Cover
Cover - shares | 6 Months Ended | |
Feb. 28, 2021 | Apr. 14, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Allied Corp. | |
Entity Central Index Key | 0001575295 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --08-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Feb. 28, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 85,916,824 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Feb. 28, 2021 | Aug. 31, 2020 |
Current assets | ||
Cash | $ 148,984 | $ 94,047 |
Inventory (Note 4) | 103,972 | 52,585 |
Amounts due from related parties (Note 12) | 11,738 | 0 |
Prepaid expenses | 25,189 | 51,682 |
Total current assets | 289,883 | 198,314 |
Deposits and advances (Note 5) | 2,829,286 | 3,008,246 |
Right-of-use assets (Note 8) | 73,758 | 374,997 |
Property, plant and equipment (Note 6) | 228,914 | 223,020 |
Intangible assets (Note 7) | 3,118,112 | 3,300,000 |
Total assets | 6,539,953 | 7,104,577 |
Current liabilities | ||
Accounts payable and accrued liabilities | 1,379,647 | 1,396,495 |
Current portion of lease liabilities (Note 8) | 4,127 | 17,073 |
Loan payable (Note 9) | 1,253,772 | 1,253,772 |
Convertible notes payable (Note 10) | 1,328,535 | 400,000 |
Total current liabilities | 3,966,081 | 3,067,340 |
Lease liabilities, net of current portion (Note 8) | 69,631 | 333,073 |
Total liabilities | 4,035,712 | 3,400,413 |
Stockholders' equity | ||
Preferred stock - 50,000,000 shares authorized, $0.0001 par value Nil shares issued and outstanding | 0 | 0 |
Common stock - 300,000,000 shares authorized, $0.0001 par value; 85,305,780 shares issued and outstanding (85,105,780 - par value $0.0001 - August 31, 2020) | 8,531 | 8,511 |
Additional paid in capital | 14,308,501 | 12,226,382 |
Common stock issuable | 472,616 | 19,952 |
Accumulated deficit | (11,803,864) | (7,908,566) |
Accumulated other comprehensive loss | (481,543) | (642,115) |
Total stockholders' equity | 2,504,241 | 3,704,164 |
Total liabilities and stockholders' equity | $ 6,539,953 | $ 7,104,577 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Feb. 28, 2021 | Aug. 31, 2020 |
Stockholders' equity (deficit) | ||
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares par value | $ 0.0001 | $ 0.0001 |
Common stock, shares issued | 85,305,780 | 85,105,780 |
Common stock, shares outstanding | 85,305,780 | 85,105,780 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2021 | Feb. 29, 2020 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) | ||||
Revenue | $ 1,060 | $ 0 | $ 5,260 | $ 0 |
Expenses | ||||
Amortization | 196,341 | 33,980 | 366,021 | 33,980 |
Charitable donations | 15,000 | 26,254 | 15,000 | 99,543 |
Consulting fees | 163,892 | 317,074 | 491,735 | 491,214 |
Stock-based compensation | 1,380,120 | 0 | 1,380,120 | 0 |
Foreign exchange | (11,291) | 67,215 | (16,256) | (3,919) |
Interest expense | 145,588 | 0 | 258,428 | 0 |
Office and miscellaneous | 436,017 | 268,578 | 541,829 | 349,549 |
Professional fees | 242,148 | 192,802 | 372,779 | 339,350 |
Rent | 10,058 | 4,611 | 30,890 | 8,940 |
Research and development | 0 | 0 | 0 | 8,009 |
Travel | 4,265 | 25,355 | 5,606 | 67,370 |
Operating expenses | 2,582,138 | 935,869 | 3,446,152 | 1,394,036 |
Loss from operations | (2,581,078) | (935,869) | (3,440,892) | (1,394,036) |
Other expenses | ||||
Loss on termination of lease | 0 | 0 | (65,566) | 0 |
Settlement payments | 0 | 0 | (105,000) | 0 |
Gain (loss) on debt extinguishment | 19,820 | 0 | (90,180) | 0 |
Write-off of receivables | 0 | (55,983) | 0 | (55,983) |
Accretion | (138,178) | (44,417) | (193,661) | (44,417) |
Total other expense | (118,358) | (100,400) | (454,406) | (100,400) |
Net loss | (2,699,436) | (1,036,269) | (3,895,298) | (1,494,436) |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustments | 42,354 | 11,419 | 160,572 | 5,739 |
Comprehensive loss | $ (2,657,082) | $ (1,024,850) | $ (3,734,726) | $ (1,488,697) |
Basic and diluted loss per share | $ (0.03) | $ (0.01) | $ (0.05) | $ (0.02) |
Weighted average number of common shares outstanding | 85,276,609 | 79,040,099 | 85,305,780 | 77,161,058 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders Equity (Deficit) (Unaudited) - USD ($) | Total | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Stock Issuable [Member] | Stock subscription receivable [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income (loss) [Member] |
Balance, shares at Aug. 31, 2019 | 51,200,014 | |||||||
Balance, amount at Aug. 31, 2019 | $ (389,438) | $ 5,120 | $ 0 | $ 912,965 | $ 24,135 | $ (364) | $ (1,300,803) | $ (30,491) |
Cancellation of common stock, shares | (10,459,220) | |||||||
Cancellation of common stock, amount | 0 | $ (1,046) | $ 0 | 1,046 | 0 | 0 | 0 | 0 |
Effect of reverse acquisition, shares | 42,027,986 | |||||||
Effect of reverse acquisition, amount | 3,995,201 | $ 4,203 | $ 0 | 3,925,542 | 65,092 | 364 | 0 | 0 |
Shares reacquired by treasury, shares | (4,500,000) | 4,500,000 | ||||||
Shares reacquired by treasury, amount | 0 | $ (450) | $ 450 | 0 | 0 | 0 | 0 | 0 |
Common stock subscribed,shares | ||||||||
Common stock subscribed,amount | 275,908 | $ 0 | $ 0 | 0 | 275,908 | 0 | 0 | 0 |
Comprehensive loss for the period | (463,847) | 0 | 0 | 0 | 0 | 0 | (458,167) | (5,680) |
Balance, amount at Nov. 30, 2019 | 3,417,824 | $ 7,827 | $ 450 | 4,839,553 | 365,135 | 0 | (1,758,970) | (36,171) |
Balance, shares at Nov. 30, 2019 | 78,768,780 | 4,500,000 | ||||||
Balance, shares at Aug. 31, 2019 | 51,200,014 | |||||||
Balance, amount at Aug. 31, 2019 | (389,438) | $ 5,120 | $ 0 | 912,965 | 24,135 | (364) | (1,300,803) | (30,491) |
Common stock subscribed for cash | 276,000 | |||||||
Balance, amount at Feb. 29, 2020 | 7,340,040 | $ 8,314 | $ 0 | 9,927,582 | 224,135 | 0 | (2,795,239) | (24,752) |
Balance, shares at Feb. 29, 2020 | 83,138,780 | |||||||
Balance, shares at Nov. 30, 2019 | 78,768,780 | 4,500,000 | ||||||
Balance, amount at Nov. 30, 2019 | 3,417,824 | $ 7,827 | $ 450 | 4,839,553 | 365,135 | 0 | (1,758,970) | (36,171) |
Comprehensive loss for the period | (1,024,850) | $ 0 | $ 0 | 0 | 0 | 0 | (1,036,269) | 11,419 |
Shares issued for cash, shares | 370,000 | |||||||
Shares issued for cash, amount | 0 | $ 37 | $ 0 | 340,963 | (341,000) | 0 | 0 | 0 |
Shares issued on acquisition of assets, shares | 45,000,000 | (4,500,000) | ||||||
Shares issued on acquisition of assets, amount | 4,500,000 | $ 450 | $ (450) | 4,500,000 | 0 | 0 | 0 | 0 |
Share subscriptions received | 200,000 | 0 | 0 | 0 | 200,000 | 0 | 0 | 0 |
Beneficial conversion feature | 247,066 | 0 | 0 | 247,066 | 0 | 0 | 0 | 0 |
Balance, amount at Feb. 29, 2020 | 7,340,040 | $ 8,314 | $ 0 | 9,927,582 | 224,135 | 0 | (2,795,239) | (24,752) |
Balance, shares at Feb. 29, 2020 | 83,138,780 | |||||||
Balance, shares at Aug. 31, 2020 | 85,105,780 | |||||||
Balance, amount at Aug. 31, 2020 | 3,704,164 | $ 8,511 | 12,226,382 | 19,952 | 0 | (7,908,566) | (642,115) | |
Common stock subscribed,amount | 110,000 | 0 | 110,000 | 0 | 0 | 0 | ||
Comprehensive loss for the period | (1,076,939) | $ 0 | 0 | 0 | (1,195,862) | 118,923 | ||
Shares issued for cash, shares | 200,000 | |||||||
Shares issued for cash, amount | 250,000 | $ 20 | 249,980 | 0 | 0 | 0 | 0 | |
Detachable warrants issued with convertible notes payable | 153,764 | 0 | 153,764 | 0 | 0 | 0 | 0 | |
Shares issuable upon modification of debt | 133,127 | 0 | 133,127 | 0 | 0 | 0 | 0 | |
Balance, amount at Nov. 30, 2020 | 3,274,116 | $ 8,531 | 12,763,253 | 129,952 | 0 | (9,104,428) | (523,192) | |
Balance, shares at Nov. 30, 2020 | 85,305,780 | |||||||
Balance, shares at Aug. 31, 2020 | 85,105,780 | |||||||
Balance, amount at Aug. 31, 2020 | $ 3,704,164 | $ 8,511 | 12,226,382 | 19,952 | 0 | (7,908,566) | (642,115) | |
Common stock subscribed,shares | 4,900,000 | |||||||
Common stock subscribed for cash | $ 250,000 | |||||||
Balance, amount at Feb. 28, 2021 | 2,504,241 | $ 8,531 | 14,308,501 | 472,616 | 0 | (11,803,864) | (481,543) | |
Balance, shares at Feb. 28, 2021 | 85,305,780 | |||||||
Balance, shares at Nov. 30, 2020 | 85,305,780 | |||||||
Balance, amount at Nov. 30, 2020 | 3,274,116 | $ 8,531 | 12,763,253 | 129,952 | 0 | (9,104,428) | (523,192) | |
Comprehensive loss for the period | (2,657,787) | 0 | 0 | 0 | 0 | (2,699,436) | 41,649 | |
Beneficial conversion feature | 22,564 | 0 | 22,564 | 0 | 0 | 0 | 0 | |
Detachable warrants issued with convertible notes payable | 142,564 | 0 | 142,564 | 0 | 0 | 0 | 0 | |
Stock-based compensation | 1,380,120 | 0 | 1,380,120 | 0 | 0 | 0 | 0 | |
Common stock issuable to settle debt | 92,664 | 0 | 0 | 92,664 | 0 | 0 | 0 | |
Common stock subscribed for cash | 250,000 | 0 | 0 | 250,000 | 0 | 0 | 0 | |
Balance, amount at Feb. 28, 2021 | $ 2,504,241 | $ 8,531 | $ 14,308,501 | $ 472,616 | $ 0 | $ (11,803,864) | $ (481,543) | |
Balance, shares at Feb. 28, 2021 | 85,305,780 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Feb. 28, 2021 | Feb. 29, 2020 | |
Cash provided by (used in): Operating activities | ||
Net loss for the period | $ (3,895,298) | $ (1,494,436) |
Adjustment to net loss for the period for non-cash items | ||
Accretion | 193,661 | 44,417 |
Amortization | 366,021 | 33,980 |
Loss on debt extinguishment | 90,180 | 0 |
Write-off of receivables | 0 | 55,983 |
Loss on termination of lease | (65,566) | 0 |
Stock-based compensation | 1,380,120 | 0 |
Changes in non-cash working capital balance: | ||
Increase in other receivables | 0 | (75,584) |
Decrease (increase) in prepaid expenses | 34,179 | (21,096) |
Increase in due from related parties | (11,738) | (14,185) |
Increase in accounts payable and accrued liabilities | 95,637 | 28,362 |
Increase in inventory | (51,388) | 0 |
Net Cash Provided By Used In Operating Activities | (1,733,060) | (1,442,560) |
Cash provided by (used in): Investing activities | ||
Refund (payment) of deposits | 129,897 | (504,866) |
Purchase of property, plant and equipment | (33,209) | (32,190) |
Cash obtained from acquisition of assets | 0 | 12,894 |
Net Cash Provided By Used In Investing Activities | 96,688 | (524,162) |
Cash provided by (used in): Financing activities | ||
Proceeds of convertible notes | 1,186,892 | 588,000 |
Repayment of finance lease obligations | (16,315) | 0 |
Proceeds from the issuance of common stock | 250,000 | 276,000 |
Proceeds for subscriptions of stock issuable | 250,000 | 200,000 |
Net Cash Provided By Used In Financing Activities | 1,670,577 | 1,064,000 |
Effect of exchange rate on changes of cash | 20,732 | 4,136 |
Increase (decrease) in cash | 54,937 | (902,722) |
Cash, beginning of period | 94,047 | 1,080,882 |
Cash, end of period | 148,984 | 178,160 |
Supplemental cash flow disclosures: | ||
Income taxes paid | 0 | 0 |
Interest paid | $ 225,679 | $ 0 |
Nature of operations, reverse t
Nature of operations, reverse take-over transaction and going concern | 6 Months Ended |
Feb. 28, 2021 | |
Nature of operations, reverse take-over transaction and going concern | |
1. Nature of operations, reverse take-over transaction and going concern | a) Nature of operations Allied Corp. (the “Company or Allied”) was incorporated in the State of Nevada on February 3, 2013. On July 1, 2019, the Company changed its name to Allied Corp. The Company’s business plan is to discover new medical technologies some of which are cannabis derived to target full scope therapy and support for trauma survivors, military veterans and first responders, however the Company has not begun any operations or obtained the required permits to begin operations. The head office and the registered office of the Company are located at 1405 St. Paul Street, Kelowna BC V1Y 2E4. On September 10, 2019, the Company was acquired in a reverse takeover (“RTO”) transaction (see Note 1b) and the RTO is considered a purchase of the Company’s net assets (see Note 3) by AM (Advanced Micro) Biosciences, Inc. (“AM Biosciences”). For accounting purposes, the legal subsidiary, AM Biosciences has been treated as the acquirer and Allied Corp., the legal parent, has been treated as the acquiree. On February 18, 2020, the Company acquired all the issued and outstanding share capital of a Colombian company, Allied Colombia S.A.S (formerly Medicolombia’s Cannabis S.A.S) (“Allied Colombia”). b) Reverse take-over transaction (RTO) On July 25, 2019, as amended effective August 27, 2019, the Company entered into a reorganization and stock purchase agreement (the “Reorganization Agreement”) to acquire 100% of the issued and outstanding equity of AM (Advanced Micro) Biosciences, Inc (“AM Biosciences”). Effective September 10, 2019, the parties closed the Reorganization Agreement (the “Acquisition”). As part of the transaction, Pacific Capital Investment Group, Inc., the then majority shareholder of Allied (the “Allied Shareholder”) delivered 51,200,014 shares of common stock, representing approximately 65.42% of the outstanding equity of Allied Corp. to SECFAC Exchange Corp. on behalf of the prior shareholders of AM Biosciences and certain other designees of AM Biosciences as a consideration to acquire 100% of the issued and outstanding equity of AM Biosciences. Further, as part of the transaction, the Allied Shareholder submitted for cancellation and return to treasury 10,459,220 and 4,500,000 shares of common stock. As a consequence, immediately subsequent to the close of the Reorganization Agreement, Allied had 78,268,780 shares of common stock outstanding. The Reorganization Agreement constitutes a reverse merger, such that AM Biosciences acquired control of Allied Corp. At the time of the Reorganization Agreement, the operations of Allied Corp. did not constitute businesses under ASC 805 Business Combinations and accordingly the transaction is considered a reverse asset acquisition in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). Under this method of accounting, AM Biosciences was deemed to be the accounting acquirer for financial reporting purposes. This determination was primarily based on the facts that, immediately following the acquisition: (i) AM Biosciences’ stockholders owned a substantial majority of the voting rights in the combined company, (ii) AM Biosciences designated a majority of the members of the initial board of directors of the combined company, and (iii) AM Biosciences’ senior management holds all key positions in the senior management of the combined company. As a result, as of the closing date of the acquisition, the net assets of the Company were recorded at their acquisition-date relative fair values in the consolidated financial statements of the Company and the reported operating results prior to the acquisition will be those of AM Biosciences. See Note 3 for details on the reverse acquisition. c) Going concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a net loss for the six months ended February 28, 2021 of $3,895,298, has generated minimal revenue and as at February 28, 2021 has a working capital deficit of $3,676,198. