0001079973-21-000292.txt : 20210419 0001079973-21-000292.hdr.sgml : 20210419 20210419161756 ACCESSION NUMBER: 0001079973-21-000292 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 60 CONFORMED PERIOD OF REPORT: 20210228 FILED AS OF DATE: 20210419 DATE AS OF CHANGE: 20210419 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CANNABIS GLOBAL, INC. CENTRAL INDEX KEY: 0001413488 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 831754057 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-56141 FILM NUMBER: 21834818 BUSINESS ADDRESS: STREET 1: 520 S. GRAND AVENUE STREET 2: SUITE 320 CITY: LOS ANGELES STATE: CA ZIP: 90071 BUSINESS PHONE: (310) 986-4929 MAIL ADDRESS: STREET 1: 520 S. GRAND AVENUE STREET 2: SUITE 320 CITY: LOS ANGELES STATE: CA ZIP: 90071 FORMER COMPANY: FORMER CONFORMED NAME: MCTC Holdings, Inc. DATE OF NAME CHANGE: 20190220 FORMER COMPANY: FORMER CONFORMED NAME: MICROCHANNEL TECHNOLOGIES CORP DATE OF NAME CHANGE: 20070925 10-Q 1 cbgl_10q-022821.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

   

 

FORM 10-Q

(Mark One)

 

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended February 28, 2021

 

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____

 

Commission File Number: 000-27039

 

CANNABIS GLOBAL, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   83-1754057
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
     
520 S. Grand Avenue, Suite 320    
Los Angeles, CA   90071
(Address of principal executive offices)   (Zip Code)

 

(310) 986-4929

(Registrant’s telephone number, including area code)

 

(Former Name, former address and former fiscal year, if changed since last report)

 

Securities registered under Section 12(b) of the Exchange Act: 31,210,445

Securities registered under Section 12(g) of the Exchange Act: Common Stock

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” "non-accelerated filer," “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No 

 

As of the end of the quarterly reporting period ending February 28, 2021 there were 66,205,688 shares of the registrant’s common stock outstanding.

 

As of April 19, 2021, there were 72,133,317 shares of the registrant’s common stock outstanding.

 

 
 
 

 

CANNABIS GLOBAL, INC. 

FORM 10-Q

 

For the Period Ended February 28, 2021

 

Table of Contents

  

PART I  FINANCIAL INFORMATION
   
Item 1. Financial Statements  
   
Condensed consolidated balance sheets as of February 28, 2021 (unaudited)
and August 31, 2021 (audited)
3
   
Condensed consolidated statements of operations for the three and six months ended
February 28, 2021 and February 29, 2020 (unaudited)
4
   

Condensed consolidated statements of equity for the six months ended

February 28, 2021 and February 29, 2020 (unaudited)

5

 

   

Condensed consolidated statements of cash flows for the six months ended

February 28, 2021 and February 29, 2020 (unaudited)

7
   
Notes to Condensed Consolidated Financial Statements (unaudited) 8
   
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations 29
   
Item 4.  Controls and Procedures 43
   
PART II  OTHER INFORMATION
   
Item 1. Legal Proceedings 43
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 43
   
Item 3. Defaults Upon Senior Securities 43
   
Item 4. Mine Safety Disclosures 43
   
Item 5. Other Information 43
   
Item 6. Exhibits 44
   
Signatures 45
   

 

 

2 
 
 

 

 CANNABIS GLOBAL, INC. AND SUBSIDIARIES

 CONSOLIDATED BALANCE SHEET

(Unaudited)

 

       
   February 28,  August 31,
   2021  2020
       
ASSETS          
  Current Assets:          
  Cash  $134,187   $2,338 
  Accounts Receivable   218,374    —   
Notes receivable, current   121,247    —   
  Inventory   180,155    75,338 
Total Current Assets   653,963    77,676 
           
Machinery & Equipment- Net   1,362,177    25,406 
           
Other Assets          
   Long-Term Investments   650,000    1,714,903 
   Intangible Assets   500,000    500,000 
Right of Use Asset   607,306    —   
  Notes Receivable   41,000    —   
  Security Deposit   7,200    7,200 
Goodwill   8,098,603    —   
           
TOTAL ASSETS  $11,920,249   $2,325,185 
           
           
           
LIABILITIES & STOCKHOLDER'S EQUITY (DEFICIT)          
  Current Liabilities:          
  Accounts Payable  $463,248   $233,568 
  Accounts Payable - Related Party   1,139    1,139 
  Accrued Interest   139,401    33,301 
  Right of use liability, current   62,063    —   
  Notes payable, current   1,703,579    —   
  Convertible Notes, Net of Debt Discount of $1,032,292 and $678,246, respectively   1,948,152    1,866,872 
  Derivative Liability   2,054,739    1,125,803 
  Notes Payable - Related Party   616,844    499,788 
  Total Current Liabilities   6,989,165    3,760,471 
           
  Right of use liability, long term   545,243    —   
  Notes payable   126,615    —   
  Total Liabilities   7,661,023    3,760,471 
           
  Stockholder's Equity (Deficit)          
  Preferred Stock, par value $0.0001,          
      10,000,000 shares Authorized, 6,000,000 shares Issued and          
       Outstanding at February 28, 2021 and August 31, 2020   600    600 
  Common Stock, par value $0.001,          
      290,000,000 shares Authorized,  66,205,687 and 27,082,419 shares Issued and          
      Outstanding at February 28, 2021 and August 31, 2020, respectively   66,203    2,708 
  Additional Paid-In Capital   8,862,713    4,618,168 
  Shares to be issued   1,360    187 
  Preferred stock to be issued   —        
  Accumulated Deficit   (8,520,943)   (6,056,949)
           
  Total Stockholder's Equity (Deficit) attributable to Cannabis Global, Inc.   409,933    (1,435,286)
           
Noncontrolling Interest   3,849,293    —   
Total Stockholders' Equity (Deficit)   4,259,226    (1,435,286)
           
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)  $11,920,249   $2,325,185 

 

 

 The accompanying notes are an integral part of these unaudited consolidated financial statements

 

 

3 
 
 

 

 CANNABIS GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 
   For the Three Months Ended  For the Six Months Ended
   February 28,  February 29,  February 28,  February 29,
   2021  2020  2021  2020
             
Revenue:                    
   Products Sales  $25,816   $—     $30,226   $5,003 
   Consulting Revenue- Related Party   —      —      —      5,000 
Total Revenue   25,816    —      30,226    10,003 
                     
Cost of Goods Sold   6,653    —      7,953    2,900 
Gross Profit   19,163    —      22,273    7,103.00 
                     
Operating Expenses:                    
    Advertising Expenses   (498)   14,262    50,524    15,694 
    Consulting Services   20,750    67,662    252,051    103,545 
    Professional Fees   129,263    133,159    179,895    282,114 
   General and Administrative Expenses   282,056    195,832    396,492    383,355 
 Total Operating Expenses   431,571    410,915    878,962    784,708 
                     
 Operating Loss   (412,408)   (410,915)   (856,689)   (777,605)
                     
Other  Income (Expense)                    
Interest Expense   (1,933,728)   (522,203)   (2,706,483)   (553,453)
Changes in FV of Derivatives   593,235    170,922    1,308,912    183,425 
Other Income   1,522    —      1,642      
Equity method loss   (359,391)   —      (211,376)   —   
Total Other Income (Expense)   (1,698,362)   (351,281)   (1,607,305)   (370,028)
                     
 Net Loss   (2,110,770)   (762,196)   (2,463,994)   (1,147,633)
                     
 Net loss attributable to noncontrolling interest   —      —      —      —   
                     
 Net loss attributable to Cannabis Global, Inc.  $(2,110,770)  $(762,196)  $(2,463,994)  $(1,147,633)
                     
 Basic & Diluted Loss per Common Share  $(0.05)  $(0.06)  $(0.06)  $(0.09)
                     
 Weighted Average Common Shares                    
 Outstanding   43,196,439    12,321,639    39,744,494    12,752,506 

 

 

 The accompanying notes are an integral part of these unaudited consolidated financial statements

 

4 
 
 

 

CANNABIS GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

 

                                
   Class A Preferred Stock  Common Stock  Common Stock to be issued 

Additional

Paid In

  Accumulated  Stockholders' Equity Attributable to Cannabis  Noncontrolling  Total Stockholders'
   Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Global Inc.  Interest  Equity
Balance, August 31, 2019   —     $—      12,524,307   $1,253    1,893,333   $189   $1,187,574   $(1,127,601)  $61,415   $—      61,415 
Common stock issued for services rendered   —      —      1,893,333    189    (1,893,333)   (189)   —      —      —           —   
Shares Issued for Services   —      —      23,333    2              20,881         20,883         20,883 
Stock based compensation   —      —      —      —      —      —      95,670    —      95,670         95,670 
Proceeds from common stock subscriptions   —      —      203,333    20    —      —      74,980         75,000         75,000 
Proceeds from common stock subscriptions - To be Issued   —      —      —      —      260,000    26    64,974    —      65,000         65,000 
Discount on convertible note   —      —      —      —      —      —      20,000    —      20,000         20,000 
Effects of Reverse stock-split             188,822    19              (19)        —           —   
Net Loss                                      (385,437)  $(385,437)        (385,437)
Balance, November 30, 2019   —      —      14,833,128   $1,483    260,000   $26   $1,464,060   $(1,513,038)  $(47,469)  $—     $(47,469)
                                                        
Common stock to be issued for investment   —      —      —      —      400,000    40    112,360        $112,400         112,400 
Proceeds from common stock subscriptions - To be Issued             260,000    26    (260,000)   (26)   —           —           —   
Stock based compensation   —      —      —      —      —      —      94,618         94,618         94,618 
Net Loss   —      —      —      —      —      —      —      (762,196)   (762,196)        (762,196)
Balance, February 29, 2020   —      —      15,093,128    1,509    400,000    40    1,671,038    (2,275,234)   (602,647)   —      (602,647)

