes past the maturity date.
~~During the year ended December 31, 2020 the Company issued~~ ~~4,067,332~~ ~~common shares upon the conversion of $1,984,000~~ ~~in convertible notes and recorded a gain of $566,408~~.
~~September 30, 2021 Activity~~
~~During the nine-month period ended September 30, 2021, the Company received proceeds from convertible notes of $427,083~~.
~~During the nine months ended September 30, 2021 the Company recorded $64,540~~ ~~in interest expense on its convertible notes and amortized $767,414~~ ~~of note discount which was charged to interest expense. As of September 30,~~ 2021, there was $~~43,900~~48,488 in accrued interest on these notes, and $~~192,007~~167,569 in unamortized note discount related to these notes. As of the date of this Report, there was one note for $100,000 that was past due its maturity date. The Company has not received any notice of default on these notes and continues to accrue interest on these notes past the maturity date.

During the ~~nine months~~year ended ~~September 30,~~December 31, 2021, the Company issued ~~30,581,678~~51,681,766 common shares upon the conversion of $~~1,105,500~~1,303,316 in convertible notes and recorded a loss on conversion of $~~1,226,489~~1,452,629.

1718

March 31, 2022 Activity
During the three months ended March 31, 2022, the Company received proceeds from convertible notes of $476,250.
During the three months ended March 31, 2022, the Company recorded $22,787 in interest expense on its convertible notes and amortized $109,970.73 of note discount which was charged to interest expense. As of ~~September 30,~~March 31, 2022, there was $65,131 in accrued interest on these notes, and $293,985 in unamortized note discount relating to these notes. As of the date of this Report, there were eight notes amounting to $698,017 that was past due its maturity date. The Company has not received any notice of default on these notes and continues to accrue interest on these notes past the maturity date.
During the three months ended March 31, 2022, the Company issued 28,186,741 common shares upon the conversion of $248,767 in convertible notes and recorded a loss on conversion of $246,994.
Derivative liability
As of March 31, 2022 and December 31, 2021, derivative liabilities were valued using a probability-weighted average Black-Scholes-Merton pricing model with the following assumptions:
Schedule of assumptions used

September 30,
2021
March 31, 2022
December 31, 2021

Exercise Price $ 0.01342 – 0.0345
$  0.00671 – 0.0110
$  0.1342 – 0.0345
Stock Price $ .032-0.05 $  0.017 $  0.013 – 0.05
Risk-free interest rate .08-.09% 0.04% 0.04% – 0.09%
Expected volatility 128.50%-227.10% 194.2% 128.50 – 227.10%
Expected life (in years) 0.50 - 1.00 1.00 1.00
Expected dividend yield 0% 0% 0%
Fair Value: $ 982,429 $  1,092,526 $  507,494

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 for its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected 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.

During the ~~nine months~~period ended ~~September 30, 2021,~~March 31, 2022, the Company recognized a ~~gain~~loss of $~~2,694,220~~ 585,033as ~~“Change in the fair value of the derivative liability”~~“Other Expense” on its Consolidated Statements of ~~Operations.~~Operations, which represented the net change in the value of the derivative liability.

NOTE ~~10.~~8. NOTES PAYABLE

The following tables set forth the components of the Company’s, ~~notes payable~~convertible debentures as of ~~September 30, 2021~~March 31, 2022, and December 31, ~~2020:~~ 2021:
Schedule of notes payable
September 30,
2021 December 31,
2020 March 31,
2022 December 31,
2021
Principal value of Promissory Note $ 8,184,654 $ 8,977,721 $ 8,339,578 $ 8,223,888
Loan discounts (62,203 ) (248,972 ) 0 0
Promissory Note, long term net of discount $ 8,122,451 $ 8,728,749
Promissory Note, $ 8,339,578 $ 8,223,888
19

Pursuant to the terms of the Securities Purchase Agreement with AMS, the Company issued a non-interest-bearing CAD $~~10,000,000~~$10,000,000 ($7,330,000 USD) promissory note secured only by the shares acquired in AMS. Principal payments under the Promissory Note are due quarterly commencing upon AMS receiving a license to cultivate and are computed based upon 50% of AMS' cash flow, defined as EBITDA less all capital expenditures, taxes incurred, non-recurring items, and other non-cash items for the relevant fiscal quarter, including the servicing of all senior debt payment obligations of the Company. The Promissory Note matures the earlier of two years from the date AMS receives a license to cultivate, or December 31, 2021. Since AMS had not received its cultivation license as of December 31, 2020, the Note Payable ~~will have~~has a maturity date of December 31, 2021. and is past due.

The Company performed a valuation study as part of the AMS acquisition. The valuation study determined that the Promissory Note should be valued at $6,632,917 since it was non-interest bearing. As a result, the Company recorded a note discount of $697,083. The note discount will be amortized to interest expense over the three-year term of the Promissory Note. During the ~~nine months~~year ended ~~September 30,~~December 31, 2021, the Company has recorded $186,610 in amortization expense related to this note discount.

18
On July 3, 2019, the Company entered into a 12% $1,000,000Loan Agreement with Koze Investments LLC (“Koze”), payable in full on June 28, 2020. Under the terms of the 12% Note, Koze took a first security interest against the Company’s Hanover, Ontario cannabis facility in progress and required the Company to pay off its existing mortgage of approximately ~~$650,000~~$650,000 CAD. Additionally, the Company agreed to pay a 3% origination fee, prepay the year of interest ($60,000) and to issue to Koze five-year warrants to purchase 1,001,000 shares of the Company’s Common Stock at an exercise price of $1.00 per share. After paying the origination fees, the prepayment and paying off the original mortgage, the Company used a portion of the remaining proceeds as payment against the SMI purchase price of CAD $1,000,000. During the period ended December 31, 2020, the Company recorded an additional amount of $890,570 relating to penalties for late payment. On July 9, 2021, the Company closed the sale of the Hanover property and used the proceeds from the sale to repay this note in full. The note was repaid for $~~1,600,000~~$1,600,000 which included the original principal of ~~$1,000,000,~~$1,000,000, accrued interest of $124,735 and penalties of $475,265. This mortgage has now been discharged.

On April 21, 2020, the Company received a loan from the Government of Canada under the Canada Emergency Business Account program (CEBA). This loan was in the amount of $40,000 CAD (USD $29,352). These funds are interest-free until December 31, 2022, at which time the remaining balance will convert to a 3-year term loan at an interest rate of 5% per annum. An additional amount of $20,000 CAD (USD $15,708) was received on December 29, 2020. If the Company repays the loan prior to December 31, 2022, there will be loan forgiveness of 33% or $20,000 CAD.

During the ~~nine months~~year ended ~~September 30,~~December 31, 2021, the Company entered into Note Agreements with secured investors amounting to $238,560. These notes are non-interest bearing and mature in 12 months. Repayment includes principal amount plus $50,000 CAD settlement cash fee plus 58,140 Common Shares at $0.43 per share plus 59,524 Common Shares at $0.42 per share. These notes are secured by a General Security Agreement over all present and after acquired property, assets, and undertakings. These notes are past due.
NOTE 9. LEASES
Adopted Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard On November 15, 2019, the FASB has issued ASU 2019-10, which amends the effective dates for three major accounting standards. The ASU defers the effective dates for the credit losses, derivatives, and lease standards for certain companies. Since the Company is classified as a small reporting company and has a calendar-year end companies the Company eligible for deferring the adoption of ASC 842 to December 15, 2021.
20
In the first quarter of fiscal 2022, we adopted ASU 2016-02 using the “Comparatives Under 840 Option” approach to transition. Under this method, financial information related to periods prior to adoption will be as originally reported under the previous standard – ASC 840, Leases. The effects of adopting the new standard (ASC 842, Leases) in fiscal 2022 were recognized as a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal first quarter. We elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification as operating or capital leases. We also elected to combine lease and non-lease components and to exclude short-term leases from our consolidated balance sheets. We did not elect the hindsight practical expedient in determining the lease term for existing leases as of February 3, 2019.
The most significant impact of adoption was the recognition of finance lease assets and finance lease liabilities of $5,727,811 and $5,850,761, respectively. We expect the impact of adoption to be immaterial to our consolidated statements of earnings and consolidated statements of cash flows on an ongoing basis. As part of our adoption, we also modified our control procedures and processes, none of which materially affected our internal control over financial reporting.
Leases
The majority of our lease obligations are real estate finance leases from which we conduct our business. For any lease with an initial term in excess of 12 months, the related lease assets and liabilities are recognized on the Condensed Consolidated Balance Sheets as either operating or finance leases at the inception of an agreement where it is determined that a lease exists. Leases with an initial term of 12 months or less are not recorded on our Condensed Consolidated Balance Sheets; we recognize lease expense for these leases on a straight-line basis over the lease term.
Finance lease assets represent the right to use an underlying asset for the lease term, and finance lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are recognized based on the present value of future payments over the lease term at commencement date. We use a collateralized incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. Our lease terms generally do not include options to extend or terminate the lease unless it is reasonably certain that the option will be exercised. Fixed payments may contain predetermined fixed rent escalations. We recognize the related rent expense on a straight-line basis from the commencement date to the end of the lease term.
The weighted average remaining lease term is 19.75 years and the weighted average discount rate is 16.9%.
Future lease payments under our non-cancellable leases as of March 31, 2022 were as follows ($CAD):
Schedule of Future Minimum Rental Payments for Operating Leases
2022 $742,500
2023 $1,039,500
2024 $1,091,748
2025 $1,146,335
2026 $1,203,652