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise sufficient financing to acquire or develop a profitable business. Management intends on financing its operations and future development activities largely from the sale of equity securities with some additional funding from other traditional financing sources, including related party loans until such time that funds provided by future planned operations are sufficient to fund working capital requirements, refer to note 14 for details. d) COVID-19 impact In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and the related adverse public health developments have adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. Management has determined that there has been no significant impact to the Company’s operations, however management continues to monitor the situation. e) Business Risks While some states in the United States have authorized the use and sale of cannabis, it remains illegal under federal law and the approach to enforcement of U.S. federal laws against cannabis is subject to change. Because the Company plans to engage in cannabis-related activities in the United States, it assumes certain risks due to conflicting state and federal laws. The federal law relating to cannabis could be enforced at any time and this would put the Company at risk of being prosecuted and having its assets seized. On January 4, 2018, United States Attorney General Jeff Sessions issued a memorandum to United States district attorneys (the ““Sessions Memorandum”) which rescinded previous guidance from the United States Department of Justice specific to cannabis enforcement in the United States, including the Cole Memorandum. With the Cole Memorandum rescinded, United States federal prosecutors no longer have guidance relating to the exercise of their discretion in determining whether to prosecute cannabis related violations of United States federal law. In response to the Sessions Memorandum, on April 13, 2018, the United States President Donald Trump promised Colorado Senator Cory Gardner that he will support efforts to protect states that have legalized cannabis. Nevertheless, a significant change in the federal government’s enforcement policy with respect to current federal laws applicable to cannabis could cause significant financial damage to the Company. The Company may be irreparably harmed by a change in enforcement policies of the federal government depending on the nature of such change. Given the current illegality of cannabis under United States federal law, the Company’s ability to access both public and private capital may be hindered by the fact that certain financial institutions are regulated by the United States federal government and are thus prohibited from providing financing to companies engaged in cannabis related activities. The Company’s ability to access public capital markets in the United States is directly hindered as a result. The Company may, however, be able to access public and private capital markets in Canada in order to support continuing operations. |
Significant accounting policies
Significant accounting policies | 6 Months Ended |
Feb. 28, 2021 | |
Significant accounting policies | |
2. Significant accounting policies | Business Presentation These unaudited condensed consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and are expressed in United States dollars. The Company’s fiscal year end is August 31. These interim unaudited financial statements have been prepared in accordance with US GAAP for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by US GAAP for complete financial statements. Therefore, these interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended August 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC. The financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at February 28, 2021, and the results of its operations for the three and six months ended February 28, 2021, and cash flows for the six months ended February 28, 2021. The results of operations for the period ended February 28, 2021 are not necessarily indicative of the results to be expected for future quarters or the full year. The significant accounting policies followed are: a) Principles of consolidation The consolidated financial statements include accounts of Allied Corp. and its majority owned subsidiaries. Subsidiaries are consolidated from the date of acquisition and control and continue to be consolidated until the date that such control ceases. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect these returns through its power over the investee. All intercompany balances, income, expenses, and unrealized gains and losses resulting from intercompany transactions are eliminated on consolidation. b) Cash and cash equivalents Cash is comprised of cash on hand, cash held in trust accounts and demand deposits. Cash equivalents are short-term, highly liquid investments with maturities within three months when acquired. The Company did not have any cash equivalents as of February 28, 2021 and August 31, 2020. c) Property, plant and equipment Property and equipment are stated at cost. The Company depreciates the cost of property, plant and equipment over their estimated useful lives at the following annual rates and methods: Farm facility and equipment 1 - 10 years straight-line basis Office and computer equipment 5 years straight-line basis Land equipment 10 years straight-line basis d) Inventory Inventory is comprised of raw materials, and work-in-progress. Cost includes expenditures directly related to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Inventory costs include pre-harvest costs. Pre-harvest costs include labor and direct materials to grow cannabis, which includes water, electricity, nutrients, integrated pest management, growing supplies and allocated overhead. As of February 28, 2021 and August 31, 2020, the Company does not have material harvested cannabis inventory. Inventory is stated at the lower of cost or net realizable value, determined using weighted average cost. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. At the end of each reporting period, the Company performs an assessment of inventory and records write-downs for excess and obsolete inventories based on the Company’s estimated forecast of product demand, production requirements, market conditions, regulatory environment, and spoilage. Actual inventory losses may differ from management’s estimates and such differences could be material to the Company’s balance sheets, statements of net loss and comprehensive loss and statements of cash flows. e) Intangible assets At February 28, 2021 and August 31, 2020, intangible assets include licenses which are being amortized over their estimated useful lives of 10 years. The Company’s licenses are amortized over their economic or legal life on a straight-line basis, whichever is shorter. The licenses have been amortized from the date of acquisition. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives. For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value. f) Long-lived assets In accordance with ASC 360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. g) Foreign currency translation and functional currency conversion Items included in these consolidated financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entities operate (the “functional currency”). Prior to September 10, 2019, the Company’s functional currency was the Canadian dollar. Translation gains and losses from the application of the U.S. dollar as the reporting currency during the period that the Canadian dollar was the functional currency are included as part of cumulative currency translation adjustment, which is reported as a component of shareholders’ equity under accumulated other comprehensive loss. The Company re-assessed its functional currency and determined as at September 10, 2019, its functional currency changed from the Canadian dollar to the U.S. dollar based on management’s analysis of changes in our organization. The change in functional currency was accounted for prospectively from September 10, 2019 and prior period financial statements were not restated for the change in functional currency. For periods commencing September 10, 2019, monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates in effect at the balance sheet date. Opening balances related to non-monetary assets and liabilities are based on prior period translated amounts, and non-monetary assets and non-monetary liabilities incurred after September 10, 2019 are translated at the approximate exchange rate prevailing at the date of the transaction. Revenue and expense transactions are translated at the approximate exchange rate in effect at the time of the transactions. Foreign exchange gains and losses are included in the statement of operations and comprehensive loss as foreign exchange gains. The Company assessed the functional currency for Allied Colombia, a wholly-owned subsidiary acquired by the Company on February 18, 2020 to be the Colombian peso. The functional currency for Tactical Relief LLC is U.S. dollar. h) Share issuance costs Costs directly attributable to the raising of capital are charged against the related share capital. Costs related to shares not yet issued are recorded as deferred share issuance costs. These costs are deferred until the issuance of the shares to which the costs relate, at which time the costs will be charged against the related share capital or charged to operations if the shares are not issued. i) Research and development costs Research and development costs are expensed as incurred. j) Revenue recognition The Company’s revenue is comprised of sales of cannabis products. The Company’s revenue-generating activities have a single performance obligation and revenue is recognized at the point in time when control of the product transfers and the Company’s obligations have been fulfilled. This generally occurs when the product is shipped or delivered to the customer, depending upon the method of distribution and shipping terms set forth in the customer contract. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of the Company’s product. Certain of the Company’s customer contracts may provide the customer with a right of return. In certain circumstances the Company may also provide a retrospective price adjustment to a customer. These items give rise to variable consideration, which is recognized as a reduction of the transaction price based upon the expected amounts of the product returns and price adjustments at the time revenue for the corresponding product sale is recognized. The determination of the reduction of the transaction price for variable consideration requires that the Company make certain estimates and assumptions that affect the timing and amounts of revenue recognized. Sales of products are for cash or otherwise agreed-upon credit terms. The Company’s payment terms vary by location and customer; however, the time period between when revenue is recognized and when payment is due is not significant. The Company estimates and reserves for its bad debt exposure based on its experience with past due accounts and collectability, write-off history, the aging of accounts receivable and an analysis of customer data. For the six months ended February 28, 2021, the Company generated sales of $5,260. k) Net income (loss) per common share Net income (loss) per share is calculated in accordance with ASC 260, Earnings per Share Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding. l) Income taxes The Company accounts for income taxes under ASC 740, Income Taxes m) Related party transactions Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. The Company discloses related party transactions that are outside of normal compensatory agreements, such as salaries. Related party transactions are measured at the exchange amounts. n) Significant accounting estimates and judgments The preparation of the financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Although management uses historical experience and its best knowledge of the amount, events or actions to for the basis for judgments and estimates, actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods. Significant estimates and assumptions included in these financial statements relate to the valuation assumptions related to the estimated useful lives and recoverability of long-lived assets, stock-based compensation, and deferred income tax assets and liabilities. Judgments are required in the assessment of the Company’s ability to continue to as going concern as described in Note 1. o) Financial instruments ASC 825, Financial Instruments Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. For certain of the Company’s financial instruments, including accounts payable, due from related parties, notes and loans payable, the carrying amounts approximate their fair values due to the short maturities. The Company does not have any assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet as of February 28, 2021 and August 31, 2020 other than cash. Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions. p) Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The standard states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. The Company adopted ASU 2016-02 on September 1, 2019, using the transition relief to the modified retrospective approach, presenting prior year information based on the previous standard. The Company did not have any leases until the acquisition of its wholly owned subsidiary, Allied Colombia S.A.S. on February 18, 2020. The Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease payments arising from the lease. All leases with terms greater than twelve months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. Unless a lease provides all of the information required to determine the implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. The Company uses the implicit interest rate in the lease when readily determinable. Our lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that we will exercise that option. Leases with terms of twelve months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of an asset or liability. See Note 7 – Leases. q) Reclassification Certain reclassifications have been made to conform the prior period’s consolidated financial statements and notes to the current period’s presentation. r) Recent accounting pronouncements The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the six months ended February 28, 2021, are of significance or potential significance to the Company. |
Reverse Take-over transaction
Reverse Take-over transaction | 6 Months Ended |
Feb. 28, 2021 | |
Reverse Take-over transaction | |
3. Reverse Take-over transaction | Pursuant to the Reorganization Agreement (see Note 1(b)), effective on September 10, 2019, the Company acquired 100% of the issued and outstanding equity of AM Biosciences (the “Acquisition”). As consideration for the equity of AM Biosciences, the Allied Shareholder issued and delivered 51,200,014 shares of common stock, representing approximately 62.12% of the outstanding equity of the Company to SECFAC Exchange Corp. on behalf of the previous shareholders of AM Biosciences and other designees of AM Biosciences. The Acquisition, was accounted for as a reverse asset acquisition pursuant to Topic 805, Business Combinations, as substantially all of the fair value of the assets acquired were concentrated in a group of similar non-financial assets, and the acquired assets did not have outputs or employees. |
Inventory
Inventory | 6 Months Ended |
Feb. 28, 2021 | |
Inventory | |
4. Inventory | Inventory is comprised of the following items: February 28, 2021 August 31, 2020 Raw materials $ 27,680 $ 52,585 Work in progress 76,292 - Total inventory $ 103,972 $ 52,585 |
Deposits and advances
Deposits and advances | 6 Months Ended |
Feb. 28, 2021 | |
Deposits and advances | |
5. Deposits and advances | February 28, 2021 August 31, 2020 a) Towards the purchase of prefabricated buildings $ 2,585,540 $ 2,600,720 b) Refundable deposits towards future land acquisitions - 174,030 c) Vitalis equipment deposit 233,496 233,496 Other 10,250 - Total deposits and advances $ 2,829,286 $ 3,008,246 a) In 2019, the Company entered to a separate modular building purchase agreement to acquire and construct an 8,700 square foot facility to be used as a certified Cannabis Cultivation and extraction facility. At February 28, 2021, Company had deposits of $2,585,540 (August 31, 2020 - $2,600,720) to purchase prefabricated buildings. As of February 28, 2021, the Company had not yet received the buildings and the amounts have been recorded as deposits. b) At February 28, 2021, the Company has entered into two purchase and sale agreements to acquire land as described in note 15(a). At February 28, 2021, Company had deposits totaling $Nil (August 31, 2020 - $174,030). c) At February 28, 2021 and August 31, 2020, the Company had paid $233,496 to purchase equipment as described in Note 15(b). At February 28, 2021, the Company had not yet received the equipment and the amount paid has been recorded as a deposit. |
Property plant and equipment
Property plant and equipment | 6 Months Ended |
Feb. 28, 2021 | |
Property plant and equipment | |
6. Property plant and equipment | At February 28, 2021, property, plant and equipment consisted of: Construction in process Farm facility and equipment Office and computer equipment Land equipment Total Cost August 31, 2020 $ 136,114 $ 79,956 $ 3,161 $ 6,000 $ 225,231 Additions 14,303 11,118 7,788 - 33,209 Transfer (144,735 ) 144,735 - - Foreign exchange 4,523 5,730 134 196 10,583 November 30, 2020 $ 10,205 $ 241,539 $ 11,083 $ 6,196 $ 269,023 Accumulated depreciation August 31, 2020 $ - $ 2,211 $ - $ - $ 2,211 Additions - 33,309 1,330 516 35,155 Foreign exchange - 2,735 6 2 2,743 November 30, 2020 $ - $ 38,255 $ 1,336 $ 518 $ 40,109 Net book value August 31, 2020 $ 136,114 $ 77,745 $ 3,161 $ 6,000 $ 223,020 November 30, 2020 $ 10,205 $ 203,284 $ 9,747 $ 5,678 $ 228,914 As of February 28, 2021, the construction in process has not been in use. |
Intangible assets
Intangible assets | 6 Months Ended |
Feb. 28, 2021 | |
Intangible assets | |
7. Intangible assets | At February 28, 2021, intangible assets consisted of: Cost $ Foreign exchange $ Accumulated amortization $ Impairment $ February 28, 2021 Net carrying value $ August 31, 2020 Net carrying value $ Cannabis licenses 5,435,334 (408,526 ) (794,724 ) (1,113,972 ) 3,118,112 3,300,000 5,435,334 (408,526 ) (794,724 ) (1,113,972 ) 3,118,112 3,300,000 On February 17, 2020, the Company acquired $5,435,334 of licenses as part of the acquisition of Medicolumbia. The licenses acquired are issued by the Republic of Colombia and include the use of seeds for growing Cannabis, production of derivatives from Cannabis for medicinal and scientific use, cultivation of Cannabis plants, and producer of seeds. The Company has recorded amortization of these licenses of $169,954 and $330,866 for the three and six months ended February 28, 2021, respectively. |
Leases
Leases | 6 Months Ended |
Feb. 28, 2021 | |
Leases | |
8. Leases | In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability, measured on a discounted basis, on the balance sheet for all leases with terms longer than 12 months. The Company also elected to keep all leases with an initial term of 12 months or less off the balance sheet. The Company did not have any leases until the acquisition of Allied Colombia during the year ended August 31, 2020. The acquisition resulted in the addition of $82,398 of operating lease assets and liabilities. The Company entered into an agreement to lease the land described in Note 4(b) and 14(a) with a commencement date of June 1, 2020. The lease requires the Company to make monthly payments of $4,501 (CAD$5,870) per month. The lease is for a 10-year term, expiring on May 31, 2030, with one 10-year renewal option and an option for the Company to purchase the land for approximately $920,000 (CAD$1,200,000).Effective November 1, 2020, the Company terminated the lease. Pursuant to ASC 842-20 upon the termination of the lease, the Company derecognized the lease related asset and liability and included any consideration paid or received upon termination that was not already included in the lease payments in the gain or loss on termination of the lease.After recording the proceeds from the landlord and derecognizing the capitalized building costs as well as the right of use asset and liability, the Company recorded a loss of $65,565 on the termination of the lease. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term.For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term.For finance leases, interest on the lease liability and the amortization of the ROU asset results in front-loaded expense over the lease term.ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. At February 28, 2021, the Company did not have any finance leases. At February 28, 2021, the weighted average remaining operating lease term was 9.00 years and the weighted average discount rate associated with operating leases was 15%. The Components of lease expenses were as follows: Operating lease cost: Amortization of right-of-use assets 4,543 Interest on lease liabilities 12,413 Total operating lease cost 16,956 The following table provides supplemental cash flow and other information related to leases for the six months ended February 28, 2021: Lease payments 16,315 Supplemental balance sheet information related to leases as of February 28, 2021 are as below: Cost 387,573 Accumulated amortization (9,627 ) Lease termination (299,089 ) Foreign exchange (5,099 ) Net carrying value at February 28, 2021 73,758 Future minimum lease payments related to lease obligations are as follows: 2021 7,457 2022 14,915 2023 14,915 2024 14,915 Thereafter 83,272 Total minimum lease payments 135,474 Less: amount of lease payments representing effects of discounting (61,716 ) Present value of future minimum lease payments 73,758 Less: current obligations under leases (4,127 ) Lease liabilities, net of current portion 69,631 |
Loans payable
Loans payable | 6 Months Ended |
Feb. 28, 2021 | |
Loans payable | |
9. Loan payable | In June 2020, the Company entered into a financing agreement to finance the buildings described in Note 5(a). Pursuant to the agreement, the Company financed $1,253,772 of the purchase price. The Company paid $71,023 at commencement date on May 29, 2020, and will make six monthly interest payments of $37,613 commencing June 20, 2020 and repay the principal of $1,253,772 on November 20, 2020. During the three months ended February 28, 2021, the Company amended the loan agreement to extend the repayment due date to May 20, 2021. During the six months ended February 28, 2021, the Company paid interest in the amount of $225,679. |
Convertible notes payable
Convertible notes payable | 6 Months Ended |
Feb. 28, 2021 | |
Convertible notes payable | |
10. Convertible notes payable | a) On January 23, 2020, the Company issued two convertible notes with principal amounts of $400,000 and $200,000, respectively, with a total face value of $600,000 (the “Notes”) and warrants to purchase 240,000 shares of the Company’s common stock at $1.25 per share for 1 year. The Notes were issued with an original discount of $12,000, and bear interest at 10% per annum compounded monthly. The notes mature on July 20, 2020 and are convertible into shares of the Company’s common stock at any time prior to maturity at a conversion price of $1.25 per share. The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging The relative fair values of the convertible note and the warrants were $470,467 and $117,533 respectively. The effective conversion price was then determined to be $0.98. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $115,383 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $108,100 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $364,517. The beneficial conversion feature of $115,383, the original issue discount of $12,000 and the relative fair value of the warrants of $108,100 discounted the carrying value of the convertible debt on the date of issue. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. On June 30, 2020, the Company repaid $200,000 of the $600,000 note which left $400,000 outstanding on each note. i. First Modification: On July 1, 2020, the Company entered into amendments to the convertible notes. Pursuant to the amendments, beginning on July 1, 2020, the convertible notes bear simple interest at 5% per annum. The maturity date of the convertible notes was amended to due on demand on or before October 31, 2020. In consideration for extending the maturity date, the Company issued to the convertible note holders 16,000 common shares of the Company and warrants to purchase additional 320,000 common shares of the Company at $1.25 per share expiring October 31, 2021. Each note holder received 8,000 common shares and 160,000 warrants. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment The extended convertible notes had a total carrying value of $400,000. As the common shares and warrants were issued as consideration for extending the convertible notes, the fair value of the common share and warrants of $218,397 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $220,065. ii. Second Modification: On November 1, 2020, the Company entered into amendments to the convertible notes. Pursuant to the amendments, the maturity date of the convertible notes was amended to due on demand on or before March 31, 2021. In consideration for extending the maturity date, the Company agreed to issue to the convertible note holders 100,000 common shares of the Company. Each note holder will receive 50,000 common shares. