RE:RE:RE:Bevcanna Shareholder Must Read 20. DEFERRED REVENUE On June 12, 2018, the Company entered into a license agreement (the “License Agreement”) with BevCanna, a related party, whereby the Company would provide BevCanna with certain manufacturing and quality assurance services for manufacturing beverages in the Company’s facilities, and whereby BevCanna entered into a lease agreement with the Company to lease a portion of land, aquifer and facilities controlled by the Company in order to facilitate the development of BevCanna’s business. BevCanna paid $12,400,000 pursuant to the License Agreement, 50% of which $6,200,000 was paid with 24,800,000 Class A common shares of BevCanna with a fair value of $0.25 per share and the remaining portion in cash. The License Agreement establishes a 10-year term, which can be renewed for two consecutive 10-year terms. As there is no assurance at this stage that the term may be renewed, the Company amortized the amount over the initial term of 10-year period, recognizing $1,240,000 (2019 - $1,240,000) as revenue from License Agreement for the year ended December 31, 2020. As at December 31, 2020, the Company has a remaining balance of deferred revenue of $9,244,389 (2019 - $10,535,748). During the year ended December 31, 2019, the Company recovered $195,465 for overhead costs paid on behalf of BevCanna. On February 14, 2020, the Company amended the lease agreement with BevCanna, allowing BevCanna an increased area of the premises for permitted use from 5,500 square feet to 12,289 square feet for the remaining term of the lease. The Company was paid $1,303,400 for the additional space and displacement fee, of which $650,000 cash was received during 2019, with $600,000 recognized as revenue and $50,000 remained in deferred revenue as at December 31, 2019. During the year ended December 31, 2020, the remaining $653,400 displacement fee was paid in the form of 1,537,411 BevCanna common shares at a price of $0.425 per share. Accordingly, revenue of $703,400 in total was recognized for 2020. The Company was acquired by BevCanna on February 19, 2021, at which time the License Agreement is eliminated on consolidation. On August 25, 2019, the Company leased an additional property unit situated on the Company’s land to a related party. The terms of the lease are the same as the above License Agreement. The Company received $12,000 upfront and will amortize the amount over 10 years. For the year ended December 31, 2020, the Company recognized lease income of $1,358 (2019 - $475).