Cannabix Technologies Inc — Management Reports 2024

Dec 20, 2024

CANNABiX TECHNOLOGIES INC.

Cannabix Technologies Inc.

MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE FINANCIAL QUARTER ENDED OCTOBER 31, 2024

This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the unaudited financial statements and notes thereto for the period ended October 31, 2024 of Cannabix Technologies Inc. (the “Company”). Such financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

All dollar amounts are expressed in Canadian dollars unless otherwise indicated.

DATE

This MD&A is prepared as of December 20, 2024

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this report are forward-looking statements, which reflect our management’s expectations regarding our future growth, results of operations, performance and business prospects and opportunities including statements related to the development of marijuana breathalyzer technology and contactless alcohol breathalyzer technology, availability of financing and projected costs and expenses. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits we will obtain from them. These forward-looking statements reflect management’s current views and are based on certain assumptions and speak only as of the date of this report. These assumptions, which include management’s current expectations, estimates and assumptions about its marijuana breathalyzer technology development, contactless alcohol breathalyzer technology development, the global economic environment, the market for breathalyzers and our ability to manage our technology development, property interests and operating costs, may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a downturn in general economic conditions, (2) inability to develop an effective marijuana breathalyzer (3) delays in technology development (4) industry competition (5) the uncertainty of government regulation, no guarantee of patent acceptance by regulator authorities (6) potential negative financial impact from regulatory investigations, claims, lawsuits and other legal proceedings and challenges, (7) inability to finance (8) other factors beyond our control.

There is a significant risk that such forward-looking statements will not prove to be accurate. Investors are cautioned not to place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future results. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Additional information about these and other assumptions, risks and uncertainties are set out in the section entitled “Risk Factors” below.

DESCRIPTION OF BUSINESS

The Company was incorporated under the laws of the province of British Columbia on April 5, 2011. The Company completed an initial public offering to list on the TSX Venture Exchange on December 16, 2013 under the symbol “WPO”. Effective June 26, 2014, the Company delisted from the TSXV and listed on the Canadian Securities Exchange (“CSE”) under the symbol BLO. Previously, the Company was in the mineral acquisition and exploration business and held ownership in one mineral exploration property located in Quebec, Canada. Currently, the Company’s primary business is the development of marijuana and alcohol breathalyzer technology. On August 12, 2014, the Company completed a name change from West Point Resources Inc. to Cannabix Technologies Inc. For further details, please see the Amended and Restated Final Prospectus of the Company dated September 26, 2013 which is available on SEDAR+ at http://www.sedarplus.ca.

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BREATHALYZER TECHNOLOGY DEVELOPMENT

Overview

Cannabix Technologies is developing new technologies to detect Tetrahydrocannabinol (known as “THC”- the psychoactive component of marijuana that causes impairment) in breath samples for, employers and laboratories and law enforcement. In addition, Cannabix is developing novel wall mounted alcohol screening devices targeted primarily for workplace settings.

Cannabix Marijuana Breathalyzer (CMB) System

The Cannabix Marijuana Breathalyzer (CMB) System is a collect and send drug screening solution targeted for employers, laboratories and law enforcement. Cannabix is developing its Breath Collection Unit (BCU) the MS Breath Sampler (MSBS) hardware (the “Cannabix Hardware”), when used together, performs the function of human breath sample collection and breath sample analysis. Within the BCU, the breath sample is captured inside a proprietary cartridge, delivered to a laboratory for either MSBS or liquid chromatography–mass spectrometry (LC–MS) analysis. In non-clinical testing, the CMB has detected and confirmed THC in breath out to 4 hours after smoking. Furthermore, breath samples have the ability to be stored and analyzed up to several days after sample collection.

The MSBS is specialized laboratory hardware developed by Cannabix to confirm THC in breath from humans. The MSBS is mounted (coupled) to a mass spectrometer and sample is analyzed using existing MS/MS methods with limited sample preparation needed. The Company has filed patent applications related to its BCU technology (See “Additional Patent Applications”).

On May 15, 2024, Cannabix and Omega Laboratories (“Omega”) entered into a strategic partnership and development agreement (“SPDA” or “the Agreement”) to work together to advance the development and commercialization of the CMB technology including validation and method development within Omega’s accredited facilities.

Pursuant to the SPDA

• Omega will be the exclusive laboratory in North America to process and analyze Cannabix delta9 THC breath sample cartridges in conjunction with its BCU and MSBS technology for five (5) years.
• Contemplates critical steps to further Cannabix’s technology from the research and development stage to commercialization.
• The Parties agreed to key milestones that will provide mutual benefits to each of Cannabix and Omega including validation of results, publication of validation results to industry journals, and enter into potential large-scale studies, and testing agreements with Omega’s clients.
• Contemplates hardware licence fees, revenues, future manufacturing, distribution arrangements, carve outs and leaves the door open for additional agreements in other global jurisdictions.
• Omega will receive special warrants of Cannabix (as more particularly described below) and Omega was granted the right to appoint a director to the Company’s board of directors, subject to certain conditions including, but not limited to, the Board Right Threshold.

