NOTE

– RELATED PARTY TRANSACTIONS

The Company has received loans from several related parties, as described above in Notes

and

There are advances of

$1,065,328

to CEN Ukraine as of both

March 31, 2020

and

December 31, 2019,

which such advances were made for the purpose of funding the operations of CEN Ukraine as summarized in Note

CEN Ukraine was founded by Bill Chaaban. Prior to

December 3, 2017,

Bill Chaaban directly owned

51%

of CEN Ukraine. CEN Ukraine was founded to seek agricultural and pharmaceutical opportunities in Ukraine. Bill Chaaban personally funded the establishment and initial phases of CEN Ukraine. On

December 14, 2017,

the Company entered into a controlling interest purchase agreement with Bill Chaaban, our interim Chief Executive Officer and member of our board of directors, and another shareholder of CEN Ukraine, Usamakh Saadikh, a member of our board of directors, for

51%

of the outstanding equity interests of CEN Ukraine. The consideration will be paid by issuing common shares of the Company. The agreement, which is subject to certain conditions, has

not

closed as of

June 12, 2020,

as the Company needs to raise additional funds in order to proceed with the closing. Bahige (Bill) Chaaban, our Interim Chief Executive Officer and member of our Board of Directors, and Usamakh Saadikh, a member of our Board of Directors, each directly own

25.5%

of CEN Ukraine respectively. The remaining

49%

of CEN Ukraine is owned by XN Pharma, which is an entity jointly owned by Bahige (Bill) Chaaban and Usamakh Saadikh. Bahige (Bill) Chaaban and Usamakh Saadikh do

not

currently hold any positions with CEN Ukraine. CEN Ukraine is operated and controlled by its sole director. Pursuant to Ukrainian law, shareholders of a company do

not

have the ability to control the company or the actions of its director. CEN Ukraine is operated under the direction of its management per the guidelines of Ukrainian law.

July 12, 2017,

the Company’s Shareholders elected individuals to serve as Directors on the Board. These individuals hold long-term convertible notes payable issued prior to the election. All notes payable bear interest at

per annum and are convertible to common shares with various maturity dates. They became related parties when they were elected.

As of

March 31, 2020,

the Company owed Joseph Byrne, a

shareholder and former CEO of the Company,

$8,347

for a short-term advance received.

During both of the

three

-months ended

March 31, 2020

and

2019,

the Company incurred payroll and consulting expenses of

$31,200

with certain Board Members and Officers. As of

March 31, 2020

and

December 31, 2019,

$295,100

and

$263,900,

respectively, was payable to these related parties for payroll and consulting charges, which are included within accrued expenses.

During

2017,

the Company purchased equipment from R&D Labs Canada, Inc., whose president is Bill Chaaban, in exchange for a

$300,000

note payable. This equipment was then sold to CEN Ukraine for a loss of

$255,141

in exchange for a

$44,859

note receivable, payable in

equal installments beginning in

2017

through

2026.

payments have been received as of

March 31, 2020,

however, management expects this balance to be collectible.

The Company leases

North Rear Road, a

10.4

acre site of land in Canada, through a sublease from a relative of the Company’s President. There are

two

buildings on the site –

one

27,000

square feet and

one

53,000

square feet. There is also a

4,000

square foot vault for security purposes. The Company constructed improvements to this property, including structures and equipment for growing marijuana, security fencing required for licensing as a marijuana producer, and other infrastructure. These improvements were fully impaired during the

quarter of

2018.

Jamaal Shaban (“Lessor”), cousin of Bill Chaaban, leased the

North Rear Road property to the Company under an agreement effective

January 2017

for monthly rental payments of CAD

4,000

plus taxes for a period of

five

years. The lease has been accounted for as an operating lease. As of

March 31, 2020

and

December 31, 2019,

the operating right of use asset was

$55,451

and

$68,547,

respectively, and the associated liability was

$52,632

and

$65,467,

respectively, utilizing an

discount rate. During the

three

-months ended

March 31, 2020

and

2019,

lease expenses of

$8,719

and

$5,986,

respectively, related to this agreement were recognized within general and administrative expenses. This lease was assigned by the Lessor to Jamsyl Group, a

third

-party, when Jamsyl Group purchased the property from Jamaal Shaban in

October 2019.

The Company also leases office space in Windsor, Ontario from R&D Labs Canada, Inc., whose president is Bill Chaaban. This lease was subsequently assigned to RN Holdings Ltd, a

third

-party, on

May 8, 2019

when RN holdings purchased the building. Under the lease agreement effective

October 1, 2017,

monthly rents of CAD

2,608

are due through

September 2022,

at which point monthly rents of CAD

3,390

are due. As of

March 31, 2020

and

December 31, 2019,

the operating right of use asset was

$143,609

and

$160,737,

respectively, and the associated liability was

$146,838

and

$163,157,

respectively, utilizing an

discount rate. During the

three

-months ended

March 31, 2020

and

2019,

lease expenses of

$6,325

and

$4,978,

respectively, related to this agreement were recognized within general and administrative expenses.

Maturities of operating lease liabilities at

March 31, 2020

were as follows:

	Amount
2020	$	55,896
2021		47,437
2022		25,368
2023		28,676
2024		28,676
Thereafter		71,690

Total lease payments	$	257,743
Less imputed interest		58,273
Present value of lease liabilities	$	199,470