NOTE ~~11.~~10. INCOME TAXES

As of ~~September 30, 2021,~~March 31, 2022, the Company has approximately $~~78,829,000~~86,000,000 of federal net operating loss carryforwards (“NOLS”) in the United States. The federal net operating loss carryforwards begin to expire in 2030. 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 ~~as to~~ whether the net operating loss carryforward is subject to any Internal Revenue Code 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 of ~~September 30, 2021,~~March 31, 2022, the Company has no0 unrecognized income tax benefits.

21
The tax years from ~~2017~~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 ~~12.~~11. COMMITMENTS AND CONTINGENCIES

Effective March 22, 2019, the Company entered into a lease agreement to lease three offices at 3600 888 3 St SW, Calgary, Alberta, Canada, T2P 5C5. The lease may be terminated by either party on 30 days’ notice. Rent is $2,000 CAD per ~~month (reduced from $4,000 per month effective October 1, 2020 retroactively adjusted).~~month. This space was provided by a company to which, Mr. Orman, one of the Company’s directors, serves as a ~~Director.~~director.

~~On March 29, 2021,~~Effective January 1, 2022, the Company ~~received the acceptance of our Offer~~entered into a lease agreement with Formosa Mountain Ltd to ~~Purchase certain assets and facilities located~~lease a cannabis production facility in Cremona, Alberta, Canada. The ~~purchase price~~facility is ~~$12,550,000 CAD. The Company has paid~~ a ~~$200,000 CAD deposit. The 55,200~~55,000 square foot, ~~facility~~6,000 kg per year plant, built in 2015. Rent is ~~capable of producing 5,200 kilograms of cannabis biomass~~$82,500 CAD per month, and will increase by 5% each year. The facility previously held Health Canada licenses for cultivation and sales of medical dried flower, as well as extract and edible sales. After closing of the transaction, the Company intends to apply for new Health Canada licenses. Funding for this acquisition is in the due diligence phase.
19
This lease has a 20 year term.

NOTE ~~13.~~12. STOCKHOLDERS’ EQUITY
Preferred Stock
The Company is authorized to issue up to 10,000,000 shares of one or more series of Preferred Stock, par value of $0.0001 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 for $1.00 per share to certain investors who then became members of management and the board of directors. Each share of Series A Convertible Preferred Stock is convertible into 1,250 shares of Common Stock and vote on an as-converted basis. The rights and designations of these Preferred Shares include the following:

·• entitles the holder thereof to 1,250 votes on all matters submitted to a vote of the shareholders:

·• The holders of outstanding Series A Convertible Preferred Stock shall 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 Convertible Preferred Stock shall receive a dividend on the number of shares of Common Stock into which each share of Series A Convertible Preferred Stock is convertible;

·• Each Series A Preferred Share is convertible into 1,250 shares of Common ~~Stock~~;Stock;

·• not redeemable.

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

~~The Company is authorized to issue up to 100,000~~9,011 Preferred A shares ~~of Series A Preferred Stock, par value of $1.00.~~were converted into common shares during the three months ended March 31, 2022 at 1250:1.

There were 58,180 shares and ~~65,429~~67,191 shares of Series A Preferred Stock issued and outstanding as of ~~September 30, 2021~~March 31, 2022, and~~60,000~~ ~~shares outstanding at~~ December 31, ~~2020,~~2021, respectively.

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.
22

Series B Preferred Stock / Common Stock

In February 2019, the Company commenced an offering of up to $3 million in principal amount of Units at a price of $1.00 per Unit, each Unit consisting of one share of Series “B” Convertible Preferred Stock, each Convertible Preferred Share convertible into one share of the Company’s Common Stock at the election of the holder and one Common Stock Purchase Warrant exercisable to purchase one share of Common Stock 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. This Offering was closed at the end of August 2019. As of December 31, 2020, the Company had accepted $475,000 in subscriptions in this offering.

~~The Company is authorized to issue 3,000,000 shares of Series B Preferred Stock, par value of $1.00.~~
There were 475,000 shares of Series B Convertible Preferred Stock issued and outstanding as of ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020,~~2021, respectively.

Common stock
20

The Company is authorized to issue 300,000,000 shares of Common Stock, par value $0.0001 per share. As of ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020,~~ 2021, there were~~95,348,472~~168,460,301 and ~~46,986,794~~125,509,810 shares of Common Stock ~~were~~ issued and outstanding, respectively.
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.

Shares Reserved for Issuance

As of ~~September 30, 2021,~~March 31, 2022, the Company had ~~122,616,480~~159,459,346 Common Shares reserved for issuance. These shares are comprised of ~~81,786,250~~72,725,000 Common Shares issuable upon the conversion of the Series A Preferred Stock; 475,000Common Shares issuable upon the conversion of Series B Preferred Stock; ~~38,032,702~~84,761,818 shares issuable upon a conversion of the convertible notes, and ~~2,322,528~~1,497,528 Common Shares issuable upon the exercise of warrants. None of these shares were used in the calculation of earnings per share because their inclusion would be anti-dilutive since the Company is operating at a loss. There are no assurances that the conversion rights will be utilized or that the options or the warrants will be exercised.

Stock Options

During the period ended ~~September 30, 2021~~March 31, 2022, and December 31, ~~2020,~~2021, the Company did not record any stock-based compensation expense related to stock options, as there were none outstanding.

Stock Purchase Warrants

The following table reflects all outstanding and exercisable warrants on ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~ 2021:
Warrant activity
Number of Warrants Outstanding (a) Weighted Average Exercise Price Average Remaining Contractual Life (Years)
Warrants outstanding, January 1, 2018 0 $ 0 –
Warrants issued 350,000 0.57 1.50
Warrants exercised 0 – –
Warrant forfeited 0 – –
Warrants outstanding, December 31, 2018 350,000 $ 0.57 .12
Warrants issued 1,519,750 $ 1.01 .59
Warrants outstanding December 31, 2019 1,869,750 $ 0.92 .80
Warrants exercised (25,000 ) – –
Warrants outstanding December 31, 2020 1,844,750 $ 0.92 .50
Warrants issued (a) 477,778 $ 0.30 5.00
Warrants outstanding September 30, 2021 2,322,528 0
Schedule of warrant activity
Number of Warrants Outstanding Weighted Average Exercise Price Average Remaining Contractual Life (Years)
Warrants outstanding December 31, 2019 1,869,750 $ 0.92 .55
Warrants exercised (25,000 )
Warrants outstanding December 31, 2020 1,844,750 $ 0.92 .25
Warrants issued (a) 477,778 $ 0.30 4.17
Warrants forfeited (825,000 )
Warrants outstanding December 31, 2021 1,497,778 $ 0.79 2.75
Warrants outstanding March 31, 2022 1,497,778

Stock purchase warrants are exercisable for two-five years from the date of issuance.