The Agreement includes an “R&D Phase” and “Commercial Phase” and “Exclusive Testing” of Cannabix’s delta9 THC breath sample cartridges for drugs for five (5) years within North America, subject to certain exemptions as set out in the Agreement. The R&D phase covers key milestone developments where the Parties will work within Omega’s certified laboratories. During the Commercial Phase of the Agreement, the Parties will determine, pricing, licensing and other revenue parameters. The Agreement includes certain Carve-Outs related to the Exclusive Testing and clauses for terminating the Agreement based on milestone timelines, mutual agreement, non-performance, and inability to agree on Exclusive Testing fees.

Omega Special Warrants

As consideration for the completion of specific milestones by Omega, Omega will receive: (i) 1,000,000 common shares of the Company (each, a “Common Share”), which will be issued by the Company to Omega in conjunction with the execution of the Agreement (this share payment has been completed); and (ii) an aggregate of 11,000,000

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special warrants (the "Special Warrants") of the Company that will vest and automatically convert into Common Shares (each, a "Special Warrant Share") upon the occurrence of specific milestones as set out in the Agreement and summarized as follows:

R&D Phase

• 3,000,000 of the Special Warrants will convert into Special Warrant Shares upon Omega completing a Validation Packet for Cannabis Hardware under forensic testing validation requirements. Omega will have six (6) months from the date of the Agreement to complete and certify a Validation Packet of Cannabis Hardware. Omega will have 6 months from the Agreement Date to complete and certify a Validation Packet of Cannabis Hardware unless such failure is due in whole or in part to Cannabis not being able to supply the Cannabis Hardware in a timely manner in which case the deadline will be extended in good faith by the Parties;
• 2,000,000 of the Special Warrants will convert into Special Warrant Shares upon Omega successfully converting the Validation Packet data into a white paper for publishing in peer reviewed journal and the submission of a formal proposal to use Cannabis Hardware in a prominent study. Omega will have twelve (12) months from the date of the Agreement to complete this milestone, subject to certain clauses; and
• 2,000,000 of the Special Warrants will convert into Special Warrant Shares upon Omega successfully achieving detection of a panel of drugs ("Drug Panel") using existing or enhanced Cannabis Hardware. Achieving a Drug Panel would entail establishing that the Cannabis Hardware could detect multiple drug species in breath in addition to delta9 THC.

Commercial Phase

• Subject to the achievement of the "R&D Phase" milestones: (i) 2,000,000 of the Special Warrants will convert into Special Warrant Shares upon Omega entering into a commercial testing agreement (a "Testing Agreement") with three (3) of its clients for employee drug testing; and (ii) 2,000,000 of the Special Warrants will convert into Special Warrant Shares upon Omega entering into a Testing Agreement with three (3) law enforcement organizations (being either state, civic or municipal police agencies).

The Special Warrants expire on the date that is five (5) years from the date of execution of the Agreement (May 15, 2024).

Manufacturing, Distribution, Intellectual Property and Other Terms

• During the Commercial Phase, the Parties have agreed that they will negotiate to enter into a distribution agreement with Omega for the North American distribution of Cannabis Hardware.
• During the Commercial Phase, the Parties may negotiate to enter into a manufacturing and/or license agreement whereby Omega would manage the manufacturing of the Cannabis Hardware.
• For so long as Omega holds at least 3,000,000 Common Shares, Omega will have the right to appoint one person to the board of directors.
• Omega will have a right of first refusal for a period of two (2) years after the date of the Agreement to participate in future equity private placements conducted by the Company.
• Under the Agreement, Cannabis will retain interest to all developed and background intellectual property.

Breath Logix - Wall Mounted Alcohol Breathalyzer Devices

The Company is developing its Breath Logix breath alcohol screening devices for workplace (SMEs) and other user settings where fast, easy, reliable alcohol in breath screen is needed. The Breath Logix technology has thus far been developed as a wall mounted version and an in-vehicle cabin version. The Breath Logix "workplace series" (currently under development) is a fully automated breath alcohol screening system for employee, contractor and visitor access control. Breath Logix is self-administered, non-invasive and has both non-contact and direct straw modes. The Breath Logix is engineered for rapid and repeatable high-volume screening in various employment settings. The device can provide BAC results on its screen within a few seconds after a sample is delivered. The device is cloud-connected and can deliver real time BAC results via portal, email and SMS. Furthermore, the device can help identify users by taking a picture when a breath sample is being delivered to the device.

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The Company is currently pilot testing its Breath Logix in Montana, Australia, South Africa and Texas, and has commenced efforts to complete electronic and alcohol standards certification for Australia and the United States.

FAIMS technology (THC and other analyte detection)

The Company is developing technology to detect THC in breath using high-field asymmetric waveform ion mobility spectrometry known as “FAIMS” and FAIMS-mass spectrometer systems (FAIMS-MS). The objective is to develop a point of care (portable) THC breath screening device using FAIMS technology.

FAIMS is specialized ion filtering technology centered on a “FAIMS cell” and specialized electronics. Currently the Company is characterizing its FAIMS cell and supporting electronics to establish repeatable results, improve resolving power and separation capability. Among many things, the Company is also developing a novel “detector” technology that would confirm specific ions (like THC) that have been filtered through the FAIMS cell, delivering a confirmation signal. The characterization work is being conducted using a bench version of the FAIMS instrumentation. The “FAIMS cell” and supporting electronics and hardware are at the prototype development stage.