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment The extended convertible notes had a total carrying value of $400,000. As the common shares were issued as consideration for extending the convertible notes, the fair value of the common share of $110,000 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $110,000 and as the common shares had not been issued as of February 28, 2021 and have been recorded as common shares issuable. As at February 28, 2021, the Company has recorded accrued interest of $26,575, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. b) On September 29, 2020, the Company issued a convertible note with a fair value of $163,341 (the “Note”) and warrants to purchase 130,673 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note is due on demand after March 27, 2021. The Note is convertible into shares of the Company’s common stock at any time prior to March 27, 2021 at a conversion price of $1.25 per share. The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $85,330 and $78,011 respectively. The effective conversion price was then determined to be $0.65. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $85,330 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $78,011 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. As at February 28, 2021, the Company has recorded accrued interest of $6,803, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. c) On October 26, 2020, the Company issued a convertible note with a face value of $37,613 (the “Note”) and warrants to purchase 30,090 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note is due on demand after April 23, 2021.The Note is convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share. The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging The relative fair values of the convertible note and the warrants were $20,176 and $17,437 respectively. The effective conversion price was then determined to be $0.65. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $20,176 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $17,437 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. As at February 28, 2021, the Company has recorded accrued interest of $1,288, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. d) On November 11, 2020, the Company issued a convertible note with a face value of $85,937 (the “Note”) and warrants to purchase 68,750 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note is due on demand after May 9, 2021.The Note is convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share. The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging The relative fair values of the convertible note and the warrants were $48,258 and $37,679 respectively. The effective conversion price was then determined to be $0.70. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $48,258 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $37,679 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. As at February 28, 2021, the Company has recorded accrued interest of $2,566, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. e) On December 2, 2020, the Company issued a convertible note with a face value of $600,000 (the “Note”) and warrants to purchase 240,000 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note is due on demand after November 27, 2021.The Note is convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share. The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging The relative fair values of the convertible note and the warrants were $457,436 and $142,564 respectively. The effective conversion price was then determined to be $0.95. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $457,436 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $22,564 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. As at February 28, 2021, the Company has recorded accrued interest of $14,466, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. f) On January 7, 2021, the Company issued a convertible note with a face value of $300,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after November 27, 2021.The Note is convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share. The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging As the stock price at the issuance date was less than the conversion price, it was determined that there was no beneficial conversion feature (“BCF”). As at February 28, 2021, the Company has recorded accrued interest of $4,274, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. |
Equity
Equity | 6 Months Ended |
Feb. 28, 2021 | |
Equity | |
11. Equity | During the six months ended February 29, 2020: Pursuant to the Acquisition described in Note 1, the Allied Shareholder submitted for cancellation and return to treasury 10,459,220 shares of common stock. On September 9, 2019, the Company returned 4,500,000 common shares to treasury and reserved for acquisition of Allied Colombia. On February 14, 2020, the 4,500,000 common shares were re-issued to the previous shareholders of Allied Colombia with a fair value of $4,500,000. On December 1, 2019, the Company issued 130,000 common shares at $0.50 per share, for which gross cash proceeds of $265,000 had previously been received. On January 21, 2020, the Company issued 240,000 common shares at $1.25 per share for total net proceeds of $276,000 in cash. During the six months ended February 28, 2021: On September 30, 2020, the Company issued 120,000 shares of common stock at $1.25 per share for gross cash proceeds of $150,000. In connection with the extension of convertible notes payable, as of February 28, 2021, the Company has common stock issuable of $129,952 (August 31, 2020 - $19,952). At February 28, 2021, the Company had received $250,000 for the purchase of 500,000 common shares which were issued subsequent to February 28, 2021. At February 28, 2021, the Company had agreed to settle $112,484 of accounts payable through the issuance of 107,044 common shares with a fair value of $92,664 which resulted in a gain on settlement of debt of $19,820. The shares were issued subsequent to February 28, 2021. |
Related party transactions and
Related party transactions and balances | 6 Months Ended |
Feb. 28, 2021 | |
Related party transactions and balances | |
12. Related party transactions and balances | All transactions with related parties have occurred in the normal course of operations and are recorded at the exchange amount which is the amount agreed to by the Company and the related party. a) Key management compensation and related party transactions The Company has identified its directors and certain senior officers as its key management personnel. The compensation costs for key management personnel were as follows: February 28, 2021 August 31, 2020 Consulting fees and benefits $ 221,213 $ 310,220 b) Amounts due to/from related parties In the normal course of operations, the company shares certain administrative resources with companies related by common management and directors. The administrative resources and services, which were provided in the normal course of operations, were measured at the exchange. All amounts payable and receivable are non-interest bearing, unsecured and due on demand. The following table summarizes the amounts were due from related parties: February 28, 2021 August 31, 2020 CEO and Director $ (46,525 ) $ (12,588 ) COO and Director (86,273 ) (42,059 ) An entity controlled by the CFO (13,327 ) (10,797 ) An entity controlled by a director - (5,142 ) $ (146,125 ) $ (70,586 ) As of February 28, 2021, the Company advanced $11,738 to related parties for future expenses. As of February 28, 2021, the Company had $146,125 (August 31, 2020 - $70,586) payable to related parties for expenses incurred or expensed paid on behalf of the Company by the parties which has been presented in accounts payable and accrued liabilities. |
Financial risk factors
Financial risk factors | 6 Months Ended |
Feb. 28, 2021 | |
Financial risk factors | |
13.Financial risk factors | The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows: a) Credit risk: Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash account. Cash accounts are held with major banks in Canada. The Company has deposited its cash with a bank from which management believes the risk of loss is low. b) Liquidity risk: Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to meet liabilities when due. Accounts payable are due within the current operating period. The Company has a working capital deficit and requires additional financing to meet its current obligations (see Note 1). c) Market risk: Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The Company is not exposed to market risk. d) Interest rate risk: Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk, from time to time, on its cash balances. Surplus cash, if any, is placed on call with financial institutions and management actively negotiates favorable market related interest rates. e) Foreign exchange risk: Foreign currency risk is limited to the portion of the Company’s business transactions denominated in currencies other than the Canadian dollar. The Company has not entered into any foreign currency contracts to mitigate risk, but manages the risk my minimizing the value of financial instruments denominated in foreign currency. The Company is exposed to foreign currency risk to the extent that the following monetary assets and liabilities are denominated in Canadian dollars: February 28, 2021 Balance in Canadian dollars: Cash and cash equivalents $ - Accounts payable (393,478 ) Net exposure (393,478 ) Balance in US dollars: $ (308,810 ) A 10% change in the US dollar to the Canadian dollar exchange rate would impact the Company’s net loss by approximately $30,881 for the six months ended February 28, 2021 (February 29, 2020 – $4,860). The Company is exposed to foreign currency risk to the extent that the following monetary assets and liabilities are denominated in Colombian Pesos: February 28, 2021 Balance in Colombian Pesos dollars: Cash and cash equivalents $ 51,687,241 Accounts payable (5,356,061,524 ) Net exposure (5,304,374,282 ) Balance in US dollars: $ (740,719 ) A 10% change in the US dollar to the Colombian Peso exchange rate would impact the Company’s net loss by approximately $74,072 for the three months ended February 28, 2021 (February 29, 2020 - $2,731). |
Capital management
Capital management | 6 Months Ended |
Feb. 28, 2021 | |
Capital management | |
14. Capital management | The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the business and continue as a going concern. The Company considers capital to be all accounts in equity. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The Company has a working capital deficit and requires additional capital to finance is future business plans. The Company is not subject to any externally imposed capital requirements. |
Commitments
Commitments | 6 Months Ended |
Feb. 28, 2021 | |
Commitments | |
15. Commitments | a) On November 6, 2018, the Company signed an assignment to purchase two separate lots located at 8999 Jim Bailey Road in Kelowna, British Columbia, Canada. The land is zoned I2 General Industrial and allow for “Cannabis Production Facilities” as a principal use. The total commitment for the two parcels of land are CAD$1,942,250 (US$1,457,367) (Lot 1 - $988,550, Lot 2 - CAD$953,700). During the year ended August 31, 2019, the Company executed several “offer to purchase amendments” to defer the assignment and close of the two parcels of land. On November 11, 2019, the Company executed an additional offer to purchase amendment to extend the assignment and close of the land parcels no later than February 10, 2020 and there was an additional amendment to extend the close of the purchase to May 2020. On May 7, 2020, the Company assigned the purchase of Lot 1 to a third party. In June 2020, the Company entered into a lease agreement to lease Lot 1 from the third party for an annual rent of CAD$70,442 for 10 years commencing June 1, 2020 until May 31, 2030. On November 1, 2020, the lease agreement was terminated. In November 2019, the board of directors determined the Company would not close on Lot 2 as the parcel of land will not be required for future operations. As a result, the Company does not have a commitment to pay the value of CAD$953,700 for the land and will eligible to receive or assign the initial refundable deposit of CAD$10,000. During the year ended August 31, 2020, this contract of purchase and sale for LOT 2 – 8999 Jim Bailey Road was assigned to another non-related party. b) On August 30, 2019, the Company entered into sales agreement to purchase an extraction system to be use in future at its operation in Colombia. The equipment has a value of CAD$658,260. The terms of the agreement require the Company to pay the full amount in monthly installments starting September 1, 2019 and will continue to February 2020. The equipment will be paid in full before the equipment is shipped to Colombia and title transfers to the Company. At February 28, 2021, the $233,496 (Note 5(c)) has been recorded as a deposit until the remaining purchase price is paid and the equipment is received. c) As of February 28, 2021, the Company recorded a contingent liability of $536,727 for expenses in connection with Allied Colombia acquisition, which is included in the balance of accounts payable and accrued liabilities on the consolidated balance sheets. |