 

 

 

 

5 
 
 

 

CANNABIS GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

(continued)

 

                                
   Class A Preferred Stock  Common Stock  Common Stock to be issued 

Additional

Paid In

  Accumulated  Stockholders' Equity Attributable to Cannabis  Noncontrolling  Total Stockholders'
   Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Global Inc.  Interest  Equity
                                                        
Balance, August 31,2020   6,000,000    600    27,082,419    2,708    1,871,858   $187   $4,618,168   $(6,056,949)  $(1,435,286)  $—     $(1,435,286)
Stock based compensation             3,400,000    3,400              179,600    —      183,000    —      183,000 
Proceeds from common stock subscriptions             510,204    510    89,796    90    (600)   —      0    —      0 
Common stock issued for investment             7,222,222    7,222    —      —      642,778    —      650,000    —      650,000 
Common stock issued in settlement of convertible notes payable and accrued interest             1,500,000    1,500              28,500    —      30,000    —      30,000 
Discount on convertible notes                                      —      —      —      —   
Preferred stock issued                                 —      —      —      —      —   
Effects of Par value adjustment                  24,372         1,683    (26,055)   —      —      —      —   
Net Loss                                     $(353,224)   (353,224)   —      (353,224)
Balance, November 30, 2020   6,000,000   $600    39,714,845   $39,712    1,961,654   $1,960   $5,442,391   $(6,410,173)  $(925,510)  $—     $(925,510)
                                                        
Stock based compensation   —      —      4,106,543    4,107    (600,000)   (600)   335,827    —      339,334    —      339,334 
Proceeds from common stock subscriptions   —      —      6,516,667    6,517    —      —      384,483    —      391,000    —      391,000 
Common stock issued for investment   —      —      12,820,297    12,820    —      —      2,209,355    —      2,222,175    3,849,293    6,071,468 
Common stock issued in settlement of convertible notes payable and accrued interest   —      —      3,047,335    3,047    —      —      213,682    —      216,729    —      216,729 
Derivative impact of conversions   —      —      —      —      —      —      276,975    —      276,975    —      276,975 
Net Loss   —      —      —      —      —      —      —      (2,110,770)   (2,110,770)   —      (2,110,770)
Balance, February 28, 2021   6,000,000    600    66,205,687    66,203    1,361,654    1,360    8,862,713   $(8,520,943)   409,933    3,849,293    4,259,226 

 

 

 

 

 The accompanying notes are an integral part of these unaudited consolidated financial statements

 

6 
 
 

 

CANNABIS GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

 

       
   For the Six Months Ended
   February 28,  February 29,
   2021  2020
CASH FLOWS FROM OPERATING ACTIVITIES          
Net Loss   (2,463,994)   (1,147,633)
 Adjustments to reconcile net loss to net cash          
 used in operating activities:          
   Non-Cash Interest Expense   2,342,280    547,671 
   Equity method loss from investments   211,376    —   
   Depreciation Expense   1,798    1,571 
   Stock Based Compensation   522,334    211,171 
   Changes in Fair Value of Derivative Liabilities   (1,308,912)   (183,425)
Changes In:          
   Accounts Receivable   (24,767)   (10,003)
Inventory   (104,817)   (22,831)
Accounts Payable and accrued expenses   (61,053)   79,168 
Accounts Payable - Related Party   —      (1,139)
Accrued Interest   111,311    5,782 
Net Cash Used in Operating Activities   (774,444)   (519,668)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
  Purchase of Machinery & Equipment   —      (3,500)
  Cash acquired in acquisition   2,200    —   
Net Cash Provided by Investing Activities   2,200    (3,500)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
  Proceeds from Issuance of Common Stock   391,000    140,000 
  Proceeds from convertible notes payable   1,086,000    388,101 
  Repayment of convertible notes payable   (578,000)   —   
  Repayment of notes payable   5,093    —   
Net Cash Provided by Financing Activities   904,093    528,101 
           
Net (Decrease) Increase in Cash   131,849    4,933 
Cash at Beginning of Period   2,338    152,082 
           
Cash at End of Period   134,187    157,015 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid during the year for:          
  Interest  $188,292   $—   
  Income Taxes  $—     $—   
           
  Shares issued and loan incurred for acquisition of intangible assets  $650,000   $612,400 
  Common stock issued for acquisition of NPE  $2,222,175   $—   
  Increase in noncontrolling interest from acquisition of NPE  $3,849,293    —   
  Shares issued for conversion of notes payable and accrued interest  $246,729   $—   

 

 

 The accompanying notes are an integral part of these unaudited consolidated financial statements

 

 

7 
 
 

 

 

Note 1. Organization and Description of Business

 

Cannabis Global, Inc. is located at 520 S. Grand Avenue, Suite 320, Los Angeles, California 90071. Our telephone number is (310) 986-4929 and our website is accessible at www.cannabisglobalinc.com. Our shares of Common Stock are quoted on the OTC Markets Pink Tier, operated by OTC Markets Group, Inc., under the ticker symbol “CBGL.”

 

Historical Development

 

We incorporated in Nevada in 2005 under the name MultiChannel Technologies Corporation, a wholly owned subsidiary of Octillion Corporation, a development stage technology company focused on the identification, acquisition and development of emerging solar energy and solar related technologies. In April, 2005, we changed our name to MicroChannel Technologies, Inc., and in June, 2008, began trading on the OTC Markets under the trading symbol “MCTC.” Our business focused on research and development of a patented intellectual properties combining physical, chemical and biological cues at the “cellular” level to facilitate peripheral nerve regeneration.

 

On June 27, 2018, we changed domiciles from the State of Nevada to the State of Delaware, and thereafter reorganized under the Delaware Holding Company Statute. On or about July 12, 2018, we formed two subsidiaries for the purpose of effecting the reorganization. We incorporated MCTC Holdings, Inc. and MCTC Holdings Inc. incorporated MicroChannel Corp. We then effected a merger involving the three constituent entities, and under the terms of the merger we were merged into MicroChannel Corp., with MicroChannel Corp. surviving and our separate corporate existence ceasing. Following the merger, MCTC Holdings, Inc. became the surviving publicly traded issuer, and all of our assets and liabilities were merged into MCTC Holdings, Inc.’s wholly owned subsidiary MicroChannel Corp. Our shareholders became the shareholders of MCTC Holdings, Inc. on a one for one basis.

 

On May 25, 2019, Lauderdale Holdings, LLC, a Florida limited liability company, and beneficial owner 70.7% of our issued and outstanding common stock, sold 130,000,000 common shares, to Mr. Robert Hymers, Mr. Edward Manolos and Mr. Dan Nguyen, all of whom were previously unaffiliated parties of the Company. Each individual purchased 43,333,333 common shares for $108,333,333 or an aggregate of $325,000. These series of transactions constituted a change in control.

 

On August 9, 2019, we filed a DBA in California registering the operating name Cannabis Global. On July 1, 2019, the Company entered into a 100% business acquisition with Action Nutraceuticals, Inc., a company owned by our CEO, Arman Tabatabaei in exchange for $1,000 (see “Related Party Transactions”). 

 

Subsequent to the closing of the fiscal year ending August 31, 2019, we affected a reverse split of our common shares effective as of September 30, 2019 at the rate of 1:15.

 

On September 11, 2019, we formed a subsidiary Aidan & Co, Inc. (“Aidan”) a California corporation as a wholly owned subsidiary of the Company. Aidan will be engaged in various related business opportunities. At this time Aidan has no operations.

 

On December 4, 2019, our shareholders approved and authorized (i) re-domiciling the Company from Delaware to Nevada; (ii) changing the name of the Company from MCTC Holdings, Inc. to Cannabis Global, Inc.; and, (iii) seeking a corresponding change of name and new trading symbol for the Company with FINRA.

 

8 
 
 

 

 

On March 30, 2020, we filed Articles of Conversion with the Delaware Secretary of State, electing to convert and re-domicile the Company from a Delaware corporation to a newly formed Nevada corporation named Cannabis Global, Inc. Concurrently, the Registrant filed Articles of Incorporation and Articles of Domestication with the Nevada Secretary of State incorporating the Registrant in Nevada under the name Cannabis Global, Inc. and accepting the re-domicile of Registrant’s Delaware corporation. There was no change to the Registrant’s fiscal year end. As a result of our FINRA corporate action, our name was changed to Cannabis Global, Inc. and our trading symbol changed to “CBGL.”

 

On April 18, 2020, we formed a subsidiary Hemp You Can Feel, Inc., a California corporation (“HYCF”), as a wholly owned subsidiary of the Company. HYCF will be engaged in various related business opportunities. At this time HYCF has no operations.

 

On May 6, 2020, we signed a joint venture agreement with RxLeaf, Inc. (“RxLeaf”) a Delaware corporation, creating a joint venture for the purpose of marketing the Company’s products to consumers. Under the terms of the agreement, the Company will produce products, which will be sold by RX Leaf via its digital marketing assets. The Company agreed to share the profits from the joint venture on a 50/50 basis.