University of Florida Licence Agreement

On August 6, 2015, the Company entered into research and patent option agreements with the University of Florida to develop a marijuana breath detection device based upon high-field ion mobility (FAIMS) and mass spectrometry (MS). On July 25, 2016 (amended on March 6, 2018 and August 26, 2019, March 16, 2021) completed a definitive license and equity agreement with the University of Florida Research Foundation (UFRF) for US Patent 8,237,118, entitled “Partial Ovoidal FAIMS Electrode”, Patent filed on August 21, 2008, invented by Richard A. Yost, Todd A. Prox, Marilyn Prieto and Jennifer G. Bryant, in the area of breath analysis of controlled substances. The agreement provides Cannabis exclusive worldwide rights in the area of breath analysis of controlled substances. Pursuant to the terms of the licence agreement, the company has been granted the licence for a period of 10 years after the first commercial sale of a licensed product (with an option to extend for additional five-year terms). As consideration for the patent licence, the Company has issued UFRF 603,870 common shares of the Company. Commencing in 2017, an annual license maintenance fee of US$2,000 would be paid by the Company and every year thereafter until the first commercial sale. In addition, the company will pay an annual licence maintenance fee and will make payments upon meeting certain development, regulatory and commercialization milestones. Upon commencement of commercial production, the Company will pay a royalty between 2% and 4% on all net sales.

On March 6, 2018, the Company entered into a second license agreement with the UFRF for Patent Cooperation Treaty (“PCT”) application, “Device and Method for Detection of Cannabis and Other Controlled Substances Using FAIMS” (PCT/CA2017/000042), and amended on August 26, 2019 (Licence Agreement #A17886). Effective March 15, 2021, the Company terminated Licence Agreement #A17886.

Cannabis Drug Detection Device Patent

On January 12, 2021 the United States Patent and Trademark Office (USPTO) granted patent No. 10,888,249 (originally filed as provisional applications 61/981,650 and 14/689,434) entitled, “Cannabis Drug Detection Device” to the Company.

On June 15, 2021, the Canadian Intellectual Property Office (CIPO) granted patent No. 2887841 entitled, “Cannabis Drug Detection Device”.

As a requirement under the license agreement between the Company and Cannabis Breathalyzer Inc. entered into on June 5, 2014, Company issued 5 million common shares to Cannabis Breathalyzer Inc. as a final milestone payment, triggered by the grant of patent 10,888,249 by the USPTO.

Agreement with Cannabis Breathalyzer Inc.

On June 5, 2014, the Company and Cannabis Breathalyzer Inc (a private company) entered into a definitive license which provided the Company (the “Licensee”) exclusive right, title, and interest in United States Patent Application

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Serial No. 61/981,650 [US non-provisional patent application no. 14/689,434 was filed April 17, 2015 (Cannabis Drug Detection Device)] ("Licensed Patent") and its foreign counterpart (Canadian Intellectual Property Office Patent Application No. 2887841) ("Licensed Patent") from Cannabis Breathalyzer Inc. (the licensor). The Definitive Agreement defined the Licensed Patent as the claims derived from United States Patent Application Serial No. 61/981,650 and any patent issued in the future from any reissue, reexamination, divisional, continuation and/or continuation-in-part of the Licensed Patents, including any foreign counterpart thereof.

In consideration for the Licensed Patent, the Company issued 7,500,000 common shares to Cannabis Breathalyzer Inc. and issued 7,500,000 warrants exercisable at $0.075 (fully exercised by the expiry date on June 26, 2015) On April 9, 2015 the Company issued 7,500,000 of common shares pursuant to prototype milestone payment to Cannabis Breathalyzer Inc. On January 12, 2021, the USPTO granted patent No. 10,888,249 (based on application No. 14/689,434) and a final milestone payment of 5,000,000 common shares was made to Cannabis Breathalyzer Inc. on January 13, 2021.

On July 28, 2016, Cannabis Breathalyzer Inc. assigned its entire right, title and interest in and to the US and Canadian patent applications derived from the licensed provisional patent application to the Company through a written assignment.

Patent History

US non-provisional patent application no. 14/689,434 was filed April 17, 2015 claiming priority from the prior provisional application and naming the same inventors Attariwala and Malhi. The US application was published on October 29, 2015. Assignment of the application from the inventors to Cannabis Breathalyzer was recorded in the US Patent Office on June 4, 2015. Assignment of the application from Cannabis Breathalyzer Inc. to Cannabis Technologies Inc. was recorded in the US Patent Office on August 23, 2016. Corresponding Canadian patent application No. 2887841 was filed April 16, 2015, also claiming priority from the prior provisional application, and an assignment of the application from Cannabis Breathalyzer Inc. to Cannabis Technologies Inc. was also recorded with the Canadian Intellectual Property Office on August 23, 2016. The Company has received several office actions and comments from Canadian and US Patent and Trademark Offices since its initial filing. On January 12, 2021 the USPTO granted patent No. 10,888,249 entitled, "Cannabis Drug Detection Device" to the Company. The Company has issued response as of January 2, 2020, to address objections raised by the Canadian Intellectual Property Office (CIPO) in an Examiner's Report issued July 3, 2019. New office actions were issued by Canadian authorities on March 17, 2020 and April 9, 2020, respectively, and a response to the objections raised in those office actions was filed on October 7, 2020. On June 15, 2021, the CIPO granted patent No. 2887841 entitled, "Cannabis Drug Detection Device".