Share purchase warrants
Share purchase warrants | 6 Months Ended |
Feb. 28, 2021 | |
Share purchase warrants | |
16. Share purchase warrants | The following table summarizes the continuity of share purchase warrants: Number of warrants Weighted average exercise price Balance, August 31, 2020 560,000 1.25 Issued 469,513 1.25 Expired (240,000 ) 1.25 Balance, February 28, 2021 789,513 1.25 As at February 28, 2021, the following share purchase warrants were outstanding: Number of warrants Exercise price $ Expiry date 320,000 1.25 October 31 2021 130,673 1.25 September 29, 2022 30,090 1.25 October 16, 2022 68,750 1.25 November 11, 2020 240,000 1.25 November 27, 2020 |
Stock Options
Stock Options | 6 Months Ended |
Feb. 28, 2021 | |
Share purchase warrants | |
17. Stock Options | On February 1, 2021, the Company granted 4,900,000 stock options to directors, officers and employees of the Company. The options expire five years after the grant date and 1,200,000 options are exercisable at $0.825 per share and 3,700,000 exercisable at $0.75 per share. The options vest one third on the grant date and one third on the first and second years after the grant date. The weighted average grant date fair value of stock options granted was $0.77 per share. During the six months ended February 28, 2021, the Company recorded stock-based compensation of $1,380,120 on the consolidated statement of operations. A summary of the Company’s stock option activity is as follow: Number of Options Weighted Average Exercise Price $ Weighted Average Remaining Contractual Term Aggregate Intrinsic Value $ Balance, August 31, 2020 – – – – Granted 4,900,000 0.77 4.93 Outstanding, February 28, 2021 4,900,000 0.77 4.93 1,086,000 Exercisable, February 28, 2021 1,633,333 0.77 4.93 362,000 The fair value of each option granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: Six Months Ended February 28, 2021 Six Months Ended February 29, 2020 Expected dividend yield 0 % - Expected volatility 182 % - Expected life (in years) 5 - Risk-free interest rate 0.42 % - At February 28, 2021, there was $2,150,832 of unrecognized compensation costs related to non-vested stock-based compensation arrangements granted under the Plan. |
Non-cash activities
Non-cash activities | 6 Months Ended |
Feb. 28, 2021 | |
Non-cash activities | |
18. Non-cash activities | For the Six Months Ended February 28, 2021 For the Six Months Ended February 29, 2020 Non-cash activities: Common stock issued pursuant to asset acquisitions - 4,500,000 Debt settled with shares issuable 112,484 - Beneficial conversion feature 176,328 129,533 Relative fair value of warrants issued with convertible note 275,691 117,533 Original debt discount against convertible notes - 12,000 Net liabilities acquired in Medicolombias Acquisition - (222,837 ) Relative fair value of shares issued on modification of convertible notes 110,000 - |
Segment disclosure
Segment disclosure | 6 Months Ended |
Feb. 28, 2021 | |
19. Segment disclosure | The Company has two operating segments including: a) Allied Columbia SAS, a Columbian based company through which the Company intends to commence commercial production in Colombia. (Allied Colombia) b) Allied Corp. which consists of the rest of the Company’s operations. (Allied) Factors used to identify the Company’s reportable segments include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance. The Company’s operating segments have been broken out based on similar economic and other qualitative criteria. The Company operates the Allied reporting segment in one geographical area (Canada), and the Allied Colombia reporting segment in one geographical area (Colombia). Financial statement information by operating segment for the three months ended February 28, 2021 is presented below: Allied $ Allied Colombia $ Total $ Net sales 1,060 - 1,060 Net loss (2,186,773 ) (512,663 ) (2,699,436 ) Accretion 138,178 - 138,178 Depreciation and amortization - 196,341 196,341 Total assets as of February 28, 2021 2,782,106 3,757,847 6,539,953 Financial statement information by operating segment for the six months ended February 28, 2021 is presented below: Allied $ Medicolombia $ Total $ Net Sales 5,260 - 5,260 Net loss (3,055,772 ) (839,526 ) (3,895,298 ) Accretion 193,661 - 193,661 Depreciation and amortization - 366,021 366,021 Financial statement information by operating segment for the three months ended February 29, 2020 is presented below: Allied $ Medicolombia $ Total $ Net loss (997,484 ) (38,785 ) (1,036,269 ) Accretion 44,417 - 44,417 Depreciation and amortization - 33,980 33,980 Financial statement information by operating segment for the six months ended February 29, 2020 is presented below: Allied $ Medicolombia $ Total $ Net loss (1,455,651 ) (38,785 ) (1,494,436 ) Accretion 44,417 - 44,417 Depreciation and amortization - 33,980 33,980 Geographic information for the six months ended and as at February 28, 2021 is presented below: Revenues $ Total Assets $ Canada 5,260 2,782,106 Colombia - 3,757,847 Total 5,260 6,539,953 |
Subsequent events
Subsequent events | 6 Months Ended |
Feb. 28, 2021 | |
Subsequent events | |
20. Subsequent events | a) On January 24, 2021, the Company entered into an acquisition agreement to acquire all common shares of Pacific Sun Fungi Inc. (“PSF”) for $85,500 in cash and 200,000 common shares of the Company. In March 2021, the Company issued a promissory note in the amount of $85,500 to the shareholders of PSF. As of April 14, 2021, the promissory note remains unpaid. The Company has not received any common shares of PSF. The transaction has not been closed. b) On March 26, 2021, the Company issued a convertible note with a face value of $18,000 and warrants to purchase 18,000 shares of the Company’s common stock at $0.50 per share for one year. The note bears interest at 10% per annum and is due on demand on September 26, 2021.The note is convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share. c) On March 26, 2021, the Company issued a convertible note with a face value of $100,000 and warrants to purchase 100,000 shares of the Company’s common stock at $0.50 per share for one year. The note bears interest at 10% per annum and is due on demand on September 26, 2021. The note is convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share. d) On March 30, 2021, the Company entered into an asset purchase agreement (“APA”) to acquire two privileged licenses issued by the Nevada Department of Taxation purposed for the cultivation of cannabis (the “Licenses”). In consideration for the licenses, the Company agreed to pay $150,000, issue a $1,350,000 promissory note and assume certain liabilities. The promissory note bears interest at the Short Term Applicable Federal Rate of 0.11% per annum and shall be repaid through quarterly payments of a minimum of 50% of the net operating income received in connection with the Nevada cannabis operation associated with the acquired Licenses. All outstanding principal and accrued interest is due two years after issuance of the note. As of April 14, 2021, the Company has not issued any considerations under the APA. The Company has not received any assets outlined in the APA. The asset purchase has not been closed. Concurrent with the APA, the Company entered into a services agreement (the “Services Agreement”) and a land lease agreement (the “Lease Agreement”) with the seller of the Licenses. Pursuant to the Services agreement the seller of the licenses will provide consulting services to the Company in exchange for the reimbursement of expenses incurred. Pursuant to the Lease Agreement, the Company leased land in North Las Vegas to accommodate an approximately 9,000 square foot building to be used for the cultivation, marketing or sale of cannabis for a period of 25 years. Lease payments shall commence on the date which the first cannabis plant is planted, and monthly lease payments are as follows: · $1,500 per month for the first five years. · $1,800 per month for years 6 to 10 of the lease. · $2,025 per month for years 11 to 15 of the lease. · $2,280 per month for years 16 to 20 of the lease. · $2,565 per month for years 21 to 25 of the lease. In addition, for the term of the lease, the Company shall pay the landlord 50% of the net operating income derived from the cannabis cultivation operation located at the leased premises. e) Subsequent to February 28,, 2021, the Company received proceeds of $175,000 for the purchase of 350,000 common shares of the Company. |
Significant accounting polici_2
Significant accounting policies (Policies) | 6 Months Ended |
Feb. 28, 2021 | |
Significant accounting policies | |
Basis Presentation | These unaudited condensed consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and are expressed in United States dollars. The Company’s fiscal year end is August 31. These interim unaudited financial statements have been prepared in accordance with US GAAP for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by US GAAP for complete financial statements. Therefore, these interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended August 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC. The financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at February 28, 2021, and the results of its operations for the three and six months ended February 28, 2021, and cash flows for the six months ended February 28, 2021. The results of operations for the period ended February 28, 2021 are not necessarily indicative of the results to be expected for future quarters or the full year. |
Principles of consolidation | The consolidated financial statements include accounts of Allied Corp. and its majority owned subsidiaries. Subsidiaries are consolidated from the date of acquisition and control and continue to be consolidated until the date that such control ceases. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect these returns through its power over the investee. All intercompany balances, income, expenses, and unrealized gains and losses resulting from intercompany transactions are eliminated on consolidation. |
Cash and cash equivalents | Cash is comprised of cash on hand, cash held in trust accounts and demand deposits. Cash equivalents are short-term, highly liquid investments with maturities within three months when acquired. The Company did not have any cash equivalents as of February 28, 2021 and August 31, 2020. |
Property and Equipment | Property and equipment are stated at cost. The Company depreciates the cost of property, plant and equipment over their estimated useful lives at the following annual rates and methods: Farm facility and equipment 1 - 10 years straight-line basis Office and computer equipment 5 years straight-line basis Land equipment 10 years straight-line basis |
Inventory | Inventory is comprised of raw materials, and work-in-progress. Cost includes expenditures directly related to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Inventory costs include pre-harvest costs. Pre-harvest costs include labor and direct materials to grow cannabis, which includes water, electricity, nutrients, integrated pest management, growing supplies and allocated overhead. As of February 28, 2021 and August 31, 2020, the Company does not have material harvested cannabis inventory. Inventory is stated at the lower of cost or net realizable value, determined using weighted average cost. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. At the end of each reporting period, the Company performs an assessment of inventory and records write-downs for excess and obsolete inventories based on the Company’s estimated forecast of product demand, production requirements, market conditions, regulatory environment, and spoilage. Actual inventory losses may differ from management’s estimates and such differences could be material to the Company’s balance sheets, statements of net loss and comprehensive loss and statements of cash flows. |
Intangible assets | At February 28, 2021 and August 31, 2020, intangible assets include licenses which are being amortized over their estimated useful lives of 10 years. The Company’s licenses are amortized over their economic or legal life on a straight-line basis, whichever is shorter. The licenses have been amortized from the date of acquisition. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives. For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value. |
Long-lived assets | In accordance with ASC 360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. |