(a) The Company issued 477,448 common share purchase warrants during the second quarter ended June 30, 2021 to an accredited investor as part of a convertible debenture. These warrants are exercisable at $0.30 per share and expire at the end of five years.

2123

~~The value of the stock purchase warrants for the periods ended September 30, 2021, and December 31, 2020, was determined using the following Black-Scholes methodology:~~
~~Assumptions used~~
~~Expected dividend yield (1)~~ ~~0.00~~%
~~Risk-free interest rate range (2)~~ ~~0.07~~%
~~Volatility range (3)~~ ~~135~~%
~~Expected life (in years)~~ ~~5.00~~
~~_____________~~
~~(1)~~ ~~The Company has no history or expectation of paying cash dividends on its Common Stock.~~
~~(2)~~ ~~The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant.~~
~~(3)~~ ~~The volatility of the Company’s Common Stock is based on trading activity for the previous three-year period ended at each stock purchase warrant contract date.~~
~~During the nine-month period ended September 30, 2021, and September 30, 2020, the Company recorded $290,099 and $617,758, respectively, in stock-based compensation.~~
NOTE ~~14.~~13. SUBSEQUENT EVENTS

On ~~October 18, 2021, a debenture dated~~ April ~~14, 2021 was converted into 4,458,333, in the amount of $53,500 plus interest of $2,675 at $0.0126.~~
~~On October 18, 2021, a holder of Preferred A shares converted 3,795 Preferred A shares into 4,458,333 Common shares.~~
~~On November 8, 2021, the Company issued 4,801 Preferred A shares to an accredited investor at $15.62 per share for net proceeds of $75,000.~~
~~On November 9, 2021,~~1, 2022, the Company entered into a convertible debenture with an accredited investor in the amount of ~~$55,000.~~$48,750. This debenture bears interest of 10% and is convertible into common shares at 61% of the lowest closing price during the previous 20 ~~trading~~ days to the date of the conversion. Prepayment of this note is authorized at 115% - 135% up to 180 days. In the event of default interest increases to 22%. This debenture matures April 1, 2023.

On ~~November 10,~~April 18, 2022, the Company issued 4,615,385 common shares on partial conversion of a debenture dated September 29, 2021 at $0.0065 per share for a ~~holder~~total of ~~Preferred A~~$30,000 principal.
On April 28, 2022, the Company entered into a $5,000,000 equity line of credit with Tysadco Partners, LLC, with a two-year term. The Company may draw down between $50,000 and $1,000,000. Settlement is common shares ~~converted 454 Preferred A~~up to 9.99% after which preferred shares ~~into 567,500 Common shares.~~would be purchased. Purchase price is 75% of the average of the two lowest daily traded VWAP (volume weighted average price) prices during the valuation period. The Company has undertaken to register the securities on a form S-1 within 60 days from execution date. The Company received $250,000 on May 4, 2022 in exchange for 25,000,000 common shares at $0.01.
On May 2, 2022, the Company issued 4,264,113 common shares on remaining conversion of a debenture dated September 29, 2021 at $0.0062 per share for principal of $23,750 plus interest of $2,687.50.

2224

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

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes a number of forward-looking statements 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, ~~2020~~2021 as filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 14, 2021 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.

2325

During the ~~nine-month~~three month period ending ~~September 30, 2021,~~March 31, 2022 the Company had no revenues from operations. Loss from operations for the ~~nine-months~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$2,288,628~~$715,558 compared with a loss in the prior year of ~~$4,670,284,~~$721,345, for a net loss of ~~$1,497,040~~$2,071,982 for the most recent ~~nine-month period,~~quarter, compared with a prior year ~~loss~~net income of ~~$8,340,088.~~$1,197,974.

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,” “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.

The following discussion should be read in conjunction with our financial statements and notes thereto included herein. 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.

Overview and History

~~We were~~The Company was originally incorporated in the State of Colorado in August 1998 under the name “Network Acquisitions, Inc.” WeThe Company changed our name to Cavion Technologies, Inc. in February 1999 and subsequently to Concord Ventures, Inc. in October 2006.

On December 21, 2000, wethe Company filed for protection under Chapter 11 of the United States Bankruptcy Code. In connection with the filing, on February 16, 2001, wethe Company sold our entire business, and all of our assets, for the benefit of our creditors. After the sale, wethe Company still had liabilities of $8.4 million and were subsequently dismissed by the Court from the Chapter 11 reorganization, effective March 13, 2001, at which time the last of ~~our~~the Company’s remaining directors resigned. On March 13, 2001, wethe Company had no business or other source of income, no assets, no employees or directors, outstanding liabilities of approximately $8.4 million and had terminated ~~our~~their duty to file reports under securities law. In February 2008, ~~we were~~the Company was re-listed on the OTC Bulletin Board.

In April 2010, wethe Company re-domiciled in Delaware under the name CCVG, Inc. (“CCVG”). Effective December 31, 2010, CCVG completed an Agreement and Plan of Merger and Reorganization (the “Reorganization") which provided for the merger of two of ~~our wholly owned~~their wholly-owned subsidiaries. As a result of this reorganization, ~~our~~the Company’s name was changed to “Golden Dragon Inc.”,” which became the surviving publicly quoted parent holding company.

2426

On May 9, 2014, wethe Company entered into a Share Purchase Agreement (the “~~Share~~“Share Purchase ~~Agreement~~”Agreement”) with ~~CannaPharmaRX,~~CannaPharmaRx, Inc., a Colorado corporation (“Canna ~~Colorado~~”Colorado”), and David Cutler, a former President, Chief Executive Officer, Chief Financial Officer and director of ~~our~~the Company. Under the Share Purchase Agreement, Canna Colorado purchased 1,421,120 shares of our common stock from Mr. Cutler and an additional 9,000,000 restricted common shares directly from ~~us.~~the Company.

On May 15, 2014, as amended and effective January 29, 2015, wethe Company entered into an Agreement and Plan of Merger (the “~~Merger~~”“Merger”) pursuant to which Canna Colorado became a subsidiary of our Company.
In October 2014, wethe Company changed ~~our~~their legal name to “CannaPharmaRx, Inc.”

Pursuant to the Merger all of the shares of ~~our~~the Company’s common stock previously owned by Canna Colorado were ~~cancelled.~~ canceled. As a result of the aforesaid transactions, we the Company became an early-stage pharmaceutical company whose purpose was to advance cannabinoid research and discovery using proprietary formulation and drug delivery technology then under development.