Additional Patent Applications

The Company has filed additional patent applications in relation to its technology, some of which are in pending status, and is contemplating further patent filings to protect additional technological advances.

Additional non-provisional patent applications directed at technological advancements related to its FAIMS (field asymmetric waveform ion mobility spectrometry) based marijuana breathalyzer technology for the detection of cannabis from breath samples has also been filed, and the technology protected by this application extends to the detection of other molecules by FAIMS as well. On August 17, 2021, the USPTO has granted patent No. 11092569 (Application number 17/019728) entitled, "Apparatus and Methods for Detection of Molecules" to the Company. This patent is centered on innovations made by Cannabis with its FAIMS technology. A corresponding application is also pending in Canada.

The company has also filed two additional provisional patent applications in 2022, one directed to a contactless alcohol breathalyzer detection system and one directed to a novel apparatus and method for capturing non-volatile and semi-volatile substances from breath. Corresponding Patent Cooperation Treaty international applications have been filed in 2023 for the contactless breath analysis system and the novel apparatus and method for capturing non-volatile and semi-volatile substances from breath, and a new provisional patent application directed to a sampler for delivering analytes obtained from breath has been filed in 2023 and was filed as a PCT application in 2024. In July of 2024, Canadian and US national stage entries were filed to pursue protection in these countries for the contactless breath

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analysis system. Both applications remain pending and are undergoing accelerated examination under the Patent Prosecution Highway program based on the favourable examination results obtained for the parent Patent Cooperation Treaty application. The company also filed a further PCT application directed to its detachable breath analysis cartridge in 2024.

There is no assurance that pending patent applications will be accepted and granted by regulatory authorities.

ALCOHOL DETECTION TECHNOLOGY

During the year ended April 30, 2023, the Company developed its Breath Logix devices and related technology. The Breath Logix is a wall mounted device for workplace (SMEs) and other user settings where fast, easy, reliable alcohol in breath screen is needed. The Breath Logix technology has thus far been developed as a wall mounted version and an in-vehicle cabin version. The Breath Logix “workplace and industrial series” is a fully automated breath alcohol screening system for employee, contractor and visitor access control. Breath Logix is self-administered, non-invasive and has both non-contact and direct straw modes. The Breath Logix is engineered for rapid and repeatable high-volume screening in various employment settings. The device can provide BAC results on its screen within a few seconds after a sample is delivered. The device is cloud-connected and can deliver real time BAC results via portal, email and SMS. Furthermore, the device can help identify users by taking a picture when a breath sample is being delivered to the device. The Company is currently pilot testing an early version of its workplace Breath Logix and has begun efforts to build a commercial workplace Breath Logix unit for electronic and alcohol certification.

OVERALL PERFORMANCE

The Company was incorporated on April 5, 2011. As an early-stage technology development company, the Company has not generated revenues to date from the development its marijuana breathalyzer or alcohol breathalyzer technologies and anticipates that it will continue to require equity financing to fund operations until such time a commercial product is developed and generates revenues on a profitable basis. The Company is focused on technology development and management anticipates that expenses will increase during the foreseeable future as the Company carries out prototype development of the marijuana and alcohol breathalyzers and eventually initiates research and testing studies on such products. The Company has incurred costs in connection with the technology development business, as well as exploration programs related to its past mineral exploration projects. Net loss for the quarter ended October 31, 2024 was $449,943 compared to $920,433 for the quarter ended October 31, 2023. At October 31, 2024, the Company has an accumulated deficit of $39,149,579.

During the quarter ended October 31, 2024, the Company incurred significant costs related to technology development. Most of the general and administrative expenses were similar to the previous year with exception of share-based compensation. The Company anticipates that expenses will continue to rise in connection with the Company’s focus on the identification and development of its technology business. See the discussion under the headings “Liquidity” and “Capital Resources” for more information.

RESULTS OF OPERATIONS

Three-month period ended October 31, 2024

During the three-month period ended October 31, 2024, the Company incurred expenses of $478,641 compared to $978,173 for the three-month period ended October 31, 2023. Expenses were comprised of primarily research and development costs of $271,958 for the quarter ended October 31, 2024 compared to $318,676 for the quarter ended October 31, 2023, which was related to the continuous development of marijuana and alcohol detection technologies. Consulting fees were $84,455 for the quarter ended October 31, 2024 compared to $106,046 for the quarter ended October 31, 2023, which was lower in 2024 due to a decrease in consulting fees to Officers and Directors. Advertising and promotion expenses were $6,704 in 2024 compared to $7,070 in 2023. Professional fees (legal & Accounting) for the quarter ended October 31, 2024, were $36,017, compared to $6,406 for the quarter ended October 31, 2023. Professional fees were significantly higher in 2024 due to additional legal fees related to patent filing and maintenance. Transfer agent and filing fees were $13,755 for the quarter ended October 31, 2024 compared to $16,077 for the quarter ended October 31, 2023. Travel related expenses were $1,157 during the three-month period ended October 31, 2024 compared to $18,903 in 2023. Office and miscellaneous expenses were $16,228 for the period ended October 31, 2024 compared to $11,099 for the period ended October 31, 2023. Rent expense was $4,983 for the quarter ended