Foreign currency translation and functional currency conversion | Items included in these consolidated financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entities operate (the “functional currency”). Prior to September 10, 2019, the Company’s functional currency was the Canadian dollar. Translation gains and losses from the application of the U.S. dollar as the reporting currency during the period that the Canadian dollar was the functional currency are included as part of cumulative currency translation adjustment, which is reported as a component of shareholders’ equity under accumulated other comprehensive loss. The Company re-assessed its functional currency and determined as at September 10, 2019, its functional currency changed from the Canadian dollar to the U.S. dollar based on management’s analysis of changes in our organization. The change in functional currency was accounted for prospectively from September 10, 2019 and prior period financial statements were not restated for the change in functional currency. For periods commencing September 10, 2019, monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates in effect at the balance sheet date. Opening balances related to non-monetary assets and liabilities are based on prior period translated amounts, and non-monetary assets and non-monetary liabilities incurred after September 10, 2019 are translated at the approximate exchange rate prevailing at the date of the transaction. Revenue and expense transactions are translated at the approximate exchange rate in effect at the time of the transactions. Foreign exchange gains and losses are included in the statement of operations and comprehensive loss as foreign exchange gains. The Company assessed the functional currency for Allied Colombia, a wholly-owned subsidiary acquired by the Company on February 18, 2020 to be the Colombian peso. The functional currency for Tactical Relief LLC is U.S. dollar. |
Share issuance costs | Costs directly attributable to the raising of capital are charged against the related share capital. Costs related to shares not yet issued are recorded as deferred share issuance costs. These costs are deferred until the issuance of the shares to which the costs relate, at which time the costs will be charged against the related share capital or charged to operations if the shares are not issued. |
Research and development costs | Research and development costs are expensed as incurred. |
Revenue Recognition | The Company’s revenue is comprised of sales of cannabis products. The Company’s revenue-generating activities have a single performance obligation and revenue is recognized at the point in time when control of the product transfers and the Company’s obligations have been fulfilled. This generally occurs when the product is shipped or delivered to the customer, depending upon the method of distribution and shipping terms set forth in the customer contract. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of the Company’s product. Certain of the Company’s customer contracts may provide the customer with a right of return. In certain circumstances the Company may also provide a retrospective price adjustment to a customer. These items give rise to variable consideration, which is recognized as a reduction of the transaction price based upon the expected amounts of the product returns and price adjustments at the time revenue for the corresponding product sale is recognized. The determination of the reduction of the transaction price for variable consideration requires that the Company make certain estimates and assumptions that affect the timing and amounts of revenue recognized. Sales of products are for cash or otherwise agreed-upon credit terms. The Company’s payment terms vary by location and customer; however, the time period between when revenue is recognized and when payment is due is not significant. The Company estimates and reserves for its bad debt exposure based on its experience with past due accounts and collectability, write-off history, the aging of accounts receivable and an analysis of customer data. For the six months ended February 28, 2021, the Company generated sales of $5,260. |
Net income (loss) per common share | Net income (loss) per share is calculated in accordance with ASC 260, Earnings per Share Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding. |
Income taxes | The Company accounts for income taxes under ASC 740, Income Taxes |
Related party transactions | Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. The Company discloses related party transactions that are outside of normal compensatory agreements, such as salaries. Related party transactions are measured at the exchange amounts. |
Significant accounting estimates and judgments | The preparation of the financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Although management uses historical experience and its best knowledge of the amount, events or actions to for the basis for judgments and estimates, actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods. Significant estimates and assumptions included in these financial statements relate to the valuation assumptions related to the estimated useful lives and recoverability of long-lived assets, stock-based compensation, and deferred income tax assets and liabilities. Judgments are required in the assessment of the Company’s ability to continue to as going concern as described in Note 1. |
Financial instruments | ASC 825, Financial Instruments Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. For certain of the Company’s financial instruments, including accounts payable, due from related parties, notes and loans payable, the carrying amounts approximate their fair values due to the short maturities. The Company does not have any assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet as of February 28, 2021 and August 31, 2020 other than cash. Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions. |
Leases | In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The standard states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. The Company adopted ASU 2016-02 on September 1, 2019, using the transition relief to the modified retrospective approach, presenting prior year information based on the previous standard. The Company did not have any leases until the acquisition of its wholly owned subsidiary, Allied Colombia S.A.S. on February 18, 2020. The Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease payments arising from the lease. All leases with terms greater than twelve months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. Unless a lease provides all of the information required to determine the implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. The Company uses the implicit interest rate in the lease when readily determinable. Our lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that we will exercise that option. Leases with terms of twelve months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of an asset or liability. See Note 7 – Leases. |
Reclassification | Certain reclassifications have been made to conform the prior period’s consolidated financial statements and notes to the current period’s presentation. |
Recent accounting pronouncements | The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the six months ended February 28, 2021, are of significance or potential significance to the Company. |
Significant accounting polici_3
Significant accounting policies (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Significant accounting policies | |
Schedule of property and equipment | Farm facility and equipment 1 - 10 years straight-line basis Office and computer equipment 5 years straight-line basis Land equipment 10 years straight-line basis |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Inventory | |
Schedule of Inventory | February 28, 2021 August 31, 2020 Raw materials $ 27,680 $ 52,585 Work in progress 76,292 - Total inventory $ 103,972 $ 52,585 |
Deposits and advances (Tables)
Deposits and advances (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Deposits and advances | |
Schedule of deposits and advances | February 28, 2021 August 31, 2020 a) Towards the purchase of prefabricated buildings $ 2,585,540 $ 2,600,720 b) Refundable deposits towards future land acquisitions - 174,030 c) Vitalis equipment deposit 233,496 233,496 Other 10,250 - Total deposits and advances $ 2,829,286 $ 3,008,246 |
Property plant and equipment (T
Property plant and equipment (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Property plant and equipment (Tables) | |
Schedule of property plant and equipment | Construction in process Farm facility and equipment Office and computer equipment Land equipment Total Cost August 31, 2020 $ 136,114 $ 79,956 $ 3,161 $ 6,000 $ 225,231 Additions 14,303 11,118 7,788 - 33,209 Transfer (144,735 ) 144,735 - - Foreign exchange 4,523 5,730 134 196 10,583 November 30, 2020 $ 10,205 $ 241,539 $ 11,083 $ 6,196 $ 269,023 Accumulated depreciation August 31, 2020 $ - $ 2,211 $ - $ - $ 2,211 Additions - 33,309 1,330 516 35,155 Foreign exchange - 2,735 6 2 2,743 November 30, 2020 $ - $ 38,255 $ 1,336 $ 518 $ 40,109 Net book value August 31, 2020 $ 136,114 $ 77,745 $ 3,161 $ 6,000 $ 223,020 November 30, 2020 $ 10,205 $ 203,284 $ 9,747 $ 5,678 $ 228,914 |
Intangible assets (Tables)
Intangible assets (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Intangible assets | |
Schedule of intangible assets | Cost $ Foreign exchange $ Accumulated amortization $ Impairment $ February 28, 2021 Net carrying value $ August 31, 2020 Net carrying value $ Cannabis licenses 5,435,334 (408,526 ) (794,724 ) (1,113,972 ) 3,118,112 3,300,000 5,435,334 (408,526 ) (794,724 ) (1,113,972 ) 3,118,112 3,300,000 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Loans payable | |
Schedule of components of lease expenses | Operating lease cost: Amortization of right-of-use assets 4,543 Interest on lease liabilities 12,413 Total operating lease cost 16,956 |
Schedule of supplemental cash flow and other information related to leases | Lease payments 16,315 |
Schedule of supplemental balance sheet information related to leases | Cost 387,573 Accumulated amortization (9,627 ) Lease termination (299,089 ) Foreign exchange (5,099 ) Net carrying value at February 28, 2021 73,758 |
Schedule of future minimum lease payments | 2021 7,457 2022 14,915 2023 14,915 2024 14,915 Thereafter 83,272 Total minimum lease payments 135,474 Less: amount of lease payments representing effects of discounting (61,716 ) Present value of future minimum lease payments 73,758 Less: current obligations under leases (4,127 ) Lease liabilities, net of current portion 69,631 |
Related party transactions an_2
Related party transactions and balances (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Related party transactions and balances | |
Schedule of related party compensation costs | February 28, 2021 August 31, 2020 Consulting fees and benefits $ 221,213 $ 310,220 |
Schedule of due from related party | February 28, 2021 August 31, 2020 CEO and Director $ (46,525 ) $ (12,588 ) COO and Director (86,273 ) (42,059 ) An entity controlled by the CFO (13,327 ) (10,797 ) An entity controlled by a director - (5,142 ) $ (146,125 ) $ (70,586 ) |
Financial risk factors (Tables)
Financial risk factors (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Financial risk factors (Tables) | |
Schedule of foreign currency translation | February 28, 2021 Balance in Canadian dollars: Cash and cash equivalents $ - Accounts payable (393,478 ) Net exposure (393,478 ) Balance in US dollars: $ (308,810 ) February 28, 2021 Balance in Colombian Pesos dollars: Cash and cash equivalents $ 51,687,241 Accounts payable (5,356,061,524 ) Net exposure (5,304,374,282 ) Balance in US dollars: $ (740,719 ) |
Share purchase warrants (Tables
Share purchase warrants (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Share purchase warrants | |
Schedule of share purchase warrants | Number of warrants Weighted average exercise price Balance, August 31, 2020 560,000 1.25 Issued 469,513 1.25 Expired (240,000 ) 1.25 Balance, February 28, 2021 789,513 1.25 |
Schedule of warrants outstanding | Number of warrants Exercise price $ Expiry date 320,000 1.25 October 31 2021 130,673 1.25 September 29, 2022 30,090 1.25 October 16, 2022 68,750 1.25 November 11, 2020 240,000 1.25 November 27, 2020 |
Stock Options (Tables)
Stock Options (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Share purchase warrants | |
Schedule of weighted average assumptions | Six Months Ended February 28, 2021 Six Months Ended February 29, 2020 Expected dividend yield 0 % - Expected volatility 182 % - Expected life (in years) 5 - Risk-free interest rate 0.42 % - |
Schedule of Stock Options activity | Number of Options Weighted Average Exercise Price $ Weighted Average Remaining Contractual Term Aggregate Intrinsic Value $ Balance, August 31, 2020 – – – – Granted 4,900,000 0.77 4.93 Outstanding, February 28, 2021 4,900,000 0.77 4.93 1,086,000 Exercisable, February 28, 2021 1,633,333 0.77 4.93 362,000 |
Noncash activities (Tables)
Noncash activities (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Non-cash activities | |
Schedule of Non-cash activities | For the Six Months Ended February 28, 2021 For the Six Months Ended February 29, 2020 Non-cash activities: Common stock issued pursuant to asset acquisitions - 4,500,000 Debt settled with shares issuable 112,484 - Beneficial conversion feature 176,328 129,533 Relative fair value of warrants issued with convertible note 275,691 117,533 Original debt discount against convertible notes - 12,000 Net liabilities acquired in Medicolombias Acquisition - (222,837 ) Relative fair value of shares issued on modification of convertible notes 110,000 - |
Segment disclosure (Tables)
Segment disclosure (Tables) | 6 Months Ended |
Feb. 28, 2021 | |
Segment disclosure (Tables) | |