 

On July 22, 2020, we signed a management agreement with Whisper Weed, Inc., a California corporation (“Whisper Weed”). Edward Manolos, our director, is a shareholder in Whisper Weed (see “Related Party Transactions”). Whisper Weed conducts licensed delivery of cannabis products in California. The material definitive agreement requires the parties to create a separate entity, CGI Whisper W, Inc. in California as a wholly owned subsidiary of the Company. The business of CGI Whisper W, Inc. will be to provide management services for the lawful delivery of cannabis in the State of California. The Company will manage CGI Whisper W, Inc. operations. In exchange for the Company providing management services to Whisper Weed through the auspices of CGI Whisper W, Inc., the Company will receive as consideration a quarterly fee of 51% of the net profits earned by Whisper Weed. As separate consideration for the transaction, the Company agreed to issue to Whisper Weed $150,000 in the Company’s restricted common stock, valued for purposes of issuance based on the average closing price of the Company’s common stock for the twenty days preceding the entry into the material definitive agreement. Additionally, the Company agreed to amend its articles of incorporation to designate a new class of preferred shares. The preferred class will be designated and issued to Whisper Weed in an amount equal to two times the quarterly payment made to the Company. The preferred shares will be convertible into the Company’s common stock after 6 months, and shall be senior to other debts of the Company. The conversion to common stock will be based on a value of common stock equal to at least two times the actual sales for the previous 90 day period The Company agreed to include in the designation the obligation to make a single dividend payment to Whisper Weed equal to 90% of the initial quarterly net profits payable by Whisper Weed. As of February 24, 2021, the Company has not issued the common or preferred shares, and the business is in the development stage.

 

On August 31, 2020, we entered into a stock purchase agreement with Robert L. Hymers III (“Hymers”). Pursuant to the Stock Purchase Agreement, the Company purchased from Hymers 266,667 shares of common stock of Natural Plant Extract of California Inc., a private California corporation (“NPE”), in exchange for $2,040,000. The purchased shares of common stock represents 18.8% of the outstanding capital stock of NPE on a fully diluted basis. NPE operates a licensed psychoactive cannabis manufacturing and distribution business operation in Lynwood, California. In connection with the stock purchase agreement, we became a party to a Shareholders Agreement, dated June 5, 2020, by and among Alan Tsai, Hymers, Betterworld Ventures, LLC, Marijuana Company of America, Inc. and NPE. The Shareholders Agreement contains customary rights and obligations, including restrictions on the transfer of the Shares.

 

On September 30, 2020, the Company entered into a securities exchange agreement with Marijuana Company of America, Inc., a Utah corporation (“MCOA”). By virtue of the agreement, the Company issued 7,222,222 shares of its unregistered common stock to MCOA in exchange for 650,000,000 shares of MCOA unregistered common stock. The Company and MCOA also entered into a lock up leak out agreement which prevents either party from sales of the exchanged shares for a period of 12 months. Thereafter the parties may sell not more than the quantity of shares equaling an aggregate maximum sale value of $20,000 per week, or $80,000 per month until all Shares and Exchange Shares are sold.

 

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On November 16, 2020, we entered into a business acquisition agreement with Ethos Technology LLC, dba Comply Bag, a California limited liability company (“Ethos”). Ethos is a development stage business in the process of entering the market for cannabis trackable storage bags. By virtue of the agreement, Ethos sold, assigned, and transferred to the Company all of Ethos’ business, including all of its assets and associated liabilities, in exchange for the Company’s issuance of an aggregate of 6,000,000 common shares. 3,000,000 shares were due at signing, with 1,500,000 shares being issued to Edward Manolos, and 1,500,000 shares being issued to Thang Nguyen. Mr. Manolos is our director and a related party. Mr. Nguyen is the brother of Dan Van Nguyen, our director and a related party. After Ethos ships orders for Ethos products equaling $1,000,000 to unaffiliated parties, the Company will issue to Messrs. Manolos and Nguyen an additional 1,500,000 shares of common stock each. At the closing we sold an aggregate 3,000,000 shares of Company common stock, par value $0.001, equal in value to $177,000 based on the closing price on November 16, 2020. Of the total sold, 1,500,000 shares of common stock were sold to Edward Manolos and 1,500,000 shares of common stock were sold to Thang Nguyen. We issued the above shares of its common stock pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, available to the Company by Section 4(a)(2) promulgated thereunder due to the fact that it was an isolated issuance and did not involve a public offering of securities.

 

 On January 27, 2021, we closed a material definitive agreement (MDA) with Edward Manolos, our director and related party. Pursuant to the MDA, the Company purchased from Mr. Manolos 266,667 shares of common stock in Natural Plant Extract of California Inc., a California corporation (“NPE”), representing 18.8% of the outstanding capital stock of NPE on a fully diluted basis. NPE operates a licensed psychoactive cannabis manufacturing and distribution business operation in Lynwood, California. NPE is a privately held corporation. Under the terms of the MDA, we acquired all beneficial ownership over the NPE shares in exchange for a purchase price of two million forty thousand dollars ($2,040,000).. In lieu of a cash payment, we agreed to issue Mr. Manolos 11,383,929 restricted common shares, valued for purposes of the MDA at $0.1792 per share. In connection with the MDA, we became a party to a Shareholders Agreement by and among Alan Tsai, Hymers, Betterworld Ventures, LLC, Marijuana Company of America, Inc. and NPE. The Shareholders Agreement contains customary rights and obligations, including restrictions on the transfer of the Shares. Mr. Manolos is our director as well as a directly of Marijuana Company of America and is therefore a related party.

On February 16, 2021, we purchased 266,667 shares of common stock of Natural Plant Extract of California Inc., a California corporation (“NPE”), from Alan Tsai, in exchange for the issuance of 1,436,368 common shares. Other than with respect to the transaction, there was no material relationship between Mr. Tsai and the Registrant. By virtue of the transaction, the Registrant acquired 18.8% of the outstanding capital stock of NPE, bringing its total beneficial ownership in NPE to 56.5%. NPE operates a licensed psychoactive cannabis manufacturing and distribution business operation in Lynwood, California. By virtue of its 56.5% ownership over NPE, the Company will control production, manufacturing and distribution of both NPE and Company products. In connection with the MDA, the Registrant became a party to a Shareholders Agreement by and among Edward Manolos, a director of the Company, Robert L. Hymers III, Betterworld Ventures, LLC, Marijuana Company of America, Inc. and NPE. The Shareholders Agreement contains customary rights and obligations concerning operations, management, including restrictions on the transfer of the Shares.

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Current Business Operations

 

Cannabis Global conducts research and development and operates multiple cannabis businesses in California and hemp-related business in the United States. We recently announced our acquisition of a 56.5%, controlling interest in Natural Plant Extract (NPE), which operates a licensed cannabis manufacturing and distribution business in Lynwood, California, holding a Type 7 California Manufacturing and a distribution license, allowing for cannabis product distribution anywhere in the state. We plan to use the Lynwood NPE operation, combined with our internally developed technologies, as a testbed to launch multi-state operations as soon as possible after the expected removal of cannabis as a Scheduled substance from the federal CSA is completed, and interstate commerce in cannabis is approved by the federal government. As of the date of this filing, cannabis remains a Schedule 1 controlled substance and so illegal under the CSA. However, As a result of the November, 2020 federal elections, and the election of Joseph R. Biden as president, it is expected that the federal government will move to amend parts of the CSA and de-schedule cannabis as a Schedule 1 drug. In late January, 2021, Senate Majority Leader Chuck Schumer said lawmakers are in the process of merging various cannabis bills, including his own legalization legislation. He is working to enact reform in this Congressional session. This would include the Marijuana Freedom and Opportunity Act, that would federally de-schedule cannabis, reinvest tax revenue into communities most affected by the drug war, and fund efforts to expunge prior cannabis records. It is likely that the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act would be incorporated. Other federal legislation under review for possible submission includes the SAFE Banking Act (or Secure and Fair Enforcement Act), a bill that would allow cannabis companies to access the federally-insured banking system and capital markets without the risk of federal enforcement action, and the Strengthening the Tenth Amendment Through Entrusting States Act (or STATES Act), a bill that seeks protections for businesses and individuals in states that have legalized and comply with state laws).

Our operations at the Natural Plant Extract facility emphasizes cannabis product manufacturing and distribution. In addition to business opportunities available from cannabis product manufacturing and distribution to all parts of the State of California, we also sees strong synergies between NPE operations and our developing technologies in the areas of secure cannabis transport, cannabis infusions, and all-natural polymeric nanoparticle technologies.

 

We also have an active research and development program primarily focused on creating and commercializing engineered technologies that deliver hemp extracts and cannabinoids to the human body. Additionally we invest, or provide managerial services, in specialized areas of the regulated hemp and cannabis industries. Thus far, the Company has filed six provisional patents, three non-provisional patents and recently announced its "Comply Bag" secure cannabis transport system with integrated track and trace capabilities via smartphones, which will be available soon.

 

Our R&D programs included the following:

  1. Development of new routes and vehicles for hemp extract and cannabinoid delivery to the human body.

  2. Production of unique polymeric nanoparticles and fibers for use in oral and dermal cannabinoid delivery.

  3. Research and commercialization of new methodologies to isolate and/or concentrate various cannabinoids and other substances that comprise industrial hemp oil and other extracts.

  4. Establishment of new methods to increase the bioavailability of cannabinoids to the human body utilizing nanoparticles and other proven bioenhancers, including naturally occurring and insect produced glycosides.

  5. Development of other novel inventions for the delivery of cannabinoids to the human body, which at this time are considered trade secrets by the Company.

 

 

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Note 2. Going Concern Uncertainties

 

During recent financial reporting periods, the Company began reporting revenue and has been active in reorganizing its business operations, these revenues being generated are nominal. The Company has an accumulated deficit of $8,520,943 as of February 28, 2021, and does not have positive cash flows from operating activities. Furthermore, as shown in the accompanying financial statements for six months ended February 28, 2021, the Company had a net loss of $2,463,994 and used cash in operations of $774,444. The Company expects to incur additional losses as it executes its business strategy in the cannabis, hemp and cannabinoid marketplaces. The Company will be subject to the risks, uncertainties, and difficulties frequently encountered by early-stage companies. The Company may not be able to successfully address any or all of these risks and uncertainties. Failure to adequately do so could cause the Company’s business, results of operations, and financial condition to suffer. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance date of these financial statements.  