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October 31, 2024 compared to $1,509 for the quarter ended October 31, 2023. The Company recorded depreciation of $43,384 for the quarter ended October 31, 2024, which included $34,138 related to the right-of-use asset and $9,246 related to lab equipment. Depreciation for the quarter ended October 31, 2023 was $37,466, of which $28,659 was related to the right-of-use asset and $8,807 was related to lab equipment. Share-based payments of $nil (2023 - $454,921) was recognized as the fair value of nil (2023 - 2,675,000) granted stock options during the quarter.

Interest income for the quarter ended October 31, 2024 was $32,257 compared to $63,718 for the quarter ended October 31, 2023, which was higher in 2023 due to the timing of savings accounts and GIC interest payments, a higher savings balance and fluctuating interest rates. Interest expense related to the accretion of lease liability was $3,559 during the three-month period ended October 31, 2024, compared to $5,978 during the three-month period ended October 31, 2023.

Net loss for the three-month period ended October 31, 2024 was $449,943, compared to a net loss of $920,433 for the three-month period ended October 31, 2023.

Corporate, general, and administration expenses, which excludes R&D expenses, decreased to $206,683 for the quarter ended October 31, 2024 from $659,497 for the quarter ended October 31, 2023. The decrease was primarily a result of difference in the fair value of share-based payments related to the granting and vesting of stock options during the quarter ended October 31, 2023. The fair value of the stock options granted and vested during the quarter ended October 31, 2023 was $454,921 compared to $nil during the quarter ended October 31, 2024.

Six-month period ended October 31, 2024

During the six-month period ended October 31, 2024, the Company incurred expenses of $1,756,002 compared to $1,585,862 for the six-month period ended October 31, 2023. Expenses were comprised of primarily research and development costs, which were $1,295,936 for the six months ended October 31, 2024 compared to $625,275 for the six-month period ended October 31, 2023, which were all related to technology development. These expenditures included consultants, materials, and testing. Research and development costs during the six-month period ended October 31, 2024 were significantly higher than the same period in 2023 due to the Company issuing 1,000,000 common shares with a fair value of $730,000 to Omega pursuant to the strategic partnership and development agreement. The fair value of the shares issued was charged to operations and included in research and development costs. Advertising and promotion expenses were $50,838 for the six-month period ended October 31, 2024 compared to $17,765 in 2023, which was higher in 2024 due to the Company entering into additional advertising campaigns. Consulting fees were $174,697 for the six-month period ended October 31, 2024 compared to $212,091 for the six-month period ended October 31, 2023, which was slightly lower in 2024 due to a decrease in consulting fees to Officers and Directors. Professional fees (legal & Accounting) for the six-month period ending October 31, 2024, were $59,832, compared to $28,606 for the six-month period ended October 31, 2023, which was higher in 2024 due to additional legal fees related to patent filings and maintenance. Transfer agent and filing fees were $48,580 in 2024 compared to $59,198 for same period in 2023. Travel related expenses were $2,473 compared to $19,468 in 2023. Rent expense was $5,944 for the six-month period ended October 31, 2024 compared to $2,858 for the six-month period ended October 31, 2023. The Company recorded depreciation of $86,538 for the six months ended October 31, 2024, which included $68,276 related to the right-of-use asset and $18,262 related to lab equipment. Depreciation for the six months ended October 31, 2023 was $74,536, which included $57,318 related to the right-of-use asset and $17,218 related to lab equipment. The right-of-use asset is the leased premises in Burnaby, BC. Rent expense was related to the lab space in Gainesville, FL. Share-based payments of $nil (2023 - $521,225) was recognized as the fair value of 2,692,500 granted and vested stock options during the six-month period ended October 31, 2023, compared to nil stock options granted and vested during the six-month period ended October 31, 2024. 2,675,000 stock options were granted during the six-month period ended October 31, 2023, of which 2,272,500 vested immediately. 420,000 additional stock option vested during the six-month period ended October 31, 2023, which were originally granted December 30, 2021.

Interest income from GICs and savings accounts for the six-month period ended October 31, 2024 was $62,421 compared to $101,340 for the same period in 2023, which was higher in 2023 due to higher interest rates, a higher savings account balance, and the timing of GIC interest payments. Net loss for the six-month period ended October 31, 2024 was $1,701,807, compared to a net loss of $1,498,224 for the six-month period ended October 31, 2023. Interest expense related to the accretion of lease liability was $8,226 during the six-month period ended October 31, 2024, compared to $13,702 during the six-month period ended October 31, 2023.

