NOTE 7 - DERIVATIVE LIABILITIES

12 Months Ended

Aug. 31, 2019

NOTE 7 – DERIVATIVE LIABILITIES

The Company accounts for the embedded conversion features included in its convertible instruments as derivative liabilities. The aggregate fair value of derivative liabilities at August 31, 2019 and 2018 amounted to $ 772,732 and $724,313 respectively. At each measurement date, the fair value of the embedded conversion features was based on the lattice binomial method using the following assumptions:

	Years Ended August 31
	2019		2018
Effective Exercise price		0.0003 - 0.0010		0.0007 - 0.00112
Effective Market price		0.0006		0.0014
Volatility		78.95%		55.96%
Risk-free interest		1.76%		2.46%
Terms	365 days		365 days
Expected dividend rate		0%		0%

The expected volatility is based on the historical volatility of comparable companies.

Changes in the derivative liabilities during the years ended August 31, 2019 and 2018 are as follows:

Balance at September 1, 2017	$	740,953
Embedded conversion features at issuance		-
Changes in fair value of derivative liabilities		(16,640	)
Balance, August 31, 2018	$	724,313

Balance at September 1, 2018	$	724,313
Embedded conversion features at issuance		-
Changes in fair value of derivative liabilities		48,419
Balance, August 31, 2019	$	772,732