The Company’s ability to continue as a going concern is an issue due to its net losses and negative cash flows from operations, and its need for additional financing to fund future operations. Management plans to obtain necessary funding from outside sources and through the sales of Company shares. There can be no assurance that such funds, if available, can be obtained on terms reasonable to the Company. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty.

Based on the Company’s current level of expenditures, management believes that cash on hand is not adequate to fund operations for the next twelve months. Management of the Company is estimating approximately $1,000,000 will be required over the next twelve months to fully execute its business strategy. These can be no assurance the Company will be able to obtain such funds.

Note 3.  Summary of Significant Accounting Policies

 

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the amounts reported in those statements. We have made our best estimates of certain amounts contained in our consolidated financial statements. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. However, application of our accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties, and, as a result, actual results could differ materially from these estimates. Management believes that the estimates, assumptions, and judgments involved in the accounting policies described below have the most significant impact on our consolidated financial statements.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

 

Derivative Instruments

 

The fair value of derivative instruments is recorded and shown separately under current liabilities. Changes in the fair value of derivatives liability are recorded in the consolidated statement of operations under non-operating income (expense).

We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, we use a weighted average Binomial option-pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

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Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Action Nutraceuticals, Inc. and Aidan & Co, Inc. All intercompany balances and transactions have been eliminated in consolidation.

 

Cash and Cash Equivalents

 

We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are held in operating accounts at a major financial institution.

 

Inventory

 

Inventory is primarily comprised of work in progress. Inventory is valued at cost, based on the specific identification method, unless and until the market value for the inventory is lower than cost, in which case an allowance is established to reduce the valuation to market value. As of February 28, 2021, and August 31, 2020, market values of all of our inventory were at cost, and accordingly, no such valuation allowance was recognized.

 

Deposits

 

Deposits is comprised of advance payments made to third parties, primarily for inventory for which we have not yet taken title. When we take title to inventory for which deposits are made, the related amount is classified as inventory, then recognized as a cost of revenues upon sale (see “Costs of Revenues” below). There were no deposits as of February 28, 2021.

 

Prepaid Expenses and Other Current Assets

 

Prepaid expenses and other current assets is primarily comprised of advance payments made to third parties for independent contractors’ services or other general expenses. Prepaid services and general expenses are amortized over the applicable periods which approximate the life of the contract or service period.

 

Accounts Receivable

 

Accounts receivable are recorded at the net value of face amount less any allowance for doubtful accounts. On a periodic basis, we evaluate our accounts receivable and, based on a method of specific identification of any accounts receivable for which we deem the net realizable value to be less than the gross amount of accounts receivable recorded, we establish an allowance for doubtful accounts for those balances. In determining our need for an allowance for doubtful accounts, we consider historical experience, analysis of past due amounts, client creditworthiness and any other relevant available information. However, our actual experience may vary from our estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay our fees, we may need to record additional allowances or write-offs in future periods. This risk is mitigated to the extent that we collect retainers from our clients prior to performing significant services.

 

The allowance for doubtful accounts, if any, is recorded as a reduction in revenue to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. To the extent the provision relates to a client's inability to make required payments on accounts receivables, the provision is recorded in operating expenses. As of February 28, 2021, and February 29, 2020, we had $0 and $0 allowance for doubtful accounts, respectively.

 

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Property and Equipment, net

 

Property and Equipment is stated at net book value, cost less depreciation. Maintenance and repairs are expensed as incurred. Depreciation of owned equipment is provided using the straight-line method over the estimated useful lives of the assets, ranging from two to seven years. Depreciation of capitalized construction in progress costs, a component of property and equipment, net, begins once the underlying asset is placed into service and is recognized over the estimated useful life. Property and equipment are reviewed for impairment as discussed below under “Accounting for the Impairment of Long-Lived Assets.”

 

Accounting for the Impairment of Long-Lived Assets

 

We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the assets.

 

Beneficial Conversion Feature

 

market value at issuance, this feature is characterized as a beneficial conversion feature (“BCF”). We record a BCF as a debt discount pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ACF”) Topic 470-20 Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and we amortize the discount to interest expense over the life of the debt using the effective interest method.

 

Revenue Recognition

 

For annual reporting periods after December 15, 2017, the Financial Accounting Standards Board (“FASB”) made effective ASU 2014-09 “Revenue from Contracts with Customers” to supersede previous revenue recognition guidance under current U.S. GAAP. Revenue is now recognized in accordance with FASB ASC Topic 606, Revenue Recognition. The guidance presents a single five-step model for comprehensive revenue recognition that requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Two options are available for implementation of the standard which is either the retrospective approach or cumulative effect adjustment approach. The guidance becomes effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. We determined to implement the cumulative effect adjustment approach to our implementation of FASB ASC Topic 606, with no restatement of the comparative periods presented. We intend to apply this method to any incomplete contracts we determine are subject to FASB ASC Topic 606 prospectively. As is more fully discussed below, we are of the opinion that none of our contracts for services or products contain significant financing components that require revenue adjustment under FASB ASC Topic 606.

 

In accordance with FASB ASC Topic 606, Revenue Recognition, we will recognize revenue when persuasive evidence of a significant financing component exists in our consulting and product sales contracts. We examine and evaluate when our customers become liable to pay for goods and services; how much consideration is paid as compared to the cash selling price of the goods or services; and, the length of time between our performance and the receipt of payment.

 

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Product Sales

 

Revenue from product sales, including delivery fees, is recognized when an order has been obtained from the customer, the price is fixed and determinable when the order is placed, the product is shipped, and collectability is reasonably assured. For any shipments with destination terms, the Company defers revenue until delivery to the customer. Given the facts that (1) our customers exercise discretion in determining the timing of when they place their product order; and, (2) the price negotiated in our product sales is fixed and determinable at the time the customer places the order, we are not of the opinion that our product sales indicate or involve any significant customer financing that would materially change the amount of revenue recognized under the sales transaction, or would otherwise contain a significant financing component for us or the customer under FASB ASC Topic 606.

 

Costs of Revenues

 

Our policy is to recognize the costs of revenue in the same manner in conjunction with revenue recognition. Costs of revenues include the costs directly attributable to revenue recognition and include compensation and fees for services, travel and other expenses for services and costs of products and equipment. Selling, general and administrative expenses are charged to expense as incurred.

Stock-Based Compensation

Restricted shares are awarded to employees and entitle the grantee to receive shares of restricted common stock at the end of the established vesting period. The fair value of the grant is based on the stock price on the date of grant. We recognize related compensation costs on a straight-line basis over the requisite vesting period of the award, which to date has been one year from the grant date. Stock-based compensation during the quarterly reporting period ended February 28, 2021 was $0.

 

Income Taxes

 

We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns in accordance with applicable accounting guidance for accounting for income taxes, using currently enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. For the quarterly reporting periods ending February 28, 2021 and February 29, 2020, we incurred no income taxes and had no liabilities related to federal or state income taxes.

 

Loss Contingencies

 

From time to time the Company is subject to various legal proceedings and claims that arise in the ordinary course of business. On at least a quarterly basis, consistent with ASC 450-20-50-1C, if the Company determines that there is a reasonable possibility that a material loss may have been incurred, or is reasonably estimable, regardless of whether the Company accrued for such a loss (or any portion of that loss), the Company will confer with its legal counsel, consistent with ASC 450. If the material loss is determinable or reasonably estimable, the Company will record it in its accounts and as a liability on the balance sheet. If the Company determines that such an estimate cannot be made, the Company's policy is to disclose a demonstration of its attempt to estimate the loss or range of losses before concluding that an estimate cannot be made, and to disclose it in the notes to the financial statements under Contingent Liabilities.

 

Net Income (Loss) Per Common Share

 

We report net income (loss) per common share in accordance with FASB ASC 260, “Earnings per Share”. This statement requires dual presentation of basic and diluted earnings with a reconciliation of the numerator and denominator of the earnings per share computations. Basic net income (loss) per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period and excludes the effects of any potentially dilutive securities. Diluted net income (loss) per share gives effect to any dilutive potential common stock outstanding during the period. The computation does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings.

 

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Note 4. Net Loss Per Share

 

During three and six months ending February 28, 2021 and February 28, the Company recorded a net loss. Basic and diluted net loss per share are the same for those periods. The dilutive weighted average shares for each period reported excludes the effect of shares issuable upon conversion of debt, as the effect would have been anti-dilutive. As of February 28, 2021, the Company’s convertible debt was convertible into 13,385,151 shares of common stock.

Note 5. – Notes Receivable – Related Party

 

On May 25, 2019, the Company issued two notes payable to Company directors Edward Manolos and Dan Nguyen, each in the amount of $16,666,67. The notes, which do not have a defined due date, outline a 5% per annum interest rate. These notes are additionally described herein in Footnote 5- Notes Receivable, Related Party and in the footnote outlining Related Party Transactions. These notes are additionally described herein in Footnote 6- Notes to Shareholders, Related Party and in the footnote outlining Related Party Transactions. Because of Mr. Manolos’ and Mr. Nguyen’s associations as directors, the Company believes these transactions are defined by 17 CFR § 229.404 - (Item 404) Transactions with related persons, promoters and certain control persons, which would require specific disclosures under the section cited.