In April 2016, we ceased operations. The Company’s then management resigned their respective positions with our Company with the exception of Mr. Gary Herick, who remained one of the Company’s officers and directors until April 23, 2019.
Effective December 31, 2018, the Company and Hanover CPMD Acquisition Corp. (“CPMD Hanover”) a newly formed, wholly-owned subsidiary, entered into a Securities Purchase Agreement with Alternative Medical Solutions, Inc., an Ontario, Canada corporation (“AMS”), its shareholders, wherein the Company acquired all of the issued and outstanding securities of AMS. AMS is a corporation organized under the laws of the Province of Ontario, Canada.
As a result of the completion of the acquisition of AMS on December 31, 2019, the Company no longer fit the definition of a “shell company,” as defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act. It filed the required disclosure on Form 8-K/A with the SEC on February 14, 2019, advising that it was no longer a shell company pursuant to the aforesaid Rule.
On January 6, 2021, the Company executed an Agreement of Purchase and Sale through its wholly-owned subsidiary, Alternative Medical Solutions Inc for the sale of the lands and premises located at Hanover, Ontario, Canada. The price was $2,000,000 CAD. As a result, and in anticipation of the closing, the Company recorded an impairment of goodwill and fixed assets relating to the property of $7,962,694 at December 31, 2020. This property was security for a $1,000,000 US Note with Koze Investments LLC by way of a first ranking charge. This transaction closed on July 9, 2021 and the note was repaid in full as principal of $1,000,000 plus accrued interest of $124,735 and penalties of $475,265. The note was discharged accordingly.
Effective February 25, 2019, the Company acquired 3,936,500 shares and 2,500,000 Warrants to purchase 2,500,000 shares of Common Stock of GN Ventures, Ltd, Alberta, Canada, f/k/a Great Northern Cannabis, Ltd. (“GN”), in exchange for an aggregate of 7,988,963 shares of its Common Stock, from a former shareholder of GN who is now the Company’s President and CEO. While no assurances can be provided, the Company believes this is the initial step in its efforts to acquire all or a significant portion of the issued and outstanding stock of GN. In May 2020, the Company exchanged 5,507,400 of its shares for 3,671,597 shares of GN.
GN owns a 60,000 square foot cannabis cultivation and grow facility located on 38 acres in Stevensville, Ontario, Canada. Because the Company is a minority shareholder of GN and GN is a privately held company, the Company cannot confirm that the information it currently has on GN’s operations is complete or fully reliable. GN estimates annual total production capacity from the Stevensville facility of up to 5,000 kilograms of cannabis. GN believes the Stevensville facility to be complete, and GN’s subsidiary, 9869247 Canada Limited, received a license to cultivate from the Canadian Ministry of Health on July 5, 2019. As a result, in October 2019, GN commenced cultivation activities and began generating revenues during the first calendar quarter of 2020.
On January 1, 2022, the Company entered into a 20 year finance lease with Formosa Mountain Ltd., for 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 licensing process is currently underway, and production and sales are anticipated in Q3, 2022.
27
COVID-19
On March 11, 2020, the World Health Organization (“WHO”) declared the Covid-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. Most U.S. states and many countries have issued policies intended to stop or slow the further spread of the disease.
The global pandemic related to an outbreak of the novel coronavirus disease (“COVID-19”) has cast uncertainty on each of these assumptions. There can be no assurance that they continue to be valid. The situation is dynamic and the ultimate duration and magnitude of the impact of COVID-19 on the economy and the financial effect on our business remain unknown at this time. These impacts could include, amongst others, an impact on our ability to obtain debt or equity financing, impairment of investments, net realizable value of inventory, impairments in the value of our long-lived assets, or potential future decreases in revenue or profitability of our ongoing operations.
Wholly-Owned Subsidiaries
Our wholly-owned subsidiaries are:
CannaPharmaRx Canada Corp. (Alberta). CannaPharmaRx Canada Corp. is a wholly owned subsidiary of the Company. This subsidiary’s sole purpose and business is to hold the shares of Alternative Medical Solutions Inc. (Ontario).
Alternative Medical Solutions Inc. (Ontario). Alternative Medical Solutions Inc. (Ontario) is a wholly owned subsidiary of the CannaPharmaRx Canada Corp.
2323414 Alberta Ltd is a wholly owned subsidiary of CannaPharmaRx Inc. This subsidiary’s role is the business and operations of our Cremona, Alberta, Canada, production facility, currently being readied for operations anticipated in Q3 of 2022.
Our executive offices are located at Suite 3600, 888 3^rd Street SW, Calgary, Alberta Canada, T2P 5C5 phone (949) 652-6838. Our website address is www.cannapharmarx.com.

We have not generated any revenues during the past five years. Following is our current Plan of Operation.

PLAN OF OPERATION

We are involved in the cannabis industry in Canada and are reviewing opportunities in other jurisdictions where cannabis has been legalized, including the US. Our principal business activities to date have been to negotiate, acquire and develop various cannabis cultivation projects throughout Canada. As of the date of this Report we do not own or operate any businesses in the US.

~~Our activities to date have centered around three projects, including (i) the Hanover Project; (ii) the Great Northern Project; and (iii) the acquisition of Ramon Road Production Campus LLC.~~
Following is a description of the projects we are pursuing as of the date of this Report:
~~Hanover~~
Effective November 19, 2018, we entered into a Securities Purchase Agreement with Alternative Medical Solutions, Inc., an Ontario, Canada corporation (“AMS”), its shareholders and Hanover CPMD Acquisition Corp., wherein we acquired all of the issued and outstanding securities of AMS. As part of the material terms of this transaction, we also agreed to acquire all of the outstanding shareholder loans held by the principal shareholder of AMS. The purchase price was CAD$12,700,000, of which CAD$1,012,982 was paid at closing and we assumed debt of approximately CAD$650,000. The principal shareholders of AMS elected to receive 971,765 shares of our Common Stock in lieu of CAD$985,000 in additional cash. We granted the holders of these shares “piggyback” registration rights but we have not yet filed a registration statement to cause us to register these shares with the SEC. The balance of approximately CAD$10,000,000 is to be paid pursuant to the terms of a relevant subordinated non-interest bearing promissory note, secured only by the shares acquired in AMS Principal payments under the Promissory Note, are due quarterly and are computed based upon 50% of AMS' cash flow, defined as EBITDA less all capital expenditures, taxes incurred, non-recurring items and other non-cash items for the relevant fiscal quarter, including the servicing of all senior debt payment obligations of the company. The Promissory Note matures the earlier of two years from the date AMS receives a license to cultivate or December 31, 2021.
25
On January 6, 2021, the Company executed an Agreement of Purchase and Sale through its wholly owned subsidiary, Alternative Medical Solutions Inc. for the sale of the lands and premises located at Hanover, Ontario, Canada. The price is $2,000,000 CAD and the closing of this transaction occurred on July 9, 2021. As a result, and in anticipation of the closing, the Company recorded an impairment of goodwill and fixed assets relating to the property of $7,962,694 during the year ended December 31, 2020. This property is security for a $1,000,000 US Note with Koze Investments, LLC by way of a first-ranking charge. At closing, the Note was retired with the proceeds from the sale by repayment of the principal of $1,000,000, accrued interest of $124,735 and penalties of $475,265. The note was discharged on July 13, 2021.

Great Northern

In early 2019, we retained new members of management who are actively engaged in the Canadian cannabis industry, including former management of GN Ventures, Ltd, Alberta, Canada, f/k/a Great Northern Cannabis, Ltd. (“GN”). Not coincidentally, effective February 25, 2019, we acquired 3,712,500 shares and 2,500,000 Warrants to purchase 2,500,000 shares of Common Stock of GN in exchange for an aggregate of 7,988,963 shares of our Common Stock, from our current CEO, who is a former shareholder of GN. ~~We believe this is the initial step in our efforts to acquire all of the issued and outstanding stock of GN.~~
28

We cannot state any definitive information concerning Great Northern because it is a privately held Canadian company ~~which~~who is keeping its business activities confidential. We expect that we will obtain additional information on the business activities of GN as we renew discussions to acquire additional interests and can perform our due diligence.

Based on information currently available in the marketplace we believe that GN owns a 60,000 square foot cannabis cultivation and grow facility located on 38 acres in Stevensville, Ontario, Canada. GN estimates annual total production capacity from the Stevensville facility of up to ~~12,500~~5,000 kilograms of cannabis. GN advised that the Stevensville facility is complete, and GN’s subsidiary, 9869247 Canada Limited, received a license to cultivate from the Canadian Ministry of Health on July 5, 2019. As a result, in October 2019 GN commenced cultivation activities, with the initial harvest in the first quarter of 2020. Additionally, it is our current understanding that GN intends to increase cannabis production by building additional cannabis cultivation facilities on the excess land presently owned adjacent to the existing Stevensville facility, provided that additional funding can be obtained on commercially reasonable terms. Neither we nor GN have any firm commitment to provide any of the funds necessary for expansion as of the date of this report..