Schedule of operating segment | Allied $ Allied Colombia $ Total $ Net sales 1,060 - 1,060 Net loss (2,186,773 ) (512,663 ) (2,699,436 ) Accretion 138,178 - 138,178 Depreciation and amortization - 196,341 196,341 Total assets as of February 28, 2021 2,782,106 3,757,847 6,539,953 Allied $ Medicolombia $ Total $ Net Sales 5,260 - 5,260 Net loss (3,055,772 ) (839,526 ) (3,895,298 ) Accretion 193,661 - 193,661 Depreciation and amortization - 366,021 366,021 Allied $ Medicolombia $ Total $ Net loss (997,484 ) (38,785 ) (1,036,269 ) Accretion 44,417 - 44,417 Depreciation and amortization - 33,980 33,980 Allied $ Medicolombia $ Total $ Net loss (1,455,651 ) (38,785 ) (1,494,436 ) Accretion 44,417 - 44,417 Depreciation and amortization - 33,980 33,980 |
Schedule of geographic information | Revenues $ Total Assets $ Canada 5,260 2,782,106 Colombia - 3,757,847 Total 5,260 6,539,953 |
Nature of operations reverse ta
Nature of operations reverse takeover transaction and going concern (Details Narrative) - USD ($) | Sep. 10, 2019 | Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2020 | Aug. 31, 2020 | Jul. 25, 2019 |
Common stock, shares outstanding | 78,268,780 | 85,305,780 | 85,305,780 | 85,105,780 | ||||
Shares reacquired by treasury, shares | 4,500,000 | |||||||
Cancellation of treasury stock | 10,459,220 | |||||||
Net losses | $ (2,699,436) | $ (1,036,269) | $ (3,895,298) | $ (1,494,436) | $ (1,494,436) | |||
Working capital deficit | $ (3,676,198) | |||||||
Reorganization Agreement [Member] | Pacific Capital Investment Group, Inc. [Member] | ||||||||
Acquire percentage | 100.00% | 100.00% | ||||||
Business aquisition, common stock issued by related party to SECFAC | 51,200,014 | |||||||
Description of delivered as part of the transaction | Representing approximately 65.42% of the outstanding equity of Allied Corp. to SECFAC Exchange Corp. |
Significant accounting polici_4
Significant accounting policies (Details) | 6 Months Ended |
Feb. 28, 2021 | |
Farm facility and equipment [Member] | Minimum [Member] | |
Estimated useful lives | 1 year |
Farm facility and equipment [Member] | Maximum [Member] | |
Estimated useful lives | 10 years |
Office and Computer Equipment [Member] | |
Estimated useful lives | 5 years |
Land Equipment [Member] | |
Estimated useful lives | 10 years |
Significant accounting polici_5
Significant accounting policies (Details Narrative) | 6 Months Ended |
Feb. 28, 2021USD ($) | |
Significant accounting policies | |
Sales | $ 5,260 |
Intangible Asset Estimated Useful Life | 10 years |
Reverse Take-over Transaction (
Reverse Take-over Transaction (Details Narrative) - Reorganization Agreement [Member] - Pacific Capital Investment Group, Inc. [Member] - shares | Sep. 10, 2019 | Sep. 10, 2019 | Jul. 25, 2019 |
Acquire percentage | 100.00% | 100.00% | 100.00% |
Description of delivered as part of the transaction | Representing approximately 62.12% of the outstanding equity of the Company to SECFAC Exchange Corp. on behalf of the previous shareholders of AM Biosciences and other designees of AM Biosciences. | ||
Business aquisition, common stock issued by related party to SECFAC | 51,200,014 |
Inventory (Details)
Inventory (Details) - USD ($) | Feb. 28, 2021 | Aug. 31, 2020 |
Reverse Take-over Transaction (Details Narrative) | ||
Raw materials | $ 27,680 | $ 52,585 |
Work in progress | 76,292 | 0 |
Total inventory | $ 103,972 | $ 52,585 |
Deposits and advances (Details)
Deposits and advances (Details) - USD ($) | Feb. 28, 2021 | Aug. 31, 2020 |
Total deposits and advances | $ 2,829,286 | $ 3,008,246 |
Towards the purchase of prefabricated buildings [Member] | ||
Total deposits and advances | 2,585,540 | 2,600,720 |
Refundable deposits towards future land acquisitions [Member] | ||
Total deposits and advances | 0 | 174,030 |
Vitalis equipment deposit [Member] | ||
Total deposits and advances | 233,496 | 233,496 |
Other [Member] | ||
Total deposits and advances | $ 10,250 | $ 0 |
Deposits and advances (Details
Deposits and advances (Details Narrative) | Feb. 28, 2021USD ($)ft² | Aug. 31, 2020USD ($) |
Total deposits and advances | $ 2,829,286 | $ 3,008,246 |
Purchase Agreement [Member] | ||
Area of land | ft² | 8,700 | |
Vitalis equipment deposit [Member] | ||
Total deposits and advances | $ 233,496 | 233,496 |
Towards the purchase of prefabricated buildings [Member] | ||
Total deposits and advances | 2,585,540 | 2,600,720 |
Two Purchase and Sale Agreement [Member] | ||
Total deposits and advances | $ 0 | $ 174,030 |
Property plant and equipment (D
Property plant and equipment (Details) | Feb. 28, 2021USD ($) |
Cost of asset, Begining balance | $ 225,231 |
Cost of asset, Addition | 33,209 |
Cost of asset, Foreign exchange | 10,583 |
Cost of asset, Ending balance | 269,023 |
Accumulated depreciation | |
Accumulated depreciation, Additions | 35,155 |
Accumulated depreciation, Begining balances | 2,211 |
Accumulated depreciation, Foreign exchange | 2,743 |
Accumulated depreciation, Ending balance | 40,109 |
Net book value, Begining balance | 223,020 |
Net book value, Ending balance | 228,914 |
Land Equipment [Member] | |
Cost of asset, Begining balance | 6,000 |
Cost of asset, Addition | 0 |
Cost of asset, Foreign exchange | 196 |
Cost of asset, Ending balance | 6,196 |
Accumulated depreciation | |
Accumulated depreciation, Additions | 516 |
Accumulated depreciation, Begining balances | 0 |
Accumulated depreciation, Foreign exchange | 2 |
Accumulated depreciation, Ending balance | 518 |
Net book value, Begining balance | 6,000 |
Net book value, Ending balance | 5,678 |
Office and Computer Equipment [Member] | |
Cost of asset, Begining balance | 3,161 |
Cost of asset, Addition | 7,788 |
Cost of asset, Foreign exchange | 134 |
Cost of asset, Ending balance | 11,083 |
Accumulated depreciation | |
Accumulated depreciation, Additions | 1,330 |
Accumulated depreciation, Begining balances | 0 |
Accumulated depreciation, Foreign exchange | 6 |
Accumulated depreciation, Ending balance | 1,336 |
Net book value, Begining balance | 3,161 |
Net book value, Ending balance | 9,747 |
Farm Facility and Equipment [Member] | |
Cost of asset, Begining balance | 79,956 |
Cost of asset, Addition | 11,118 |
Cost of asset, Foreign exchange | 5,730 |
Cost of asset, Ending balance | 241,539 |
Accumulated depreciation | |
Accumulated depreciation, Additions | 33,309 |
Accumulated depreciation, Begining balances | 2,211 |
Accumulated depreciation, Foreign exchange | 2,735 |
Accumulated depreciation, Ending balance | 38,255 |
Net book value, Begining balance | 77,745 |
Net book value, Ending balance | 203,284 |
Cost of asset, Transfer | 144,735 |
Construction in progress [Member] | |
Cost of asset, Begining balance | 136,114 |
Cost of asset, Addition | 14,303 |
Cost of asset, Foreign exchange | 4,523 |
Cost of asset, Ending balance | 10,205 |
Accumulated depreciation | |
Accumulated depreciation, Additions | 0 |
Accumulated depreciation, Begining balances | 0 |
Accumulated depreciation, Foreign exchange | 0 |
Accumulated depreciation, Ending balance | 0 |
Net book value, Begining balance | 136,114 |
Net book value, Ending balance | 10,205 |
Cost of asset, Transfer | $ (144,735) |
Intangible assets (Details)
Intangible assets (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Feb. 28, 2021 | Aug. 31, 2020 | |
Cost | $ 5,435,334 | |
Foreign exchange | (408,526) | |
Accumulated amortization | (794,724) | |
Impairment | (1,113,972) | |
Intangible assets net carrying value | 3,118,112 | $ 3,300,000 |
Cannabis Licenses [Member] | ||
Cost | 5,435,334 | |
Foreign exchange | (408,526) | |
Accumulated amortization | (794,724) | |
Impairment | (1,113,972) | |
Intangible assets net carrying value | $ 3,118,112 | $ 3,300,000 |
Intangible assets (Details Narr
Intangible assets (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |
Feb. 28, 2021 | Feb. 28, 2021 | Feb. 17, 2020 | |
Amortization of licenses | $ 794,724 | ||
Medicolumbia [Member] | |||
Acquisition of licenses | $ 5,435,334 | ||
Amortization of licenses | $ 169,954 | $ 330,866 |
Leases (Details)
Leases (Details) | 6 Months Ended |
Feb. 28, 2021USD ($) | |
Operating lease cost: | |
Amortization of right-of-use assets | $ 4,543 |
Interest on lease liabilities | 12,413 |
Total operating lease cost | $ 16,956 |
Leases (Details 1)
Leases (Details 1) | 6 Months Ended |
Feb. 28, 2021USD ($) | |
Leases | |
Lease payments | $ 16,315 |
Leases (Details 2)
Leases (Details 2) | Feb. 28, 2021USD ($) |
Leases | |
Cost | $ 387,573 |
Accumulated amortization | (9,627) |
Lease termination | (299,089) |
Foreign exchange | (5,099) |
Net carrying value | $ 73,758 |
Leases (Details 3)
Leases (Details 3) | Feb. 28, 2021USD ($) |
Leases | |
2021 | $ 7,457 |
2022 | 14,915 |
2023 | 14,915 |
2024 | 14,915 |
Thereafter | 83,272 |
Total minimum lease payments | 135,474 |
Less: amount of lease payments representing effects of discounting | (61,716) |
Present value of future minimum lease payments | 73,758 |
Less current obligations under leases | (4,127) |
Lease liabilities, net of current portion | $ 69,631 |
Leases (Details Narrative)
Leases (Details Narrative) | 6 Months Ended |
Feb. 28, 2021USD ($) | |
Leases | |
Operating lease assets and liabilities | $ 82,398 |
Land purchase | 920,000 |
Monthly payments | $ 4,501 |
Lease Expiration Date | May 31, 3030 |
Lease term | 10 years |
Weighted average discount rate operating leases | 15.00% |
Loss on lease termination | $ 65,565 |
Weighted average remaining operating lease term | 9 years |
Loans payable (Details Narrativ
Loans payable (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | |||
Nov. 20, 2020 | Jun. 20, 2020 | Feb. 28, 2021 | Feb. 29, 2020 | May 29, 2020 | |
Initialy payment for building | $ 71,023 | ||||
Monthly interest payments | $ 37,613 | ||||
Interest payments | $ 225,679 | $ 0 | |||
Repayment of Principal Amount | $ 1,253,772 | ||||
June 2020 [Member] | |||||
Purchase price of Building | $ 1,253,772 |
Convertible Note (Details Narra
Convertible Note (Details Narrative) - USD ($) | Jan. 07, 2021 | Nov. 11, 2020 | Dec. 02, 2020 | Oct. 26, 2020 | Sep. 29, 2020 | Jun. 30, 2020 | Jan. 23, 2020 | Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2020 |
Fair value of convetible notes | $ 48,258 | $ 457,436 | $ 20,176 | $ 85,330 | $ 470,467 | $ 470,467 | ||||||
Fair value of warrants | $ 37,679 | 142,436 | $ 17,437 | $ 78,011 | $ 117,533 | $ 117,533 | ||||||
Conversion price | $ 0.70 | $ 0.65 | $ 0.65 | $ 0.98 | $ 0.98 | |||||||
Beneficial conversion feature | $ 85,330 | $ 115,383 | ||||||||||
Shares issuable | 16,000 | 16,000 | ||||||||||
Purchase additional common shares | 320,000 | |||||||||||
Convertible debt | $ 364,517 | $ 364,517 | ||||||||||
Original issue discount on beneficial conversion feature | $ 48,258 | 457,436 | $ 20,176 | 12,000 | 12,000 | |||||||
Convertible debt discounted | 108,100 | 108,100 | ||||||||||
Accrued interest | 26,575 | 26,575 | ||||||||||
Additional paid in capital, fair value of warrants | $ 37,679 | $ 22,564 | $ 17,437 | $ 78,011 | 108,100 | 108,100 | ||||||
Repayment Convertible notes payable | $ 200,000 | 600,000 | ||||||||||
Outstanding note payable | $ 400,000 | |||||||||||
Gain/Loss on extinguishment | 19,820 | $ 0 | (90,180) | $ 0 | ||||||||
Accretion expenses | $ 138,178 | $ 44,417 | $ 193,661 | $ 44,417 | $ 44,417 | |||||||
Warrants issued upon debt conversion | 4,900,000 | |||||||||||
On November 1, 2020 [Member] | ||||||||||||
Outstanding note payable | $ 400,000 | |||||||||||
Gain/Loss on extinguishment | $ 110,000 | |||||||||||
Debt instrument, maturity date | Mar. 31, 2021 | |||||||||||
Common shares issued upon debt conversion | 100,000 | |||||||||||
Shares received by each noteholder | 50,000 | |||||||||||
Description of debt instrument | As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument | |||||||||||
Fair value of debt amount extingushed | $ 110,000 | |||||||||||
On July 1, 2020 [Member] | ||||||||||||
Purchase additional common shares | 320,000 | |||||||||||
Warrant exercise price | $ 1.25 | $ 1.25 | ||||||||||
Debt instrument, maturity date | Oct. 31, 2021 | |||||||||||
Common shares issued upon debt conversion | 8,000 | |||||||||||
Description of debt instrument | As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument | |||||||||||
Simple interest | 5.00% | |||||||||||
Warrants issued upon debt conversion | 160,000 | |||||||||||
Six Convertible Notes [Member] | ||||||||||||
Conversion price | $ 1.25 | |||||||||||
Accrued interest | $ 14,466 | $ 14,466 | ||||||||||
Maturity date | Apr. 23, 2021 | |||||||||||
Convertible notes, principal amounts | $ 600,000 | |||||||||||
Warrant exercise price | $ 1.25 | |||||||||||
Interest rate | 10.00% | |||||||||||
Debt instrument, maturity term | 2 years | |||||||||||
Seven Convertible Notes [Member] | ||||||||||||
Conversion price | $ 1.25 | |||||||||||
Accrued interest | 4,274 | 4,274 | ||||||||||
Maturity date | Apr. 23, 2021 | |||||||||||
Convertible notes, principal amounts | $ 300,000 | |||||||||||
Interest rate | 10.00% | |||||||||||
Convertible Debt [Member] | ||||||||||||
Gain/Loss on extinguishment | 110,000 | |||||||||||
Consideration of extending the convertible notes | 400,000 | |||||||||||
Fair value of the common share and warrants | 110,000 | |||||||||||
Five Convertible Notes [Member] | ||||||||||||
Conversion price | $ 1.25 | |||||||||||
Accrued interest | 2,566 | 2,566 | ||||||||||
Maturity date | May 9, 2021 | |||||||||||
Convertible notes, principal amounts | $ 85,937 | |||||||||||
Warrant exercise price | $ 1.25 | |||||||||||
Interest rate | 10.00% | |||||||||||
Debt instrument, maturity term | 2 years | |||||||||||
Warrants issued to purchase common shares | 68,750 | |||||||||||
Accretion expenses | 12,026 | |||||||||||
Four Convertible Notes [Member] | ||||||||||||
Conversion price | $ 1.25 | |||||||||||
Accrued interest | 1,288 | 1,288 | ||||||||||
Maturity date | Apr. 23, 2021 | |||||||||||