 

On July 9, 2019, the Company, through its Action Nutraceuticals subsidiary, loaned, Split Tee, LLC (“Split Tee”), a venture associated with Director Edward Manolos, $20,000 to engage in an exploratory research project. An additional $20,000 was supplied to Split Tee on August 23, 2019. The loans carry interest at the rate of 10% per annum and are due in one year for issuance. In addition, The Company, via Action Nutraceuticals subsidiary, invoiced Split Tee $5,000 as a consulting fee. Because of Mr. Manolos’ association as a director, the Company believes these transactions are defined by 17 CFR § 229.404 - (Item 404) Transactions with related persons, promoters and certain control persons, which would require specific disclosures under the section cited.

 

Note 6. Intangible Assets

 

On February 20, 2020, the Company entered into a material definitive agreement with Lelantos Biotech, Inc., a Wyoming corporation (“Lelantos”), and its owners. On June 15, 2020, the Company and Lelantos entered into a modification agreement cancelling the Company's obligation to issue 400,000 shares of common stock and the convertible promissory notes. The Company and Lelantos agreed to a purchase price of five hundred thousand dollars ($500,000), payable by the issuance of a promissory note. The aggregate unpaid principal amount of the note is paid in monthly payments of seven thousand, five hundred dollars ($7,500) beginning on September 1, 2020, terminating on February 1, 2025. There is no interest on the note or on the unpaid balance.

 

Note 7. Acquisition of Natural Plant Extract of California, Inc.

 

NPE Acquisition

 

On August 21, 2020 the Company, issued a convertible note pursuant to a Stock Purchase Agreement (the “SPA) to acquire 266,667 shares of common stock of Natural Plant Extract of California Inc., a California corporation (“NPE”), representing 18.8% of the outstanding capital stock of NPE on a fully diluted basis. With the exception of the entry into the subject material definitive agreements, no material relationship exists between the Registrant, or any of the Registrant’s affiliates or control persons and Hymers. Under the terms of the SPA, the Registrant acquired all rights and responsibilities of the equity stake for a purchase price of Two Million Forty Thousand United States Dollars ($2,040,000) (the “Purchase Price”). Relative to the payment of the Purchase Price, the registrant agreed to: 1) pay Hymers Twenty Thousand United States Dollars ($20,000) each month for a period of twenty-seven (27) months, with the first payment commencing September 1, 2020 and the remaining payments due and payable on the first day of each subsequent month until Hymers has received Five Hundred Forty Thousand United Stated Dollars ($540,000), and 2) issue Hymers a convertible promissory note in the amount of One Million Five Hundred Thousand United States Dollars ($1,500,000) (the “Note”). The Note bears interest at ten percent (10%) per annum. The Holder shall have the right at any time six (6) months after the Issuance Date to convert all or any part of the outstanding and unpaid principal, interest, fees, or any other obligation owed pursuant to the note. Conversion Price shall be calculated as follows: 60% of the lowest Trading Price of the common shares during the ten (10) days preceding the date the Company receive a notice of conversion. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Registrant issue upon conversion of or otherwise pursuant to the note and the other notes issued more than the maximum number of shares of Common Stock that the Company can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded, which shall be 4.99% of the total shares outstanding at any time. A debt discount of $54,212 on the note payable at issuance was calculated based on the present value of the note using an implied interest rate of 10%. A debt discount of $270,886 was recognized. Accordingly, the Company recorded an initial value of its investment in NPE of $1,714,903.

 

 

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On January 27, 20201, the Company acquired an additional 18.8% interest in NPE from Edward Manolos, a Director of the Company and a related party. The Company issued 11,383,929 shares of common stock, which had a fair value of $1,821,429.

 

On February 16, 2021, the Company purchased 266,667 shares of common stock of NPE from Alan Tsai, in exchange for the issuance of 1,436,368 common shares of the Company, with a fair value of $400,747. Other than with respect to the transaction, there was no material relationship between Mr. Tsai and the Company. By virtue of the transaction, the Company acquired 18.8% of the outstanding capital stock of NPE, bringing its total beneficial ownership in NPE to 56.5%. The transfer of control constituted an acquisition of NPE by the Company (the “NPE Acquisition”). For the three month period following the one year anniversary of the closing date, Mr. Tsai has the sole and irrevocable option to require the Company to repurchase the common shares issued to Mr. Tsai. If the value of the shares at the time notice is given is less than $150,000, Mr. Tsai will receive $150,000. If the value of the shares at the time notices is given is greater than $150,000, then Mr. Tsai will receive the market value of the shares.

 

As a result of the transaction, the Company also became party to a Shareholder Agreement with respect to its ownership over the NPE Shares, dated June 5, 2020, by and among Alan Tsai, Robert Hymers III, Betterworld Ventures, LLC (“BWV”), Marijuana Company of America, Inc. and NPE. The Joinder Agreement contains terms and conditions including, but not limited to: the ownership and management of NPE, rights of shareholders concerning the transfer of shares in NPE, pre-emptive rights, drag-along rights, confidentiality, and term and termination. 

 

The NPE acquisition is being accounted for as a business combination under ASC 805 as a result of the transfer of control. Immediately prior to obtaining control, the total investment of the Company in NPE was adjusted to fair value of $3,684,347, resulting in a loss on investment of $359,391.

 

The following information summarizes the provisional purchase consideration and preliminary allocation of the fair values assigned to the assets at the purchase date:

 

Preliminary Purchase Price Allocation:   
Cash   2,200 
Accounts receivable   193,607 
Notes receivable   162,247 
Property and equipment   1,338,569 
Right of use asset – operating lease   607,306 
Goodwill   8,098,603 
Total assets acquired  $10,402,532 
      
Accounts payable and accrued expenses   289,591 
Right of use liability – operating lease   607,306 
Notes payable   1,825,101 
Notes payable – related party   105,539 
Total Liabilities Assumed  $2,827,537 

  

As a result of the NPE acquisition, the Company recognized a non-controlling interest as of the date of the acquisition of $3,849,293. The Company’s consolidated revenues and net loss for the three and six months ended February 28, 2021 included the results of operations since the acquisition date of NPE of $18,864 and net loss of $17,797, respectively.

 

 

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Unaudited Pro Forma Financial Information

 

The following table sets forth the pro-forma consolidated results of operations for the three and six months ended February 28, 2021 and February 29, 2020 as if the NPE acquisition occurred on September 1, 2019. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisitions had taken place on the dates noted above, or of results that may occur in the future.

 

   For the three months ended  For the six months ended
   February 28, 2021  February 29, 2020  February 28, 2021  February 29, 2020
   Pro Forma  Pro Forma  Pro Forma  Pro Forma
Revenue  $126,820   $229,597   $979,866   $334,144 
Operating loss   (1,693,708)   (557,425)   (1,626,929)   (973,276)
Net loss attributable to common shareholders   (3,392,070)   (1,019,316)   (4,065,390)   1,521,976 
Net loss per common share  $(0.06)  $(0.04)  $(0.08)  $(0.06)

 

 

Note 8. Note Payable to Shareholders

 

On May 25, 2019, the Company issued two notes payable to Company directors Edward Manolos and Dan Nguyen, each in the amount of $16,666,67. The notes, which do not have a defined due date, outline a 5% per annum interest rate. These notes are additionally described herein in Footnote 5- Notes Payable, Related Party and in the footnote outlining Related Party Transactions. Because of Mr. Manolos’ and Mr. Nguyen’s associations as directors, the Company believes these transactions are defined by 17 CFR § 229.404 - (Item 404) Transactions with related persons, promoters and certain control persons, which would require specific disclosures under the section cited.

Note 9. Related Party

 

In October 2017 – August 31, 2018, the Company incurred a related party debt in the amount of $10,000 to an entity related to the legal custodian of the Company for professional fees. As of August 31, 2018, this balance was forgiven and was included as part of the $168,048 Cancellation of Debt Income on the Statement of Operations.

 

In November 30, 2017 – August 31, 2018, the Company issued a $35,554 in multiple notes payable to an entity related to the legal custodian of the Company. The notes payable bear interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. On May 8, 2018, $13,000 of the principal balance on notes payable were converted to common stock. The remaining principal balance was forgiven and included as Cancellation of Debt Income on the Income Statement for the year ended August 31, 2019.

 

18 
 
 

 

 

In March 2018 and May 2018, a legal custodian of the Company funded the Company $600 in advances. On August 31, 2018, this amount was reclassified as a note payable, that bears interest at an annual rate of 10% and is payable upon demand.

 

In connection with the above notes, the Company recognized a beneficial conversion feature of $27,954, representing the intrinsic value of the conversion features at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended August 31, 2018.

 

On May 25, 2019, the Company issued two notes payable to Company directors Edward Manolos and Dan Nguyen for loans made to the Company, each in the amount of $16,666,67 for a total balance of $33,334. The notes bear interest at 5% per annum and do not have a fixed payment schedule or maturity date. These notes are additionally described herein in Footnote 6 - Notes Payable.

 

On July 9, 2019, the Company, through its Action Nutraceuticals subsidiary, loaned, Split Tee, LLC (“Split Tee”), a venture associated with Director Edward Manolos, $20,000 to engage in an exploratory research project. An additional $20,000 was supplied to Split Tee on August 23, 2019. The loans carry interest at the rate of 10% per annum and are due in one year for issuance. In addition, The Company, via Action Nutraceuticals subsidiary, invoiced Split Tee $5,000 as a consulting fee. Because of Mr. Manolos’ association as a director, the Company believes these transactions are defined by 17 CFR § 229.404 - (Item 404) Transactions with related persons, promoters and certain control persons, which would require specific disclosures under the section cited.