On May 8, 2020, we agreed to acquire an additional 3,671,597 shares of GN common stock in exchange for an aggregate of 5,507,400 shares of our Common Stock. We presently own 7,384,097 shares of GN common stock which we believe, based on information provided by the management of GN, equals approximately 10% of the total issued and outstanding shares of GN common stock. Additionally, we own Warrants to purchase an additional 2,500,000 shares of GN common stock with each Warrant having an exercise price of CAD$1.00 per share. ~~We intend to continue to acquire the common stock of GN in one or multiple additional transactions.~~

~~Sunniva~~Cremona

~~Effective June 11, 2019,~~On January 1, 2022, the Company entered into a ~~Securities Purchase Agreement~~20 year finance lease with Sunniva, Inc, a British Columbia, Canada corporation (“Sunniva”) wherein the Company agreed to acquire all of the issued and outstanding securities of Sunniva’s wholly-owned subsidiaries Sunniva Medical Inc. (“SMI”) and 1167025 B.C. LTD (“1167025”) for CAD $16.0 million in cash and a note in the principal amount of CAD $4.0 million. These companies are the current owners of the Sunniva Canada Campus, which includes construction assetsFormosa Mountain Ltd for a ~~planned 759,000 square-foot greenhouse located on an approximately 114-acre property in Okanagan Falls, British Columbia.~~
On June 8, 2020, the Company received a notice of termination of this Purchase Agreement, as amended, from Sunniva. As a result, the Company incurred a charge of $1,881,126 due to the write-off of its deposit to Sunniva, banking fees and prepaid expenses associated with the failed acquisition of Sunniva. The Company is in discussions with Sunniva, as well as an investment banker who received deposits from the Company, about recovering all or a portion of its deposits, banking fees, and prepaid expenses.
26
~~Other~~
~~On March 29, 2021, the Company received the acceptance of our Offer to Purchase certain assets and facilities located~~cannabis production facility in Cremona, Alberta, Canada. The ~~purchase price~~facility is ~~$12,550,000 CAD. The Company has paid~~ a ~~$200,000 CAD deposit. The 55,200~~55,000 square foot, 6,000 Kg per year plant, built in 2015 as a state of the art facility. Retooling of the facility is ~~capable of producing 5,200 kilograms of cannabis biomass per year. The facility previously held Health Canada licenses for cultivation~~currently underway, as is the licensing process. Production and sales are anticipated in Q3 of medical dried flower, as well as extract and edible sales. After closing of the transaction, the Company intends to apply for new Health Canada licenses. Funding for this acquisition is in the due diligence phase.2022.

Results of Operations

The Company does not currently sell or market any products and did not have any sales in the ~~nine-months~~three months ended ~~September 30, 2021~~March 31, 2022 or ~~2020.~~2021. The Company will commence actively marketing products after the products have been cleared or approved by Health Canada, but there can be no assurance, however, that we will be successful in obtaining Health Canada clearance or approval for our products.

Costs of Goods Sold

The Company did not have sales for the ~~nine-months~~three months ended ~~September 30,~~March 31, 2022 or 2021 ~~or 2020~~ and, accordingly, there were no cost of goods sold.

Gross Profit and Gross Margin

For the ~~nine-month period~~fiscal years ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company had no gross profit or gross margin.

Operating Expenses

Our operating expenses consist primarily of general and administrative expenses, which include salaries, stock-based compensation expense and legal and professional fees associated with the costs for services or employees in finance, accounting, sales, administrative activities and the formation and compliance of a public company.

~~Operating~~
29
Overall operating expenses in three months ended March 31 2022 was $715,558 compared to $721,345 for the three months ended ~~September 30,~~March 31, 2021, was $771,203 compared to the same quarter in the prior year of $1,312,790, with a decrease to all areas, offset partially by an increase to acquisition expenses due to the write off of prepaid financing charges.
~~Operating expenses in the nine-months ended September 30, 2021 was $2,288,628 compared to $4,670,284 for the nine months ended September 30, 2020,~~ a decrease of ~~$2,381,656.~~$5,787. The decrease in the ~~2021~~2022 period is primarily attributable to ~~acquisition expenses~~increases in general and ~~stock-based~~administrative, amortization and depreciation, and payroll from the ramp up of the Cremona facility, offset by a reduction in stock based compensation ~~expenses.~~and professional fees.

Other income (expense)
Other expense was $1,356,424 for the three months ended ~~September 30, 2021 was $258,402~~March 31, 2022, compared to ~~the prior year quarter~~other income of ~~$1,340,000, a decrease~~$1,919,319, an increase of ~~$1,081,598 due~~$3,275,743. The increase is primarily attributable to ~~lower interest expense,~~ the change in ~~the~~ fair value of derivative ~~liability and other income from the recovery from the settlement of the Koze note.~~
Other income was $791,588 for the nine-months ended September 30, 2021, compared to other expense of $3,669,804, an improvement of $4,461,392. The increase in other income is primarily attributable to a reduction in the derivative liability of $2,694,220 in the 2021 period compared to an expense of $1,748,237 in the prior year, a reduction in interest expense in nine-months ended September 30, 2021 of $420,825 compared to the 2020 period due to a reduction in amortization of note discount, other income of $622,683 during the current year, offset slightly by an increase to the loss on extinguishment of debt of $1,024,573.liability.

Net Income (Loss)

As a result of the foregoing, ~~for the three-month period ended September 30, 2021,~~ the Company had a net loss of ~~$1,029,605,~~$2,071,982, and a net ~~loss~~income of ~~$2,652,790~~$1,197,974, for the ~~prior year quarter. For the nine-month period~~periods ended ~~September 30,~~March 31, 2022, and March 31, 2021, ~~and September 30, 2020, respectively, the Company had a net loss of $1,497,040 and a net loss of $8,340,088 from the prior year.~~respectively.
27

LIQUIDITY AND CAPITAL RESOURCES

As of ~~September 30, 2021,~~March 31, 2022, we had ~~$112,822~~$79,676 in cash as compared to ~~$334,969~~$27,767 at December 31, ~~2020.~~2021.

Cash flows from operating activities

The Company used ~~$2,087,367~~$375,184 in operating activities for the ~~nine-months~~first three months ended ~~September 30, 2021,~~March 31, 2022 as compared to ~~$832,322~~$799,241 during the prior year comparable ~~nine-month period.~~quarter. During the ~~nine months~~first quarter ended ~~September 30, 2021~~March 31, 2022 the Company had a net loss of ~~$1,497,040, stock based~~$2,071,982, stock-based compensation expense of ~~$290,099, advertising expense of $211,200, common stock issued in connection with financing of $51,010,~~$45,245, amortization of debt discount of ~~$954,024,~~$100,971, loss on the extinguishment of debt of ~~$1,226,489,~~$320,243, beneficial conversion feature of convertible notes of $227,386, change in the fair value of derivatives of ~~$2,694,220, an increase to prepaid assets~~$585,033, depreciation of ~~$35,170~~$942, right of use asset, net of $122,950, and an increase to payables and accruals of ~~$595,706.~~$294,028. During the prior year ~~nine months~~quarter ended ~~September 30, 2020,~~March 31, 2021 the Company had a net ~~loss~~income of ~~$8,340,088, stock-based~~$1,197,974, stock based compensation expense of ~~$617,758,~~$96,700, amortization of ~~intangible assets~~debt discount of ~~$98,304, stock issued for advertising expenses~~$287,544, loss on extinguishment of ~~$554,000, common stock issued for finance expenses~~debt of ~~$1,704,907,~~$282,289, change in fair value of derivatives of ~~$1,748,237, a decrease~~$2,630,480, depreciation of $408, an increase to prepaid expenses of ~~$1,824,558~~$277,582 and an increase to accounts payable and accruals of ~~$958,856.~~$243,896.

Cash flows from investing activities

The Company ~~received $493,654~~used $16,758 during the ~~nine-months~~first three months ended ~~September 30, 2021 from~~March 31, 2022 in investing activities ~~primarily from the sale of AMS assets,~~ as compared to ~~net cash provided of $95,681~~using $45,804 during the ~~nine-month~~three month period ended ~~September 30, 2020.~~March 31, 2021. This included the right of use asset, offset slightly by the purchase of ~~office~~plant equipment in the current year, vs computer equipment and a further investment in ~~Klonetics.~~Klonetics in the prior year.