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SUMMARY OF QUARTERLY RESULTS

The following is a summary of the Company’s financial results for the eight most recently completed quarters:

	Quarter Ended October 31, 2024 $	Quarter Ended July 31, 2024 $	Quarter Ended April 30, 2024 $	Quarter Ended January 31, 2024 $	Quarter Ended October 31, 2023 $	Quarter Ended July 31, 2023 $	Quarter Ended April 30, 2023 $	Quarter Ended January 31, 2023 $
	10/31/2024	7/31/2024	4/30/2024	1/31/2024	10/31/2023	7/31/2023	4/30/2023	1/31/2023
Revenue	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Net loss	(449,943)	(1,251,864)	(1,181,592)	(446,791)	(920,433)	(577,791)	(340,467)	(683,388)
Loss per share, basic and diluted	(0.01)	(0.01)	(0.01)	–	(0.01)	(0.01)	–	(0.01)

On a quarter-by-quarter basis the loss can fluctuate significantly due to research & development costs, timing of advertising campaigns, and the timing of stock option grants.

Net loss was higher during the quarter ended July 31, 2024, primarily due to the Company issuing 1,000,000 common shares pursuant to the Omega Agreement. The fair value of the common share issued was $730,000 and charged to operations. Net loss was significantly higher during the quarter ended April 30, 2024, due to the Company granting stock options with a fair value of $393,836, entering into advertising campaigns amounting to $105,662, and paying a one-time consulting fee of $250,000. Net loss was significantly higher during the quarter ended October 31, 2023, due to the Company granting 2,675,000 stock options. The fair value of the 2,272,500 stock options, which vested upon grant date, was $482,873 and was recorded as stock-based compensation. During the quarter ended January 31, 2023, net loss was slightly higher due to the Company recording the fair value of 980,000 vested stock options in the amount of $210,301. Net loss during the other four quarters was relatively similar.

LIQUIDITY

The Company has not begun commercial sales of any of its technology holdings and accordingly, the Company does not generate cash from operations. The Company finances technology development by raising capital from equity markets. The Company may encounter difficulty sourcing future financing in light of the recent economic downturn.

The Company had cash and cash equivalents of $3,313,100 as at October 31, 2024 and $5,532,433 as at October 31, 2023. The Company had working capital of $3,215,425 as at October 31, 2024 and working capital of $5,417,796 as at October 31, 2023.

If additional funds are required, the Company plans to raise additional capital primarily through the private placement of its equity securities. Under such circumstances, there is no assurance that the Company will be able to obtain further funds required for the Company’s continued working capital requirements. Due to the recovery from the global financial crisis, the Company may find it increasingly difficult to raise the funds required to continue the Company’s operations. Share prices have undergone significant decreases and any issuance of the Company’s equity securities in the near future may result in substantial dilution to the Company’s existing shareholders.

CAPITAL RESOURCES

The Company continues to utilize its cash resources to fund its administrative requirements and product development. As the Company does not currently generate revenue, cash balances will continue to decline as funds are utilized to conduct its operations, unless replenished by capital fundraising. In order to fund the Company’s ongoing operational needs, the Company will need funding through equity or debt financing. The Company’s operations to date have been financed by the issuance of its common shares. The Company continues to seek capital through various means including the issuance of equity and debt. While the Company has been successful in raising funds in the past, there is no assurance that it will continue to do so in the future or that it will be available on a timely basis or on terms acceptable to the Company.

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The financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future. If the Company is unable to obtain sufficient funding, the ability of the Company to meet its obligations as they come due and, accordingly, the ability of the Company to continue as a going concern will be in significant doubt. The Company has incurred $39,149,579 in losses from inception including a net loss of $449,943 for the quarter ended October 31, 2024 (2023 - $920,433) and has working capital of $3,215,425 as at October 31, 2024 (2023 - $5,417,796).

Operating Activities

The Company used net cash of $331,167 in operating activities during the quarter ended October 31, 2024 compared to $413,154 during the quarter ended October 31, 2023.

Financing Activities

The Company used net cash of $38,519 in financing activities during the quarter ended October 31, 2024, and used net cash of $35,318 during the quarter ended October 31, 2023, which was the amount of lease payments.

Investing Activities

The Company used cash of $nil for the purchase of property and equipment during the quarters ended October 31, 2024 and October 31, 2023.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has not entered into any off-balance sheet arrangements.

TRANSACTIONS WITH RELATED PARTIES

Key management consists of directors and officers of the Company. Key management compensation is summarized as follows:

(a) During the quarter ended October 31, 2024, the Company incurred consulting fees of $42,000 (2023 - $42,000) to the Chief Executive Officer of the Company.

(b) During the quarter ended October 31, 2024, the Company incurred consulting fees of $37,500 (2023 - $37,500) to the Chief Financial Officer of the Company.

(c) During the quarter ended October 31, 2024, the Company incurred research and development costs of $37,500 (2023 - $37,500) to a director of the Company.

(d) As at October 31, 2024, $40,325 (2023 - $nil) was owed to directors and officers of the Company and included in accounts payable and accrued liabilities.

PROPOSED TRANSACTIONS

There are no proposed transactions that have not been disclosed herein.

EVENTS SUBSEQUENT TO YEAR END

As at December 20, 2024, the date of this MD&A, the Company did not have any subsequent events to report.

ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

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 accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

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FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The Company’s financial instruments consist of cash, short-term investments, and accounts payable and accrued liabilities. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest rate, currency or credit risks arising from these financial instruments. The fair values of these financial instruments approximate their carrying values due to the relatively short-term maturity of these instruments.

ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS WITHOUT SIGNIFICANT REVENUE

During the periods ended October 31, 2024 and 2023, the Company incurred the following expenses:

	Quarter Ended October 31, 2024	Quarter Ended October 31, 2023
Research and development costs	$271,958	$318,676
Share-based compensation	–	$454,921
General and administrative costs	$206,683	$204,576

An analysis of material components of the Company’s general and administrative expenses is disclosed in the unaudited financial statements for the period ended October 31, 2024 to which this MD&A relates.

DISCLOSURE OF OUTSTANDING SHARE DATA

Common Shares

The Company’s common shares are listed on the Canadian Securities Exchange. The Company’s authorized share capital consists of an unlimited number of common shares without par value. As at December 20, 2024, the Company had 115,144,104 common shares outstanding.

Share Purchase Warrants

As at December 20, 2024, there were no share purchase warrants outstanding.

Stock Options

The Company had 9,505,000 stock options outstanding as at December 20, 2024 which had the following characteristics:

Number of Options	Exercise Price	Expiry Date
1,125,000	$0.50	May 11, 2025
3,180,000	$0.55	December 30, 2026
575,000	$0.45	October 3, 2025
1,925,000	$0.35	October 3, 2028
475,000	$0.25	April 2, 2026
2,225,000	$0.25	April 2, 2029

RISK FACTORS

Much of the information included in this report includes or is based upon estimates, projections or other forward-looking statements. Such forward-looking statements include any projections or estimates made by the Company and its management in connection with the Company’s business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect the Company’s current judgment regarding the direction of its business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. Except as required by

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law, the Company undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Such estimates, projections or other forward-looking statements involve various risks and uncertainties as outlined below. The Company cautions readers of this report that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other forward-looking statements. In evaluating the Company, its business and any investment in its business, readers should carefully consider the following factors:

Risks Related to the Company's Business

Because of the unique difficulties and uncertainties inherent in early-stage technology development, the Company faces a high risk of business failure.

Risks and Uncertainties

An investment in the Company involves significant risks and must be considered speculative due to the nature of the Company's business. Investors should carefully consider the risks and uncertainties described below. This list of risks and uncertainties below is not exhaustive. Furthermore, additional risks and uncertainties not presently known to the Company or that the Company believes to be immaterial may also adversely affect Cannabis Technologies' business.

Risks Related to the Company's Business

The Company has a history of operating losses and may never achieve profitability in the future. The Company is an early-stage technology development company; accordingly, it has not yet generated any revenues.

The Company expects to be involved in research and development to create several prototype marijuana breathalyzers and then perform extensive trial testing and conduct research studies with such devices prior to determining their commercial viability. This process may take several years and require significant financial resources without income. The Company expects these expenses to result in continuing operating losses for the foreseeable future.

The Company's ability to generate future revenue or achieve profitable operations is largely dependent on its ability to attract the experienced management and know-how to develop a trial tested device and to (perhaps) partner with larger, more established companies in the industry to successfully commercialize a marijuana breathalyzer. Successfully developing a marijuana breathalyzer into marketable device may take several years and significant financial resources and the Company cannot assure that it can achieve these objectives.

The Company will primarily be in a developing industry and will be subject to all associated regulatory risks.

As a result, the Company's business must be evaluated in light of the problems, delays, uncertainties and complications encountered in connection with establishing a marijuana breathalyzer and related business.

There is a possibility that the Company's marijuana breathalyzer technologies, currently under development, will be found to be ineffective, that it will be unable to receive necessary regulatory approvals in order to commercialize a device, or that it will obtain regulatory approvals that are too narrow to be commercially viable.

Any failure to successfully develop and obtain regulatory approval for products would have a material adverse effect on the Company's business, financial condition and results of operations.

Trial testing for potential marijuana breathalyzer will be expensive and time consuming, and their outcome uncertain.

Before the Company can obtain regulatory approval for the commercial sale of any marijuana breathalyzer, it will be required to complete extensive trial testing to demonstrate safety and efficacy. Depending on the exact nature of trial testing, such trials can be expensive and are difficult to design and implement. The testing process is also time-consuming and can often be subject to unexpected delays.

The timing and completion of trial testing may be subject to significant delays relating to various causes, including: inability to manufacture or obtain sufficient quantities of materials and or test subjects for use in trial testing; delays

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arising from collaborative partnerships; delays or failures in the technology during the testing period; delays in obtaining regulatory approvals to commence a study, or government intervention to suspend or terminate a study; delays, suspensions or termination of trial testing due to the applicable institutional review board or independent ethics board responsible for overseeing the study to protect research subjects; delays in identifying and reaching agreement on acceptable terms with prospective trial testing sites and subjects; variability in the number and types of subjects available for each study and resulting difficulties in identifying and enrolling subjects who meet trial eligibility criteria; scheduling conflicts; difficulty in maintaining contact with subjects after testing, resulting in incomplete data; unforeseen safety issues or side effects; lack of efficacy during trial testing; reliance on research organizations to conduct trial testing, which may not conduct such trials with good laboratory practices; or other regulatory delays.

Protection of proprietary technology can be unpredictable and costly.