Convertible notes, principal amounts | $ 37,613 | |||||||||||
Warrant exercise price | $ 1.25 | |||||||||||
Interest rate | 10.00% | |||||||||||
Debt instrument, maturity term | 2 years | |||||||||||
Warrants issued to purchase common shares | 30,090 | |||||||||||
Accretion expenses | $ 6,411 | |||||||||||
Three Convertible Notes [Member] | ||||||||||||
Conversion price | $ 1.25 | |||||||||||
Accrued interest | $ 6,803 | 6,803 | ||||||||||
Maturity date | Mar. 27, 2021 | |||||||||||
Convertible notes, principal amounts | $ 163,341 | |||||||||||
Warrant exercise price | $ 1.25 | |||||||||||
Interest rate | 10.00% | |||||||||||
Debt instrument, maturity term | 2 years | |||||||||||
Warrants issued to purchase common shares | 130,673 | |||||||||||
Accretion expenses | $ 37,046 | |||||||||||
Two Convertible Notes [Member] | ||||||||||||
Conversion price | $ 1.25 | |||||||||||
Repayment Convertible notes payable | $ 600,000 | |||||||||||
Maturity date | Jul. 20, 2020 | |||||||||||
Convertible notes, principal amounts | $ 400,000 | |||||||||||
Warrant exercise price | $ 1.25 | |||||||||||
Interest rate | 10.00% | |||||||||||
Warrants issued to purchase common shares | 240,000 | |||||||||||
Debt discount | $ 12,000 | |||||||||||
One Convertible Notes [Member] | ||||||||||||
Convertible notes, principal amounts | $ 200,000 |
Equity (Detail Narrative)
Equity (Detail Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2021 | Feb. 29, 2020 | Aug. 31, 2020 | Sep. 09, 2019 | |
Common shares returned to treasury | 4,500,000 | |||||
Cancellation of treasury stock | $ 10,459,220 | |||||
Convertible notes payable | $ 129,952 | 129,952 | $ 19,952 | |||
Shares face value | $ 92,664 | $ 92,664 | $ 4,500,000 | |||
Common stock, shares reissued | 4,500,000 | |||||
Common stock, shares purchase | 500,000 | 500,000 | ||||
Proceed from issuance of common shares | $ 250,000 | $ 250,000 | $ 276,000 | |||
Gain/Loss on extinguishment | 19,820 | $ 0 | (90,180) | 0 | ||
Settlement of accounts payable | $ 112,484 | $ 112,484 | ||||
Common stock shares issued | 85,305,780 | 85,305,780 | 85,105,780 | |||
Price Per Shares | $ 0.75 | $ 0.75 | ||||
January 21, 2020 [Member] | ||||||
Proceed from issuance of common shares | $ 276,000 | |||||
Common stock shares issued | 240,000 | 240,000 | ||||
Price Per Shares | $ 1.25 | $ 1.25 | ||||
December 1, 2019 [Member] | ||||||
Proceed from issuance of common shares | $ 265,000 | |||||
Common stock shares issued | 130,000 | 130,000 | ||||
Price Per Shares | $ 0.50 | $ 0.50 | ||||
September 30, 2020 [Member] | ||||||
Proceed from issuance of common shares | $ 150,000 | |||||
Common stock shares issued | 120,000 | 120,000 | ||||
Price Per Shares | $ 1.25 | $ 1.25 |
Related party transactions an_3
Related party transactions and balances (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Feb. 28, 2021 | Aug. 31, 2020 | |
Related party transactions and balances | ||
Consulting fees and benefits | $ 221,213 | $ 310,220 |
Related party transactions an_4
Related party transactions and balances (Details 1) - USD ($) | Feb. 28, 2021 | Aug. 31, 2020 |
Amounts due from related party | $ (146,125) | $ (70,586) |
CFO [Member] | ||
Amounts due from related party | (13,327) | (10,797) |
COO and Director [Member] | ||
Amounts due from related party | (86,273) | (42,059) |
CEO and Director [Member] | ||
Amounts due from related party | (46,525) | (12,588) |
Director [Member] | ||
Amounts due from related party | $ 0 | $ (5,142) |
Related party transactions an_5
Related party transactions and balances (Details Narrative) - USD ($) | Feb. 28, 2021 | Aug. 31, 2020 |
Related party transactions and balances | ||
Amounts due from related parties | $ 11,738 | $ 0 |
Due to related party | $ 146,125 | $ 70,586 |
Financial risk factors (Details
Financial risk factors (Details) - USD ($) | Feb. 28, 2021 | Aug. 31, 2020 | Feb. 29, 2020 | Aug. 31, 2019 |
Cash and cash equivalents | $ 148,984 | $ 94,047 | $ 178,160 | $ 1,080,882 |
Canadian dollar exchange rate [Member] | ||||
Cash and cash equivalents | 0 | |||
Accounts payable | (393,478) | |||
Net exposure | (393,478) | |||
Balance in US dollars | $ (308,810) |
Financial risk factors (Detai_2
Financial risk factors (Details 1) - Colombian Peso exchange rate [Member] | Feb. 28, 2021USD ($) |
Cash and cash equivalents | $ 51,687,241 |
Accounts payable and accrued liabilities | (5,356,061,524) |
Net exposure | (5,304,374,282) |
Balance in US dollars | $ (740,719) |
Financial risk factors (Detai_3
Financial risk factors (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2020 | |
Net losses | $ (2,699,436) | $ (1,036,269) | $ (3,895,298) | $ (1,494,436) | $ (1,494,436) |
Colombian Peso exchange rate [Member] | |||||
Net losses | $ 74,072 | 2,731 | |||
Exchange rate | 10.00% | ||||
Canadian dollar exchange rate [Member] | |||||
Net losses | $ 30,881 | $ 4,860 | |||
Exchange rate | 10.00% |
Commitments and contingencies (
Commitments and contingencies (Details Narrative) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2020CAD ($) | Feb. 28, 2021USD ($) | Feb. 29, 2020USD ($) | Feb. 28, 2021USD ($) | Feb. 29, 2020USD ($) | Feb. 28, 2021CAD ($) | Sep. 30, 2020USD ($) | Aug. 31, 2020USD ($) | Aug. 31, 2020CAD ($) | Aug. 30, 2019CAD ($) | |
Accounts payable and accrued liabilities | $ 1,379,647 | $ 1,379,647 | $ 105,000 | $ 1,396,495 | ||||||
Contingent liability | 536,727 | 536,727 | ||||||||
Annual rent for lease | 10,058 | $ 4,611 | 30,890 | $ 8,940 | ||||||
Lot 2 [Member] | ||||||||||
Commitment | $ 953,700 | |||||||||
Initial refundable deposit | $ 10,000 | |||||||||
Lot 1 [Member] | ||||||||||
Commitment | 988,550 | 988,550 | ||||||||
Term descriptions | 10 years commencing June 1, 2020 until May 31, 2030. | |||||||||
Annual rent for lease | $ 70,442 | |||||||||
Sales Agreement [Member] | ||||||||||
Deposits and advances | $ 233,496 | $ 233,496 | ||||||||
Equipment | $ 658,260 | |||||||||
CAD [Member] | ||||||||||
Commitment | $ 1,942,250 |
Share purchase warrants (Detail
Share purchase warrants (Details) - Warrants [Member] | 6 Months Ended |
Feb. 28, 2021$ / sharesshares | |
Number of warrants | |
Number of warrants, Beginning balance | shares | 560,000 |
Number of warrants, issued | shares | 469,513 |
Number of warrants, expired | shares | (240,000) |
Ending balance | shares | 789,513 |
Weighted average exercise price | |
Weighted average exercise price, Beginning balance | $ / shares | $ 1.25 |
Weighted average exercise price, issued | $ / shares | 1.25 |
Weighted average exercise price, expired | $ / shares | 1.25 |
Weighted average exercise price, Ending balance | $ / shares | $ 1.25 |
Share purchase warrants (Deta_2
Share purchase warrants (Details 1) | Feb. 28, 2021$ / sharesshares |
Warrant 4 [Member] | |
Number of warrants | shares | 68,750 |
Weighted average exercise price | $ / shares | $ 1.25 |
Expiry date | Nov. 11, 2022 |
Warrant 3 [Member] | |
Number of warrants | shares | 30,090 |
Weighted average exercise price | $ / shares | $ 1.25 |
Expiry date | Oct. 16, 2022 |
Warrant 2 [Member] | |
Number of warrants | shares | 130,673 |
Weighted average exercise price | $ / shares | $ 1.25 |
Expiry date | Sep. 29, 2022 |
Warrant 1 [Member] | |
Number of warrants | shares | 320,000 |
Weighted average exercise price | $ / shares | $ 1.25 |
Expiry date | Oct. 31, 2021 |
Warrant 5 [Member] | |
Number of warrants | shares | 240,000 |
Weighted average exercise price | $ / shares | $ 1.25 |
Expiry date | Jan. 23, 2021 |
Stock options (Details)
Stock options (Details) | 6 Months Ended |
Feb. 28, 2021$ / sharesshares | |
Loans payable | |
Number of options, granted | 4,900,000 |
Number of options, outstanding balance | 4,900,000 |
Number of options, Exercisable balance | 1,633,333 |
Weighted Average exercise price, granted | $ / shares | $ 0.77 |
Weighted Average exercise price, outstanding balance | $ / shares | 0.77 |
Weighted Average exercise price, exercisable balance | $ / shares | $ 0.77 |
Weighted average contractual term, granted | 4 years 11 months 15 days |
Weighted average contractual term, outstanding | 4 years 11 months 15 days |
Weighted average contractual term, exercisable | 4 years 11 months 15 days |
Aggregate Intrinsic value, outstanding balance | 1,086,000 |
Aggregate Intrinsic value, exercisable balance | 362,000 |
Stock options (Details 1)
Stock options (Details 1) | 6 Months Ended | |
Feb. 28, 2021 | Feb. 29, 2020 | |
Loans payable | ||
Expected volatility | 182.00% | 0.00% |
Expected dividend yield | 0.00% | 0.00% |
Expected life (in years) | 5 years | |
Risk-free interest rate | 0.42% | 0.00% |
Stock options (Details Narrativ
Stock options (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2021 | Feb. 29, 2020 | |
Price per share | $ 0.75 | $ 0.75 | ||
Stock based compensation | $ 1,380,120 | $ 0 | $ 1,380,120 | $ 0 |
Stock options granted | 4,900,000 | |||
Directors And Officers [Member] | February 1, 2021 [Member] | ||||
Price per share | $ 0.825 | $ 0.825 | ||
Stock option description | The options vest one third on the grant date and one third on the first and second years after the grant date. The weighted average grant date fair value of stock options granted was $0.77 per share. During the six months ended February 28, 2021 | |||
Unrecognized compensation costs | $ 2,150,832 | |||
Stock options granted | 4,900,000 | |||
Options exercisable | 1,200,000 | |||
Options expired | 5 years |
Noncash activities (Details)
Noncash activities (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Sep. 29, 2020 | Feb. 29, 2020 | Feb. 28, 2021 | Feb. 29, 2020 | |
Beneficial conversion feature | $ 85,330 | $ 115,383 | ||
Common stock issued pursuant to asset acquisitions | $ 4,500,000 | |||
Non-Cash Investing And Financing Activities [Member] | ||||
Beneficial conversion feature | 176,328 | $ 129,533 | ||
Common stock issued pursuant to asset acquisitions | 0 | 4,500,000 | ||
Debt settled with shares issuable | 112,484 | 0 | ||
Relative fair value of warrants issued with convertible note | 275,691 | 117,533 | ||
Original debt discount against convertible notes | 0 | 12,000 | ||
Net liabilities acquired in Medicolombias Acquisition | 0 | (222,837) | ||
Relative Fair value of warrants issued on modification of convertible note | $ 110,000 | $ 0 |
Segment disclosure (Details)
Segment disclosure (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2020 | Aug. 31, 2020 | |
Net sales | $ 1,060 | $ 5,260 | ||||
Net losses | (2,699,436) | $ (1,036,269) | (3,895,298) | $ (1,494,436) | $ (1,494,436) | |
Accretion expenses | 138,178 | 44,417 | 193,661 | $ 44,417 | 44,417 | |
Depreciation and amortization | 196,341 | 33,980 | 366,021 | 33,980 | ||
Total assets | 6,539,953 | 6,539,953 | $ 7,104,577 | |||
Allied [Member] | ||||||
Net sales | 1,060 | 5,260 | ||||
Net losses | (2,186,773) | (997,484) | (3,055,772) | (1,455,651) | ||
Accretion expenses | 138,178 | 44,417 | 193,661 | 44,417 | ||
Depreciation and amortization | 0 | 0 | 0 | 0 | ||
Total assets | 2,782,106 | 2,782,106 | ||||
Allied Colombia [Member] | ||||||
Net sales | 0 | 1,060 | ||||
Net losses | (512,663) | (2,699,436) | ||||
Accretion expenses | 0 | 193,661 | ||||
Depreciation and amortization | 196,341 | 196,341 | ||||
Total assets | $ 3,757,847 | 3,757,847 | ||||
Medicolombia [Member] | ||||||
Net sales | 0 | |||||
Net losses | (38,785) | (839,526) | (38,785) | |||
Accretion expenses | 0 | 0 | 0 | |||
Depreciation and amortization | $ 33,980 | $ 366,021 | $ 33,980 |
Segment disclosure (Details 2)
Segment disclosure (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2021 | Feb. 29, 2020 | Aug. 31, 2020 | |
Total assets | $ 6,539,953 | $ 6,539,953 | $ 7,104,577 | ||
Revenue | 1,060 | $ 0 | 5,260 | $ 0 | |
Canada [Member] | |||||
Total assets | 2,782,106 | 2,782,106 | |||
Revenue | 5,260 | ||||
Colombia [Member] | |||||
Total assets | $ 3,757,847 | 3,757,847 | |||
Revenue | $ 0 |
Subsequent events (Details Narr
Subsequent events (Details Narrative) - USD ($) | Apr. 14, 2021 | Mar. 30, 2021 | Mar. 26, 2021 | Jan. 24, 2021 | Feb. 28, 2021 | Aug. 31, 2020 |
Comon stock shares | 2,000,000 | |||||
Cash | $ 85,500 | $ 148,984 | $ 94,047 | |||
Promissory note | $ 85,500 | |||||
Price per share | $ 0.75 | |||||
Subsequent Event [Member] | ||||||
Issuance of convertible notes | $ 18,000 | |||||
Warrants purchase | 18,000 | |||||
Agreement, description | $1,800 per month for years 6 to 10 of the lease. | |||||
Purchase of common stock | 350,000 | |||||
Net proceeds | $ 175,000 | |||||
Convertible notes issuable conversion price | $ 1.25 | |||||
Maturity date | Sep. 26, 2021 | |||||
Price per share | $ 0.50 | |||||
Interest rate | 10.00% | |||||
Subsequent Event [Member] | 16 To 20 Years [Member] | ||||||
Monthly rent | 2,280 | |||||
Subsequent Event [Member] | 21 To 25 Years [Member] | ||||||
Monthly rent | $ 2,565 | |||||
Subsequent Event [Member] | Assets Purchase Agreement [Member] | ||||||
Promissory note | $ 1,350,000 | |||||
Agreed to pay | $ 150,000 | |||||
Federal rate | 0.11% | |||||
Net operating losses | 50.00% | |||||
Subsequent Event [Member] | Lease Agreement [Member] | 11 to 15 Years [Member] | ||||||
Agreement, description | 1,500 per month for the first five years. | |||||
Monthly rent | $ 2,025 | |||||
Subsequent Event [Member] | PFS [Member] | ||||||
Issuance of convertible notes | $ 100,000 | |||||
Warrants purchase | 100,000 | |||||
Convertible notes issuable conversion price | $ 1.25 | |||||
Maturity date | Sep. 26, 2021 | |||||
Price per share | $ 0.50 | |||||
Interest rate | 10.00% |