Cash flows from financing activities

During the ~~nine-months~~three months ended ~~September 30, 2021, $1,111,709~~March 31, 2022, $516,265 was provided from financing activities, including ~~$410,000 from the sale of Preferred Stock, $665,646~~$476,250 from convertible loans and notes payable ~~$291,064~~and $40,015 from the sale of Common ~~Stock, offset by $255,001 from repayment of related party loans.~~Stock. During the prior year ~~nine-month period~~quarter the Company received ~~$941,434~~$292,060 from convertible ~~debentures, offset by $15,158~~loans and notes payable, $244,104 from the ~~repayment~~sale of ~~related party loans.~~common stock, offset slightly by $39,441 from the settlement of preferred stock

In general, based on historical losses, the Company will be required to continue raising operating capital through debt and equity.
30

Currently, we have no committed source for any funds to allow us to complete any of our proposed acquisitions or projects. No representation is made that any funds will be available when needed. In the event funds cannot be raised if and when needed, 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 EVENTS

On ~~October 18, 2021, a debenture dated~~ April ~~14, 2021 was converted into 4,458,333, in the amount of $53,500 plus interest of $2,675 at $0.0126.~~
~~On October 18, 2021, a holder of Preferred A shares converted 3,795 Preferred A shares into 4,458,333 Common shares.~~
~~On November 8, 2021, the Company issued 4,801 Preferred A shares to an accredited investor at $15.62 per share for net proceeds of $75,000.~~
~~On November 9, 2021,~~1, 2022, the Company entered into a convertible debenture with an accredited investor in the amount of ~~$55,000.~~$48,750. This debenture bears interest of 10% and is convertible into common shares at 61% of the lowest closing price during the previous 20 ~~trading~~ days to the date of the conversion. Prepayment of this note is authorized at 115% - 135% up to 180 days. In the event of default interest increases to 22%. This debenture matures April 1, 2023.

On ~~November 10,~~April 18, 2022, the Company issued 4,615,385 common shares on partial conversion of a debenture dated September 29, 2021 at $0.0065 per share for a ~~holder~~total of ~~Preferred A~~$30,000 principal.
On April 28, 2022, the Company entered into a $5,000,000 equity line of credit with Tysadco Partners, LLC, with a two-year term. The Company may draw down between $50,000 and $1,000,000. Settlement is common shares ~~converted 454 Preferred A~~up to 9.99% after which preferred shares ~~into 567,500 Common shares.~~would be purchased. Purchase price is 75% of the average of the two lowest daily traded VWAP (volume weighted average price) prices during the valuation period. The Company has undertaken to register the securities on a form S-1 within 60 days from execution date. The Company received $250,000 on May 4, 2022 in exchange for 25,000,000 common shares at $0.01.
On May 2, 2022, the Company issued 4,264,113 common shares on remaining conversion of a debenture dated September 29, 2021 at $0.0062 per share for principal of $23,750 plus interest of $2,687.50.

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 ~~nine-month~~three-month period ended ~~September 30, 2021.~~March 31, 2022.
28

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. ~~A comprehensive~~The following represents a summary of our critical accounting policies, ~~can be found on Form 10-K, dated December 31, 2020, and filed on April 14, 2021. That Report contains~~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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

31
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 of the end of the period covered by this report.

These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the 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, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~September 30, 2021~~March 31, 2022 at the reasonable assurance level. 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 - There were no changes in our internal control over financial reporting during the period ended ~~September 30, 2021,~~March 31, 2022, 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.

2932

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., alleging breach of contract, specifically, breach of a nonbinding term sheet providing for Ataraxia to acquire controlling interest in AMS and they are seeking $15 million in damages. A Statement of Claim was prepared by Ataraxia Canada, Inc., as plaintiff, and circulated to Alternative Medical Solutions Inc., 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 of the date of this Report.

On July 9, 2020, we filed a lawsuit in the United States District Court for the District of Colorado (1:20-cv-01999-RM-GPG) against Gary Herick, Arrowhead Consulting, LLC, Whitemoon Energy LLC., Jamie Huttrer a/k/a Jamie Huttrer-Herick, and ZeroRMW, LLC (collectively, the “Herick Parties”). The lawsuit alleges, among other things, the Herick Parties engaged in various legal violations including breach of fiduciary duty, common law fraud, conversion, usurpation of corporate opportunities, securities violations pursuant to Section 10b-5 of the Securities Exchange Act of 1934, and civil conspiracy. Mr. Herick was a former officer and director of the Company. On September 8, the Herick Parties filed a Motion to Dismiss the Sixth Claim for Relief (§ 10b-5 Federal Securities Law). On September 28, 2020, we filed a First Amended Complaint. On October 10, 2020, the Herick Parties filed a Motion to Dismiss the Fourth and Fifth Claims for Relief. On October 30, 2020, the Parties filed a Stipulated Motion for an Extension of Time, through and including November 16, 2020, for us to respond to the Herick Parties’ Motion to Dismiss the Fourth and Fifth Claims for Relief.

On July 9, 2020, we made a demand of Gary Herick, Arrowhead Consulting, LLC, Whitemoon Energy LLC., Jamie Huttrer a/k/a Jamie Huttrer-Herick, and ZeroRMW, LLC (collectively, the “Herick Parties”) for a return of with seeking the return of profits made between the period of August 2018, to January 2019. During this period, Gary Herick was the Chief Financial Officer and Director of the Issuer. Gary Herick was also the owner of approximately twenty-six percent (26%) of the Issuer’s common stock. Pursuant to the Securities Exchange Act of 1934, §16(b), 15 U.S.C.S. § 78p(b), an issuer may recover any profits realized by a beneficial owner from the sale of the issuer's equity securities within a six (6) month period. All unlawful profits must be returned to the Issuer on or before Tuesday, September 8, 2020. If Herick does not return such profits by that date, the Company will file a lawsuit to recover such profits.

On February 17, 2021, a Settlement Agreement and Release together with a Lock Up Agreement were signed by all parties to the lawsuit. ~~On March 22, 2021,~~As a result, the ~~Court issued a notice that the case had~~litigation has been ~~terminated pursuant to the Notice of Discontinuance of Proceedings with Prejudice that had been filed in the case on March 19, 2021~~discontinued.

3033

~~As a result, the litigation has been discontinued.~~

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~~CannaPharmaRx Inc. and Does 1 – 50, inclusive (Case No. 21^st CV1 3696). The lawsuit alleges that ~~Cannapharmarx~~CannaPharmaRx Inc. (CPMD) 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~~millions dollars plus attorneys’ fees and costs. On May 5, 2021, CPMD filed a Notice of Removal from the Superior Court of the State of California, County of Los Angeles to the United States District Court for the Central District of California. On May 25, 2021, BCI filed a Notice of Motion and Motion for an Order remanding the case back to the Superior Court of the State of California, County of Los Angeles. On June 4, 2021, CPMD filed a Motion to Dismiss the First, Third and Fourth Causes of Action filed by BCI. On June 4, 2021, CPMD filed a Memorandum in Opposition to BCI’s Notice of Motion and Motion to Remand the case back to the Superior Court of the State of California, County of Los Angeles. On June 10, 2021, BCI filed a Reply in Support of a Motion to remand the case back to the Superior Court of the State of California, County of Los Angeles. On June 24, 2021, the Court granted BCI’s Motion to remand the case back to the Superior Court of the State of California, County of Los Angeles. On July 21, 2021, CPMD filed a Motion to Demurrer BCI’s Complaint. On October 6, 2021, BCI filed its Opposition to CPMD’s Demurrer to BCI’s Complaint. On October 11, 2021, CPMD filed its Reply to BCI’s Opposition to CPMD’s Demurrer to BCI’s Complaint. The Superior Court of the State of California, County of Los Angeles sustained one count of the demurrer and denied the motion to strike on two of the demurrers. On November 1, 2021, BCI notified the Company’s counsel that it would not seek to amend the Complaint to revive the struck cause of action. On November 5, 2021, CPMD filed its Answer to BCI’s Complaint. CPMD 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 of 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

We did not issue any of our equity securities during the ~~nine-months~~three months ended ~~September 30, 2021,~~March 31, 2022, or subsequent thereto.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable

ITEM 5. OTHER INFORMATION

None
31

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).

3234

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on ~~November 15, 2021.~~May 23, 2022.

CannaPharmaRx, Inc.