 

During the three months ended February 29, 2020, the Company issued two convertible promissory notes having an aggregate principal amount of $133,101 in exchange for accrued expenses owed to related parties, of which $79,333 is payable to the Company’s Chief Executive Officer and $53,768 is payable to the Company’s previous Chief Financial Officer, Robert L. Hymers III. The notes mature two years from the respective issuance date and bear interest at the rate of 10% per annum, payable at maturity. The noteholders shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a variable conversion price of 50% of the average of the previous twenty (20) trading day closing prices of the Company’s common stock, subject to adjustment. As a result of the variable conversion prices, upon issuance, the Company recognized total debt discount of $133,101, which is being amortized to interest expense over the term of the notes. On May 22, 2020, Mr. Tabatabaei converted the principal amount of $79,333 and interest of $2,608, for a total amount of $81,941.55 into 694,902 common shares. As of August 31, 2020, the carrying value of the remaining note with the former chief financial officer was $15,884, net of debt discount of $37,884 and accrued interest was $3,138.

On April 30, 2020, the Company entered into a settlement agreement with Robert L. Hymers III, its Chief Financial Officer (the “CFO”), whereby the CFO resigned and the Company issued a promissory note for $30,000, which represented the remaining amount owed to the CFO for services rendered. The note matures December 31, 2020 and bears interest at the rate of 10% per annum, payable at maturity. The noteholder has the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a fixed conversion price of $0.02 per share, subject to adjustment. As a result of the beneficial conversion price, upon issuance, the Company recognized debt discount of $30,000, which is being amortized to interest expense over the term of the note. As of August 31, 2020, the carrying value of the note was $15,061, net of debt discount of $14,939 and accrued interest was $1,011.

On August 31, 2020, the Company issued a convertible note payable and a note payable to Robert L. Hymers III in connection with the acquisition of an 18.8% equity interest in NPE.

19 
 
 

 

On November 16, 2020, the Company entered into a business acquisition agreement with Ethos Technology LLC, dba Comply Bag, a California limited liability company (“Ethos”). Ethos is a development stage business in the process of entering the market for cannabis trackable storage bags. By virtue of the agreement, Ethos sold, assigned, and transferred to the Company all of Ethos’ business, including all of its assets and associated liabilities, in exchange for the Company’s issuance of an aggregate of 6,000,000 common shares. 3,000,000 shares were due at signing, with 1,500,000 shares being issued to Edward Manolos, and 1,500,000 shares being issued to Thang Nguyen. Mr. Manolos is a director of the Company and a related party. Mr. Nguyen is the brother of Dan Van Nguyen, a director of the Company and a related party. After Ethos ships orders for Ethos products equaling $1,000,000 to unaffiliated parties, the Company will issue to Messrs. Manolos and Nguyen an additional 1,500,000 shares of common stock each. 

On November 16, 2020, the Company sold an aggregate 3,000,000 shares of Company common stock, par value $0.001, equal in value to $177,000 based on the closing price on November 16, 2020. Of the total sold, 1,500,000 shares of common stock were sold to Edward Manolos and 1,500,000 shares of common stock were sold to Thang Nguyen. The sales were made in regards to the Company’s acquisition of Ethos, and its disclosures under Item 1.01 are incorporated herein by reference. The Company issued the above shares of its common stock pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, available to the Company by Section 4(a)(2) promulgated thereunder due to the fact that it was an isolated issuance and did not involve a public offering of securities. Messrs. Manolos and Nguyen were “accredited investors” and/or “sophisticated investors” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning their qualifications as “sophisticated investors” and/or “accredited investors.” The Company provided and made available to Messrs. Manolos and Nguyen full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Messrs. Manolos and Nguyen acquired the restricted common stock for their own accounts, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless subject to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.

 

On January 27, 2021 Cannabis Global, Inc. (the “Registrant”) closed a material definitive agreement (MDA) with Edward Manolos, a director and related party. Pursuant to the MDA, the Registrant purchased from Mr. Manolos 266,667 shares of common stock in Natural Plant Extract of California Inc., a California corporation (“NPE”), representing 18.8% of the outstanding capital stock of NPE on a fully diluted basis. NPE operates a licensed psychoactive cannabis manufacturing and distribution business operation in Lynwood, California. NPE is a privately held corporation. Under the terms of the MDA, the Registrant acquired all beneficial ownership over the NPE shares in exchange for a purchase price of two million forty thousand dollars ($2,040,000). In lieu of a cash payment, the Registrant agreed to issue Mr. Manolos 11,383,929 restricted common shares, valued for purposes of the MDA at $0.1792 per share. In connection with the MDA, the Registrant became a party to a Shareholders Agreement by and among Alan Tsai, Hymers, Betterworld Ventures, LLC, Marijuana Company of America, Inc. and NPE. The Shareholders Agreement contains customary rights and obligations, including restrictions on the transfer of the Shares. Additionally, the Registrant intends, upon completion of the terms and conditions of the Material Definitive Agreement, to control the production, manufacturing and distribution of both NPE and the Registrant’s products

Note 10. - Notes Payable

 

On May 25, 2019, the Company issued two notes payable to Company directors Edward Manolos and Dan Nguyen, each in the amount of $16,666,67. The notes, which do not have a defined due date, outline a 5% per annum interest rate. These notes are additionally described herein in Footnote 7- Notes Payable, Related Party and in Footnote 11 – Related Party Transactions.

 

On July 9, 2019, the Company, through its Action Nutraceuticals subsidiary, loaned, Split Tee, LLC (“Split Tee”), a venture associated with Director Edward Manolos, $20,000 to engage in an exploratory research project (see “Related Party Transactions”). An additional $20,000 was supplied to Split Tee on August 23, 2019. The loans carry interest at the rate of 10% per annum and are due in one year for issuance. In addition, The Company, via Action Nutraceuticals subsidiary, invoiced Split Tee $5,000 as a consulting fee.

 

 

20 
 
 

 

 

On February 12, 2020, the Company issued three Sellers Acquisition promissory notes having an aggregate principal amount of $500,000 pursuant to an Acquisition Agreement to acquire Lelantos Biotech. The notes mature May 31, 2020; $450,000 (two tranches of $225,000) and $50,000 of the notes bear interest at the rate of 8% and 5% per annum, respectively. In the event, the notes are not paid within the Cash Repayment Period (prior to the Maturity Date), the notes specify the holder shall have two options for repayment including: [a] an Alternative Payment Stake Option equal to a 6.75%, 6.75% and 1.5% (or a pro-rated amount if the debt has been partially paid) fully diluted ownership position in the Company after August 4, 2020, August 12, 2020 and August 30, 2020, respectively; or [b] a Buy Out Option, anytime after the note has been outstanding for at least one year, equal to the total outstanding shares of the Company on the day of election, times 6.75%, 6.75% and 1.5%, respectively, times the average closing price of the Company’s common stock over the preceding 30 trading days, times 40% (due and payable within 90 days). Anti-dilution rights are provided for five years on the Sellers Acquisition notes and for 182 days after conversion to an Alternative Payment Stake. The notes include a Leak Out provision, should the Alternative Payment Stake option be elected, whereby no more than 30% of the holdings may be sold during the first 30 days after clearance for trading and no more than 25% of the remaining shares sold during any subsequent 30-day period. The notes are secured by a Security Agreement, require common shares to be reserved, are transferrable and are Senior to other debt of the Company. At maturity, on May 31, 2020, (i) the Company received forbearance agreements for the two tranches of $225,000 each whereby the maturity date was extended to July 15, 2020 and the interest rate was increased to 9%; and (ii) the $50,000 note and all accrued interest thereon, in the amount of $747, was forgiven. Accordingly, the Company recognized a gain for debt forgiveness of $50,747. On June 15, 2020, the Company entered into a modification agreement relative to the February 12, 2020 issued notes. Pursuant to the modification agreement, the Company issued a promissory note to Lantos in the amount of five hundred thousand dollars ($500,000). The Company may prepay the note in whole or in part at any time or from time to time without penalty or premium by paying the principal amount to be prepaid. The aggregate unpaid principal amount of the note is paid in monthly payments of seven thousand, five hundred dollars ($7,500) beginning on September 1, 2020, terminating on February 1, 2025. There is no interest on the note or on the unpaid balance. As of February 28, 2021, the carrying value of the notes was $450,000 and accrued interest payable was $37,676. As of August 31, 2020, the carrying value of the notes was $450,000 and accrued interest payable was $19,824.

  

On February 12, 2020, the Company entered into an Independent Consulting Agreement with a consultant to provide services from February 12, 2020 through December 14, 2020 (the “Consulting Agreement”). Pursuant to the Consulting Agreement, the Company issued to the consultant a Compensation promissory note having a principal amount of $100,000 for the Deferred Compensation portion of the Consulting Agreement. The note matures August 4, 2020 and bears interest at the rate of 8% per annum. In the event, the note is not paid within the Cash Repayment Period (prior to the Maturity Date), the note specifies the holder shall have two options for repayment including: [a] an Alternative Payment Stake Option equal to a 8.5% (or a pro-rated amount if the debt has been partially paid) fully diluted ownership position in the Company after August 4, 2020; or [b] a Buy Out Option, any time after the note has been outstanding for at least one year, equal to the total outstanding shares of the Company on the day of election, times 8.5% times the average closing price of the Company’s common stock over the preceding 30 trading days, times 40% (due and payable within 90 days). Anti-dilution rights are provided for five years on the Compensation note and for 182 days after conversion to an Alternative Payment Stake. The note includes a Leak Out provision, should the Alternative Payment Stake option be elected, whereby no more than 30% of the holdings may be sold during the first 30 days after clearance for trading and no more than 25% of the remaining shares sold during any subsequent 30-day period. The note is secured by a Security Agreement, requires common shares to be reserved, is transferrable and is Senior to other debt of the Company. As of February 28, 2021, the carrying value of the note was $100,000 and accrued interest payable was $8,372. As of August 31, 2020, the carrying value of the note was $100,000 and accrued interest payable was $4,405.

