8. INTANGIBLE ASSETS

 SCHEDULE OF INTANGIBLE ASSET

Intangible assets included $7,209,118 (December 31, 2023 - $12,733,885) for intellectual property (“Manna IP”) acquired under an asset purchase agreement with Manna Nutritional Group, LLC (“Manna”) dated September 10, 2021. The Manna IP encompasses patented technologies to naturally process and convert grains, pulses, and root vegetables, into low-starch, low-sugar, high-protein, fiber-rich baking flour products, as well as a wide range of breakfast cereals, juices, natural sweeteners, and baking enhancers. The Company paid $1,475,000 in cash and issued 1,476 prefunded warrants valued at $12,106,677 (the “Purchase Price”). Subject to a 9.99% stopper and SEC Rule 144 restrictions, the prefunded warrants will vest in tranches up until March 10, 2024. When vested the tranches of prefunded warrants are convertible into an equal number of common shares.

On January 3, 2023, Manna satisfied all of its contractual obligations when the patent was approved by the US Patent and Trademark Office and the title was transferred to the Company. During the year ended December 31, 2023, the Company issued 1,413 shares in relation to this transaction. As at December 31, 2024, all prefunded warrants had been converted (December 31, 2023 - 64 unconverted prefunded warrants).

Based on the terms above and in conformity with US GAAP, the Company accounted for purchase as an asset acquisition. The asset was available for use on January 3, 2023. The asset was completed and will be amortized over its useful life of 20 years. The Company recorded $632,051 in amortization expense related to the Manna IP for the year ended December 31, 2024 (December 31, 2023 - $654,952).

As at September 30, 2024, the Company determined that there was an indicator of impairment for the intangible assets due in part to the significant decline in the Company’s stock price as at September 30, 2024. As a result, the Company performed an intangible impairment test and determined that the fair value of the intangible asset was $7,832,200 based on an income approach using forecasted discounted royalty payments. For valuing the Manna IP, the Company made estimates regarding future revenues of a market participant, royalty rate, tax rate, and discount rate. The resulting fair value estimate was considered a level 3 fair value estimate given the significant uncertainty involved in estimating future revenues and other inputs. For purposes of estimating the fair value of the patent, the Company assumed that a market participant would capture between 0.008% and 0.115% of the estimated $52.9 billion flour market between the valuation date and the expiration of the patent in 2038, with an average of 0.073%. The Company accordingly recorded an asset impairment loss of $4,137,271 in operating expenses.

The Company acquired intangible assets from RCS as part of the business combination (Note 4). The following intangible assets were acquired from RCS:

SCHEDULE OF INTANGIBLE ASSETS ACQUIRED FROM RCS

The Company recorded $16,218 in amortization expense, and a foreign exchange loss of $27,665 related to the RCS assets for the year ended December 31, 2024.

The Company acquired an intangible asset from the acquisition of Redwater, as part of the asset acquisition (note 4). The Power Purchase Agreement between the Company and Rivogenix, allows the Company to obtain natural gas for its Natural Gas Power Plant. The Power Purchase Agreement was determined to be a favourable contract asset, and as such was recorded as an intangible asset at the present value of the contractual benefit. The period of the contract has been determined to be 3 years. The fair value of the Power Purchase Agreement Contract as of December 31, 2024 is $625,736. The Company recognized $32,335 in amortization expense (reflected in cost of sales) during the year ended December 31, 2024 in relation to the Power Purchase Agreement.

The estimated annual amortization expense, for all intangible assets held, for the next five years is as follows:

 SCHEDULE OF FUTURE AMORTIZATION EXPENSE