By: /s/ Dominic Colvin
Dominic Colvin,
Principal Executive Officer

By: /s/ John Cassels

John Cassels,
Principal Financial Officer and
Principal Accounting Officer

3335


	September 30,			December 31,
	2021			2020
ASSETS
Current assets
Cash	$	112,822		$	334,969
HST Receivable		1,585			551
Prepaid expenses		167,199			132,031
Total current assets		281,606			467,551
Construction in progress		0			1,566,316
Office equipment		6,755			2,435
Investments		6,750,779			6,711,289
Total Assets	$	7,039,140		$	8,747,591


LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses	$	3,123,200		$	3,584,999
Accrued interest		43,900			96,477
Accrued legal settlement		190,000			190,000
Notes payable		8,122,451			8,728,749
Convertible notes - net of discount		845,076			997,558
Derivative liability		982,429			3,676,649
Loan payable - related party		19,757			274,758
Total current liabilities		13,326,813			17,549,190
Accrued legal settlement payable in cash - noncurrent portion		0			0

Total Liabilities		13,326,813			17,549,190

Commitments and contingencies		0			0

Stockholders' Equity
Preferred stock, Series A, $1.00 par value, 100,000 shares authorized, 65,429 and 60,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		65,429			60,000
Preferred Stock Series B, $1.00 par value, 3,000,000 shares authorized 475,000 and -0- shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		475,000			475,000
Common stock, $0.0001 par value; 300,000,000 shares authorized, 95,348,472 and 46,986,794 issued and outstanding as of September 30, 2021 and December 30, 2020, respectively		9,535			4,699
Treasury stock, 133,200 and -0- shares as of September 30, 2021 and December 31, 2020, respectively		(13	)		(13	)
Additional paid in capital		72,321,722			68,336,249
Retained earnings (deficit)		(78,828,860	)		(77,331,820	)
Accumulated other comprehensive income (loss)		(330,486	)		(345,714	)
Total Stockholders' Equity (Deficit)		(6,287,673	)		(8,801,599	)
Total Liabilities and Stockholders' Equity	$	7,039,140		$	8,747,591


	March 31,			December 31,
	2022			2021
ASSETS
Current assets
Cash	$	79,676		$	27,767
HST Receivable		5,895			1,771
Total current assets		85,571			29,538
Property, plant and equipment, net		21,756			6,032
Right of use building, net		5,727,811			0
Investments		78,760			78,760
Total Assets	$	5,913,898		$	114,330

LIABILITIES & STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable and accrued expenses	$	3,693,470		$	3,129,257
Accrued interest		65,131			194,407
Accrued legal settlement		190,000			190,000
Liability for right of use building -short term		211,497			0
Notes payable		8,339,578			8,223,888
Convertible notes -net of discount		949,765			775,448
Derivative liability		1,092,526			507,494
Loan payable - related party		19,757			19,757
Total current liabilities		14,561,724			13,040,251

Liability for right of use building long-term		5,639,264			0

Total Liabilities		20,200,988			13,040,251

Commitments and contingencies		–			–

Stockholders' Equity
Preferred stock, Series A, $1.00 par value, 100,000 shares authorized, 58,180 and 67,191 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		58,180			67,191
Preferred Stock Series B, $1.00 par value, 3,000,000 shares authorized 475,000 and 475,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		475,000			475,000
Common stock, $0.0001 par value; 300,000,000 shares authorized, 168,460,301 and 125,509,810 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		16,846			12,551
Treasury stock, 133,200 and 133,200 shares as of March 31, 2022 and December 31, 2021, respectively		(13	)		(13	)
Additional paid in capital		73,891,856			73,055,579
Retained earnings (deficit)		(88,236,301	)		(86,164,319	)
Accumulated other comprehensive income (loss)		(492,658	)		(371,909	)
Total Stockholders' Equity (Deficit)		(14,287,090	)		(12,925,920	)
Total Liabilities and Stockholders' (Equity)	$	5,913,898		$	114,330


	Three Months			Three Months
	Ended			Ended
	March 31,			March 31,
	2022			2021
Revenue	$	0		$	0

Operating Expenses:
General and administrative		139,435			42,848
Amortization and depreciation		74,064			408
Stock based compensation		45,245			96,700
Rent		4,739			9,478
Professional fees		177,404			418,603
Payroll and consulting fees		274,671			153,309
Total operating expenses		715,558			721,345
Income (loss) from operations		(715,558	)		(721,345	)

Other income (expense)
Interest (expense)		(451,148	)		(428,872	)
Gain or (loss) on the extinguishment of debt		(320,243	)		(282,289	)
Change in the fair value of derivative liability		(585,033	)		2,630,480
Other income (expense) net		(1,356,424	)		1,919,319
Income (loss) before provision for income taxes		(2,071,982	)		1,197,974
Provision (credit) for income tax		0			0
Net income (loss)		(2,071,982	)		1,197,974

Basic earnings (loss) per common share	$	(0.01	)	$	0.02
Diluted earnings (loss) per common share	$	(0.01	)	$	0.02

Basic weighted average number of shares outstanding		149,215,596			48,043,065
Diluted weighted average number of shares outstanding		149,215,596			48,043,065

Comprehensive loss:
Net income (loss)	$	(2,071,982	)	$	1,197,974
Foreign currency translation adjustment		(120,750	)		(96,578	)
Comprehensive income (loss)	$	(2,192,732	)	$	1,101,396


	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30,			September 30,			September 30,			September 30,
	2021			2020			2021			2020

Revenue	$	0		$	0		$	0		$	0

Operating Expenses:
General and administrative		170,906			575,585			679,052			803,835
Acquisition expenses		209,500			68,984			209,500			1,931,621
Amortization and depreciation		762			36,308			1,946			99,450
Stock based compensation		96,700			204,600			290,099			617,758
Travel and entertainment		377			5,471			377			13,413
Rent		4,779			9,011			9,593			26,608
Professional fees		240,215			313,486			954,571			585,610
Consulting fees - related parties		47,964			99,345			143,490			591,989
Total operating expenses		771,203			1,312,790			2,288,628			4,670,284
Income (loss) from operations		(771,203	)		(1,312,790	)		(2,288,628	)		(4,670,284	)

Other income (expense)
Interest (expense)		(260,106	)		(358,950	)		(1,298,826	)		(1,719,651	)
(Loss) on extinguishment of debt		(237,226	)		(201,916	)		(1,226,489	)		(201,916	)
Other income		622,683			0			622,683			0
Change in the fair value of derivative liability		(383,753	)		(779,134	)		2,694,220			(1,748,237	)
Other income (expense) net		(258,402	)		(1,340,000	)		791,588			(3,669,804	)
Income (loss) before provision for income taxes		(1,029,605	)		(2,652,790	)		(1,497,040	)		(8,340,088	)
Provision (credit) for income tax		0			0			0			0
Net income (loss)	$	(1,029,605	)	$	(2,652,790	)	$	(1,497,040	)	$	(8,340,088	)

Basic and diluted earnings(loss) per common share	$	(0.01	)	$	(0.07	)	$	(0.02	)	$	(0.20	)

Weighted average number of shares outstanding		84,415,273			39,720,700			63,364,348			42,583,650

Comprehensive loss:
Net income (loss)	$	(1,029,605	)	$	(2,652,790	)	$	(1,497,040	)	$	(8,340,088	)
Foreign currency translation adjustment		188,848			(53,706	)		15,228			(107,499	)
Comprehensive income (loss)	$	(840,757	)	$	(2,706,496	)	$	(1,481,812	)	$	(8,447,587	)


	Preferred Stock Series A				Preferred Stock Series B				Common Stock
	Shares		Value		Shares		Value		Shares			Value
Balance, December 31, 2019		60,000	$	60,000		475,000	$	475,000		36,486,999		$	3,649

Net loss				–				–					–

Change in foreign currency translation

Common stock issued in connection with convertible notes										153,940			15

Beneficial conversion features of convertible notes

Stock-based compensation related to warrant issuances

Balance, March 31, 2020		60,000	$	60,000		475,000	$	475,000		36,640,939		$	3,664

Change in foreign currency translation

Net loss				–				–					–

Shares issued for services										300,000			30

Stock-based compensation related to warrant issuances

Shares received from share exchange with GN										5,507,400			551

Balance, June 30, 2020		60,000	$	60,000		475,000	$	475,000		42,448,339		$	4,245

Change in foreign currency translation

Net loss				–				–					–

Shares issued for services										200,000			20

Beneficial conversion feature of note discount

Warrant exercise										25,000			3

Stock based compensation related to warrant issuances

Return of common shares related to note payoff										(153,940	)		(15	)

Convertible note conversion to common stock										135,000			14

Balance, September 30, 2020		60,000	$	60,000.00		475,000	$	475,000.00		42,654,399		$	4,265