The Company’s success may depend in part upon its ability to defend and maintain granted patents from third parties, be able to maintain the existing patent it has licenced from UFRF and UBC as well as successfully file future patents. Obtaining such patent protection can be costly and the outcome of any application for such can be unpredictable. In addition, any breach of confidentiality by a third party by premature disclosure may preclude the obtainment of appropriate patent protection, thereby affecting the development and commercial value of the Company’s technology and products.

Competition

The planned business to be carried out by the Company will be highly competitive and involve a high degree of risk. There are several direct and indirect competitors to the Company. In its efforts to achieve its objectives, the Company will compete with other companies that may have greater resources, faster execution to market, and potentially superior technology.

Uninsured or Uninsurable Risk

The Company may become subject to risks against which it cannot insure or against which it may elect not to insure. Settling related liabilities would reduce funds available for core business activities. Settlement of uninsured liabilities could have a material adverse effect on our financial position.

Conflicts of Interest

The Company’s directors and officers may currently be involved, or become involved, in other business ventures that compete with our platform and services. Business opportunities for the Company may create circumstances in which outside interests of our directors and officers conflict with the interests of the Company. Directors and officers are required to act in good faith and in a manner that benefits the Company.

It is possible, however, that our directors and officers may owe similar consideration to another organization(s). It is possible that these and other conflicts of interest are resolved in a way that has a material adverse impact on the Company.

Dependence on Key Personnel

The Company depends on support from existing directors and officers and its ability to attract, and retain, new directors, officers and other personnel with appropriate skill sets. Inability to retain key team members or find new professionals to serve in important roles could have a material adverse effect on the Company’s business. There can be no assurance that we will be able to attract or retain the quality of personnel required in the future.

Patent & IP

The Company through its Licence Agreement with UBC holds certain rights to patent pending technology but cannot guarantee their final patent approval or commercial viability. The Company through its Licence Agreement with UFRF holds certain rights to patented and unpatented technology. The Company cannot guarantee its ability financially maintain such patents, and or their future commercial viability or use. The Company cannot guarantee final patent approval or commercial viability.

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Financial Liquidity

The Company has not yet generated any revenue and will likely operate at a loss as it develops its first device. We may require additional financing in order to execute our business plan. Our ability to secure required financing will depend in part upon an investor perception of our ability to create a successful business. Capital market conditions and other factors beyond our control may also play important roles in our ability to raise capital. The Company can offer no assurance that it will be able to successfully obtain additional financing, or that future financing occurs on terms satisfactory to our management and/or shareholders. If funds are unavailable in the future, or unavailable in the amounts that we feel the business requires, or unavailable on acceptable terms, we may be required to cease operating or modify our business plans in a manner that undermines our ability to achieve our business objectives.

Financial Statements Prepared on Going Concern Basis

The Company’s financial statements have been prepared on a going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the ordinary course of business. The Company’s future operations are dependent upon the successful completion of financing and the creation of operations deemed successful according to the standards of our industry. The Company cannot guarantee that it will be successful in obtaining financing in the future or in achieving business objective set forth internally or externally. Our consolidated financial statements may not contain the adjustments relating to carrying values and classification of assets and/or liabilities that would be necessary should the Company be unable to continue as a going concern.

Costs of Maintaining a Public Listing

As a result of obtaining a public listing, the Company will incur greater legal, accounting and other expenses related to regulatory compliance than it would have had it remained a private entity. The Company may also elect to devote greater resources than it otherwise would have on communication and other activities typically considered important by publicly traded companies.

Share Price Volatility and Speculative Nature of Share Ownership

The Company is listed for trading on the CSE, resulting in many legacy shareholders being able to freely trade their shares. Factors both internal and external to the Company may significantly influence the price at which our shares trade, and the volatility of our share price. Quarterly operating results and material developments reported by the Company can, and likely will, influence the price of our shares.

Sentiment toward technology stocks, as well as toward the stock market in general, is among the many external factors that may have a significant impact on the price of the Company’s shares. The Company is a relatively young company that is not generating revenue and does not possess significant cash reserves. As such, it should be considered a speculative investment. There is no guarantee that a liquid market will be developed or maintained for the Company’s shares.

Risks Relating to the Company’s Common Stock

A decline in the price of the Company’s common stock could affect its ability to raise further working capital and adversely impact its ability to continue operations.

A prolonged decline in the price of the Company’s common stock could result in a reduction in the liquidity of its common stock and a reduction in its ability to raise capital. Because a significant portion of the Company’s operations have been and will be financed through the sale of equity securities, a decline in the price of its common stock could be especially detrimental to the Company’s liquidity and its operations. Such reductions may force the Company to reallocate funds from other planned uses and may have a significant negative effect on the Company’s business plan and operations, including its ability to develop new products and continue its current operations. If the Company’s stock price declines, it can offer no assurance that the Company will be able to raise additional capital or generate funds from operations sufficient to meet its obligations. If the Company is unable to raise sufficient capital in the future, the Company may not be able to have the resources to continue its normal operations.

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ADDITIONAL INFORMATION

Additional information about the Company is available on SEDAR+ at http://www.sedarplus.ca.

BOARD APPROVAL

The board of directors of the Company has approved this MD&A.