 

 

21 
 
 

 

Note 11. Convertible Notes Payable

 

On March 19, 2020, the Company issued a convertible promissory note, payable in tranches, having an aggregate principal amount of $150,000, aggregate original issue discount (OID) of $15,000, and an aggregate of 468,750 three-year warrants exercisable at $0.48/share, which contain certain exercise price reset provisions in the event of dilutive issuances. The notes mature one year from the respective issuance date of each tranche and bear interest at the rate of 10% per annum, payable at maturity. Commencing immediately following the issuances, the noteholder shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a variable conversion price equal to the lower of 60% of the lowest closing trade price of the Company’s common stock, subject to adjustment, during the 25 trading days prior to: (i) the issuance date; or (ii) the conversion date. On March 19, 2020, the first tranche of $50,000, less OID of $5,000, was received, resulting in net proceeds to the Company of $45,000, and the Company issued 156,250 three-year warrants exercisable at $0.48 per share. On May 4, 2020, the second tranche of $25,000, less OID of $2,500, was received, resulting in net proceeds to the Company of $22,500, and the Company issued 78,125 three-year warrants exercisable at $0.48 per share. On July 10, 2020, the third tranche of $25,000, less OID of $2,500 was received, resulting in net proceeds to the Company of $22,500, and the Company issued 78,125 three year warrants exercisable at an initial price of $0.48 per share. As a result of the OID and the variable conversion price, upon issuance, the Company recognized total debt discount of $75,000, which is being amortized to interest expense over the respective term of the tranches. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. During the six months ended February 28, 2021, the Company repaid all principal and accrued interest in full.

On July 21, 2020, the Company issued a convertible promissory note with a principal amount of $78,750, with the Company receiving proceeds of $71,250 after original issue discount of $3,750 and deferred finance costs of $3,750. The note matures on July 21, 2021 and bears interest at 6% per annum. Commencing immediately following the issuances, the noteholder shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a variable conversion price equal to the 60% of the lowest closing trade price of the Company’s common stock, subject to adjustment, during the 30 trading days prior to: the conversion date. As a result of the OID and the variable conversion price, upon issuance, the Company recognized total debt discount of $78,750, which is being amortized to interest expense through the maturity date. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. During the six months ended February 28, 2021, the note and accrued interest were repaid in full.

In August 2020, the Company issued two convertible promissory notes with an aggregate principal amount of $129,250, with the Company receiving proceeds of $117,500 after original issue discount of $11,750. The notes mature in May 2021 and bear interest at 10% per annum. Commencing immediately following the issuances, the noteholder shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a fixed price of $0.1005 per share of common stock. The conversion price may reset to a lower price if the Company issues common stock to any suppliers or vendors. As a result of the OID and the potential result for dilutive issuances, upon issuance, the Company recognized total debt discount of $129,250, which is being amortized to interest expense through the maturity date. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. During the six months ended February 28, 2021, the two notes and accrued interest were repaid in full.

22 
 
 

 

The Company also entered into common stock subscription agreements with this lender, totaling share issuances of 3,409,221 (of which 510,204 are to be issued as of August 31, 2020), for cash proceeds of $329,613. In connection with these subscriptions, the Company issued a convertible promissory note of $50,000 for no consideration. The note matures on August 7, 2021 and bears interest at 10$% and is convertible at a fixed price of $0.1631 per share, subject to potential rest in the event the Company issues shares to vendors or suppliers. The Company recognized total debt discount of $50,000, which is being amortized to interest expense over the respective term of the tranches. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. During the six months ended February 28, 2021, the note and accrued interest was repaid in full.

During the six months ended February 28, 2021, the Company issued four convertible promissory notes to a lender with an aggregate principal amount of $279,500, with the Company receiving proceeds of $267,000 after deferred finance costs of $12,500. The notes matures in August, September, October and December 2021 and bear interest at 8% per annum. Commencing one hundred eighty (180) days following the issuance date of the note, the noteholder shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at variable conversion prices of 63% of the two lowest trading prices during previous fifteen (15) trading day of the Company’s common stock, subject to adjustment. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. As a result of the variable exercise price and deferred finance costs, the Company recognized total debt discount of $279,500, which is being amortized to interest expense through the maturity date. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. One note with principal of $113,000 and accrued interest of $4,557 was repaid during the period. As of February 28 2021, the carrying value of these notes was $60,379, net of debt discount of $106,121 and accrued interest was $4,830.

 

On September 2, 2020, the Company issued a convertible promissory note with an aggregate principal amount of $107,000, with the Company receiving proceeds of $100,000 after original issue discount of $5,000 and deferred finance costs of $2,000. The notes mature in September 2021 and bear interest at 12% per annum. Commencing one hundred eighty (180) days following the issuance date of the notes, the noteholders shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at variable conversion price of 60% of the lowest previous twenty (20) trading day closing trade prices of the Company’s common stock, subject to adjustment. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. As a result of the variable exercise price and deferred finance costs, upon issuance, the Company recognized total debt discount of $107,000, which is being amortized to interest expense through the maturity date. This note was repaid in full during the six months ended February 28, 2021, together with accrued interest of $5,101.

 

On January 5, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of a 10% convertible note with the principal amount of $110,000, with an accredited investor. The note is convertible at a fixed conversion price of $0.005. In the event of default by the Company, or after the public announcement of a change of control transaction as defined in the agreement, the conversion price is $0.001. The Company received net proceeds of $97,500. As a result of the variable exercise price of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $110,000, which is being amortized to interest expense through the maturity date.

 

 

23 
 
 

 

On January 12, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of a 10% convertible note with the principal amount of $115,500, with an accredited investor. The note is convertible beginning 61 days from issuance at a fixed conversion price of $0.10 per share or 60% or the lowest trading price for ten days prior to conversion in the event that the Company’s stock trades at less than $0.10 per share. The Company received net proceeds of $100,000. As a result of the variable exercise price of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $115,500, which is being amortized to interest expense through the maturity date. During the three months ended February 28, 2021, the lender converted principal and accrued interest of $57,750 and $585 into 583,354 shares of common stock. As of February 28, 2021, the carrying value of the note was $14,873, net of discount of $42,877, and accrued interest was $902.

 

On January 26, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of a 10% convertible note with the principal amount of $243,875, with an accredited investor. The note is convertible at 70% of the average of the three lowest trading prices for 20 days prior to conversion. The Company received net proceeds of $215,500. As a result of the variable exercise price of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $243,875, which is being amortized to interest expense through the maturity date. As of February 28, 2021, the carrying value of the note was $22,049, net of discount of $221,826, and accrued interest was $2,205.

 

On January 26, 2021, the Company entered into a second Securities Purchase Agreement in connection with the issuance of a 10% convertible note with the principal amount of $243,875, with an accredited investor. The note is convertible at 70% of the average of the three lowest trading prices for 20 days prior to conversion. The Company received net proceeds of $215,500. As a result of the variable exercise price of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $243,875, which is being amortized to interest expense through the maturity date. As of February 28, 2021, the carrying value of the note was $22,049, net of discount of $221,826, and accrued interest was $2,205.

 

Related Parties

During the three months ended February 29, 2020, the Company issued two convertible promissory notes having an aggregate principal amount of $133,101 in exchange for accrued expenses owed to related parties, of which $79,333 is payable to the Company’s Chief Executive Officer and $53,768 is payable to the Robert L. Hymers III. The notes mature two years from the respective issuance date and bear interest at the rate of 10% per annum, payable at maturity. The noteholders shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a variable conversion price of 50% of the average of the previous twenty (20) trading day closing prices of the Company’s common stock, subject to adjustment. As a result of the variable conversion prices, upon issuance, the Company recognized total debt discount of $133,101, which is being amortized to interest expense over the term of the notes. On May 22, 2020, the Chief Executive Officer converted $79,333 in principal and $2,608 of accrued interest into 694,902 shares of common stock to be issued having a fair value of $232,792. The conversion resulted in the elimination of $70,313 of remaining debt discount, the elimination of $231,632 of derivative liabilities, and a $10,468 gain on conversion that resulted from a related party and was therefore included in Additional paid-in capital. On December 9, 2020, Mr. Hymers converted all principal of $53,768 and all accrued interest of $4,626 into 878,190 shares of common stock.

On April 30, 2020, the Company entered into a settlement agreement with its former Chief Financial Officer (Robert L. Hymers III, hereinafter referred to as the “CFO”) whereby the CFO resigned and the Company issued a promissory note for $30,000, which represented the remaining amount owed to the CFO for services rendered. The note matures December 31, 2020 and bears interest at the rate of 10% per annum, payable at maturity. The noteholder has the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a fixed conversion price of $0.02 per share, subject to adjustment. As a result of the beneficial conversion price, upon issuance, the Company recognized debt discount of $30,000, which is being amortized to interest expense over the term of the note. On October 9, 2020, Mr. Hymers converted the note payable into 1,500,000 shares of common stock.