	Treasury Stock					Paid in		Accumulated			Accumulated other comprehensive			Equity/
	Shares		Value			Capital		deficit			income (loss)			Deficit
Balance, December 31, 2020		133,200	$	(13	)	$	68,336,249	$	(77,331,820	)	$	(345,714	)	$	(8,801,601	)

Net loss									1,197,974						1,197,974

Change in foreign currency translation												(96,578	)		(96,578	)

Conversion of Series A Preferred to common		-		-			175

Conversion of convertible notes to common shares							474,715								474,859

Sale of common stock in a private placement							244,018								244,104

Beneficial conversion feature of convertible notes							34,205								34,205

Stock based compensation related to warrant issuance							96,700								96,700

Balance, March 31, 2021		133,200	$	(13	)	$	69,186,061	$	(76,133,846	)	$	(442,293	)	$	(6,850,337	)


	Treasury Stock					Paid in			Retained earnings			Accumulated other comprehensive			Equity/
	Shares		Value			Capital			(Deficit)			income (loss)			Deficit
Balance, December 31, 2019		133,200	$	(13	)	$	61,619,415		$	(57,441,549	)	$	137,696		$	4,854,198

Net loss				–			–			(4,214,818	)		–			(4,214,818	)

Change in foreign currency translation													(67,273	)		(67,273	)

Common stock issued in connection with convertible notes							130,834									130,849

Beneficial conversion features of convertible notes							438,000									438,000

Stock-based compensation related to warrant issuances							206,579									206,579

Balance, March 31, 2020		133,200	$	(13	)	$	62,394,828		$	(61,656,367	)		70,423		$	1,347,534

Change in foreign currency translation													13,481			13,481

Net loss				–			–			(1,472,479	)		–			(1,472,479	)

Shares issued for services							152,970									153,000

Stock-based compensation related to warrant issuances							206,579									206,579

Shares received from share exchange with GN							2,477,871									2,478,422

Balance, June 30, 2020		133,200	$	(13	)	$	65,232,248		$	(63,128,846	)	$	83,904		$	2,726,536

Change in foreign currency translation													(53,706	)		(53,706	)

Net loss				–			–			(2,652,790	)		–			(2,652,790	)

Shares issued for services							400,980									401,000

Beneficial conversion feature of note discount							649,527									649,527

Warrant exercise							9,998									10,000

Stock based compensation related to warrant issuances							204,600									204,600

Return of common shares related to note payoff							(130,834	)								(130,849	)

Convertible note conversion to common stock							306,737									306,750

Balance, September 30, 2020		133,200	$	(13	)	$	66,673,255		$	(65,781,637	)	$	30,197		$	1,461,067

		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.

Schedule of prepaid expenses
	September 30, 2021		December 31, 2020
Prepaid expenses(a)	$	167,199	$	132,031

Total	$	167,199	$	132,031

Property and Equipment
	September 30, 2021							December 31, 2020
	Gross Carrying Amount		Accumulated Depreciation			Net Book Value		Gross Carrying Amount		Accumulated Depreciation			Net Book Value
Computers, software, and office equipment	$	11,099	$	(4,344	)	$	6,755	$	4,870	$	(2,435	)	$	2,435
Land		0		0			0		0		0			0
Construction in progress		0		0			0		1,566,316		0			1,566,316
Total fixed assets	$	11,099	$	(4,344	)	$	6,755	$	1,571,186	$	(2,435	)	$	1,568,751

Schedule of property and equipment
	March 31, 2022							December 31, 2021
	Gross Carrying Amount		Accumulated Depreciation			Net Book Value		Gross Carrying Amount		Accumulated Depreciation			Net Book Value
Computers, software, and office equipment	$	11,316	$	(6,138	)	$	5,178	$	11,154	$	(5,122	)	$	6,032
Plant equipment		16,578		0			16,578		–		0			–

Total fixed assets	$	27,894	$	(6,138	)	$	21,756	$	11,154	$	(5,122	)	$	6,032

Schedule of accounts payable and accrued liabilities
					March 31, 2022		December 31, 2021
	September 30, 2021		December 31, 2020
Accounts payable and accrued expenses	$	3,123,200	$	3,584,999	$	3,693,470	$	3,129,257
Accrued interest (a)		43,900		96,477		65,131		194,407
Accrued legal settlement (b)		190,000		190,000		190,000		190,000
Total accounts payable and accrued liabilities	$	3,357,100	$	3,871,476	$	3,948,601	$	3,513,664

Schedule of related party transactions
	September 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Loan payable, related parties(a)	$	19,757	$	274,758	$	19,757	$	19,757

Total loan payable, related parties	$	19,757	$	274,758	$	19,757	$	19,757

Components of convertible debentures
	March 31, 2022			December 31, 2021

Principal value of convertible notes	$	1,243,750		$	943,017
Note discount		(293,985	)		(167,569	)
Total convertible notes, net current	$	949,765		$	775,448

Schedule of assumptions used
	September 30, 2021		March 31, 2022		December 31, 2021
Exercise Price	$	0.01342 – 0.0345		$ 0.00671 – 0.0110		$ 0.1342 – 0.0345
Stock Price	$	.032-0.05		$ 0.017		$ 0.013 – 0.05
Risk-free interest rate		.08-.09%		0.04%		0.04% – 0.09%
Expected volatility		128.50%-227.10%		194.2%		128.50 – 227.10%
Expected life (in years)		0.50 - 1.00		1.00		1.00
Expected dividend yield		0%		0%		0%
Fair Value:	$	982,429		$ 1,092,526		$ 507,494

Schedule of notes payable
	September 30, 2021			December 31, 2020			March 31, 2022		December 31, 2021
Principal value of Promissory Note	$	8,184,654		$	8,977,721		$	8,339,578	$	8,223,888
Loan discounts		(62,203	)		(248,972	)		0		0
Promissory Note, long term net of discount	$	8,122,451		$	8,728,749
Promissory Note,							$	8,339,578	$	8,223,888

Schedule of Future Minimum Rental Payments for Operating Leases
2022	$742,500
2023	$1,039,500
2024	$1,091,748
2025	$1,146,335
2026	$1,203,652

Warrant activity
	Number of Warrants Outstanding (a)			Weighted Average Exercise Price		Average Remaining Contractual Life (Years)
Warrants outstanding, January 1, 2018		0		$	0		–
Warrants issued		350,000			0.57		1.50
Warrants exercised		0			–		–
Warrant forfeited		0			–		–
Warrants outstanding, December 31, 2018		350,000		$	0.57		.12
Warrants issued		1,519,750		$	1.01		.59
Warrants outstanding December 31, 2019		1,869,750		$	0.92		.80
Warrants exercised		(25,000	)		–		–
Warrants outstanding December 31, 2020		1,844,750		$	0.92		.50
Warrants issued (a)		477,778		$	0.30		5.00
Warrants outstanding September 30, 2021		2,322,528			0

Schedule of warrant activity
	Number of Warrants Outstanding			Weighted Average Exercise Price		Average Remaining Contractual Life (Years)
Warrants outstanding December 31, 2019		1,869,750		$	0.92		.55
Warrants exercised		(25,000	)
Warrants outstanding December 31, 2020		1,844,750		$	0.92		.25
Warrants issued (a)		477,778		$	0.30		4.17
Warrants forfeited		(825,000	)
Warrants outstanding December 31, 2021		1,497,778		$	0.79		2.75
Warrants outstanding March 31, 2022		1,497,778

~~Assumptions used~~

~~Expected dividend yield (1)~~	~~0.00~~%
~~Risk-free interest rate range (2)~~	~~0.07~~%
~~Volatility range (3)~~	~~135~~%
~~Expected life (in years)~~	~~5.00~~

~~(1)~~	~~The Company has no history or expectation of paying cash dividends on its Common Stock.~~
~~(2)~~	~~The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant.~~
~~(3)~~	~~The volatility of the Company’s Common Stock is based on trading activity for the previous three-year period ended at each stock purchase warrant contract date.~~

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).

	CannaPharmaRx, Inc.


	By:	/s/ Dominic Colvin
		Dominic Colvin,
		Principal Executive Officer


	By:	/s/ John Cassels
		John Cassels, Principal Financial Officer and
		Principal Accounting Officer