 

24 
 
 

On August 21, 2020 the Company, issued a convertible note pursuant to a Stock Purchase Agreement (the “SPA) to acquire 266,667 shares of common stock of Natural Plant Extract of California Inc., a California corporation (“NPE”), representing 18.8% of the outstanding capital stock of NPE on a fully diluted basis. With the exception of the entry into the subject material definitive agreements, no material relationship exists between the Registrant, or any of the Registrant’s affiliates or control persons and Hymers. Under the terms of the SPA, the Registrant acquired all rights and responsibilities of the equity stake for a purchase price of Two Million Forty Thousand United States Dollars ($2,040,000) (the “Purchase Price”). Relative to the payment of the Purchase Price, the registrant agreed to: 1) pay Hymers Twenty Thousand United States Dollars ($20,000) each month for a period of twenty-seven (27) months, with the first payment commencing September 1, 2020 and the remaining payments due and payable on the first day of each subsequent month until Hymers has received Five Hundred Forty Thousand United Stated Dollars ($540,000), and 2) issue Hymers a convertible promissory note in the amount of One Million Five Hundred Thousand United States Dollars ($1,500,000) (the “Note”). The Note bears interest at ten percent (10%) per annum. The Holder shall have the right at any time six (6) months after the Issuance Date to convert all or any part of the outstanding and unpaid principal, interest, fees, or any other obligation owed pursuant to the note. Conversion Price shall be calculated as follows: 60% of the lowest Trading Price of the common shares during the ten (10) days preceding the date the Company receive a notice of conversion. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Registrant issue upon conversion of or otherwise pursuant to the note and the other notes issued more than the maximum number of shares of Common Stock that the Company can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded, which shall be 4.99% of the total shares outstanding at any time. A debt discount of $54,212 on the note payable at issuance was calculated based on the present value of the note using an implied interest rate of 10%. A debt discount of $270,886 was recognized. Accordingly, the Company recorded an initial value of its investment in NPE of $1,714,903. At the time the note becomes convertible, the Company will recognize a derivative liability at fair value related to the embedded conversion option at that time. Prior to these transactions, Robert Hymers III and Alan Tsai each sold equity interest representing a total of 18.8% of the outstanding equity interest of NPE to Edward Manolos, a Director and preferred stockholder of the Company in a private transaction. As a result of these transactions, the Company beneficially controls approximately 56.5% of the equity of NPE. After this transaction, a Better World Ventures LLC controls 40% of the equity interests in NPE and one other entity controls 3.5%.

 

The Company is in default of the $540,000 note payable to Robert Hymers. On January 3, 2021, the Company entered into a settlement agreement with Robert Hymers concerning five delinquent payments totaling $100,000, whereby 1,585,791 shares of common stock were issued in settlement of those payments. As of February 28, 2021, the Company missed two additionally $20,000 payments, i.e., January and February 2021 payments, and remains in default of this agreement.

 

Note 12. Derivative Liability and Far Value Measurement

Upon the issuance of the convertible promissory notes with variable conversion prices and fixed conversion prices with reset provisions, the Company determined that the features associated with the embedded conversion option embedded in the debentures should be accounted for at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares would be available to settle all potential future conversion transactions.

At the issuance date of the convertible notes payable during the six months ended February 28, 2021, the Company estimated the fair value of all embedded derivatives of $2,154,823 using the Black-Scholes Pricing Model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 332% to 378%, (3) risk-free interest rate of 0.09% to 0.13%, and (4) expected life of one year.

On February 28, 2021, the Company estimated the fair value of the embedded derivatives of $2,054,739 using the Black-Scholes Pricing Model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 328%, (3) risk-free interest rate of 0.05% to 0.08%, and (4) expected life of 0.5 to 1 year. 

25 
 
 

 

The Company adopted the provisions of ASC 825-10, Financial Instruments (“ASC 825-10”). ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value. 

  Level 1 — Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;

  Level 2 — Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and

  Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities.

All items required to be recorded or measured on a recurring basis are based upon Level 3 inputs.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

The Company recognizes its derivative liabilities as Level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed are that of volatility and market price of the underlying common stock of the Company.

As of February 28, 2021, the Company did not have any derivative instruments that were designated as hedges.

26 
 
 

 

Items recorded or measured at fair value on a recurring basis in the accompanying financial statements consisted of the following items as of February 28, 2021 and August 31, 2020:

   February 28,
2021
  Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
Derivative liability  $2,054,739   $—     $—     $2,054,739 
                     

   August 31,
2020
  Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
Derivative liability  $1,125,803   $—     $—     $1,125,803 
                     

 The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the six months ended February 28, 2021:

Balance, August 31, 2020  $1,125,803 
Transfers in due to issuance of convertible promissory notes   2,514,823 
Transfers out due to repayments of convertible promissory notes   (1,255,220)
Transfers out due to conversions of convertible promissory notes   (276,975)
Change in derivative liability for the six months ended February 28, 2021   (53,692)
Balance, February 28, 2021  $2,054,739 

 

Fluctuations in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period. As the stock price increases for each of the related derivative instruments, the value to the holder of the instrument generally increases, therefore increasing the liability on the Company’s balance sheet. Additionally, stock price volatility is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s derivative instruments. The simulated fair value of these liabilities is sensitive to changes in the Company’s expected volatility. Increases in expected volatility would generally result in higher fair value measurement. A 10% change in pricing inputs and changes in volatilities and correlation factors would not result in a material change in our Level 3 fair value.

Note 13. Commitments, Contingencies and Leases

 

The Company has entered into a lease for a production and warehouse facility located in Los Angeles, California to produce such products. The term of the lease is 12 months at a base price of $3,600 per month, beginning August 2019. At this time the lease agreement has ended and the Company rents to same facility on a month-to-month basis.

 

Our headquarters are located at 520 S. Grand Avenue, Suite 320, Los Angeles, California 90071 where we leased office space under a contract effective August 15, 2019, expiring on August 14, 2020. We now rent the premises on a month-to-month basis and paying $800 per month.

 

By way of the recent acquisition of a controlling interesting Natural Plant Extract of California, the Company is a party to a lease on a building and property in Lynwood, California. The lease term ends on May 2028. The total base rent is $11,000 a month, but the Company’s portion on the lease is $8,750 as another tenant pays the balance.

 

 

27 
 
 

 

Note 14. Common Stock

 

Subsequent to the closing of the fiscal year ending August 31, 2019, the Company affected a reverse split as of September 30, 2019, which had the effect of reducing the number of outstanding shares from 187,864,600 to 12,524,307. All share and per share amounts in this filing have been retrospectively adjusted to reflect the impact of the reverse stock split.

 

As of February 28, 2021, there were 66,205,687 shares of Common Stock issued and outstanding. As of the date of this filing, April 19, 2021, there were 72,133,317 shares of Common Stock issued and outstanding.

 

Note 15. Preferred Stock

 

There are 10,000,000 shares of preferred stock, par value $0.0001 per share, of the Company Preferred Stock in one or more series, and expressly authorized the Board of Directors of the Company. On December 16, 2019, the Board of Directors authorized the issuance of 8,000,000 preferred shares as “Series A Preferred Stock.” The Series A Preferred Stock is not convertible into any other form of Securities, including common shares, of the Company. Holders of Series A Preferred Stock shall be entitled to 50 votes for every Share of Series A Preferred Stock beneficially owned as of the record date for any shareholder vote or written consent. On May 28, 2020, Mr. Robert L. Hymers III, a former director and former chief financial officer, returned 2,000,000 Series A Preferred shares to the corporate treasury. As of February 28, 2021, there were 6,000,000 Series A Preferred shares issued and outstanding. 

 

On February 28, 2021, the Company designated 1,000,000 shares of Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock”). The Series B Convertible Preferred Stock earns dividends at 8% per year, and is convertible into shares of common stock at a rate of 63% of the market price, based on the average of the two lowest trading prices during the previous 15 days. Additionally, the Series B Convertible Preferred Stock is mandatorily redeemable 16 months from the issuance date in cash. The Company entered into an agreement with an investor for 153,500 shares of Series B Convertible Preferred Stock on February 28, 2021 for a total purchase amount of $153,500, and an agreement with the same investor for 78,500 shares of Series B Convertible Preferred Stock for a purchase amount of $78,500. In March 2021, the Company received proceeds of $225,000.

 

Note 16. Subsequent Events

 

                On March 8, 2021, the Company sold a convertible note with a face value of $215,000. The note carries interest at 10% annually.

 

                On March 16, 2021, the Company sold a convertible note with a face value of $215,000. The note carries interest at 10% annually.

 

                In March 2021, the Company received $232,000 of gross proceeds for 232,000 of its Series B Convertible Preferred Stock.

 

                On March 25, 2021, the Company sold 1,314,188 registered common shares at a price of $0.06 for a total purchase price of $78,851.28.

 

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

 

Except for the historical information presented in this document, the matters discussed in this Form 10-Q for the quarter ended February 28, 2021, contain forward-looking statements which involve assumptions and our future plans, strategies, and expectations. These statements are generally identified by the use of words such as “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project,” or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.

 

Such forward-looking statements include statements regarding, among other things, (a) our potential profitability and cash flows, (b) our growth strategies, (c) our future financing plans, and (d) our anticipated needs for working capital. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Form 10-Q generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the matters described in this Form 10-Q generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.

 

Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.

 

Except where the context otherwise requires and for purposes of this Form 10-Q only, “we,” “us,” “our,” “Company,” “our Company,” and “MCTC” refer to Cannabis Global, Inc, formerly known as MCTC Holdings, Inc.

 

Overview

 

The following discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with our financial statements and the accompanying notes to the financial statements included in this Form 10-Q.

 

The MD&A is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

 

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Description of Business

 

 Cannabis Global is a research and development company that also operates multiple cannabis businesses in California and hemp-related business in the United States. We are in the process of organizing business operations which will produce hemp products for international markets, and will supply transport technologies for shippers of hemp and cannabis.

 

We recently announced our acquisition a 56.5%, controlling interest in Natural Plant Extract (NPE), which operates a licensed cannabis manufacturing and distribution business in Lynwood, California, holding a Type 7 California Manufacturing and a distribution license, allowing for cannabis product distribution anywhere in the state. We plan to use the Lynwood NPE operation, combined with our internally developed technologies, as a testbed to launch multi-state operations as soon as possible after the expected removal of cannabis as a Scheduled substance from the federal CSA is completed, and interstate commerce in cannabis is approved by the federal government.

 

The Company recently commenced operations at the Natural Plant Extract facility effective immediately with emphasis on product manufacturing and distribution. In addition to business opportunities available from product manufacturing and distribution to all parts of the State of California.

 

Comply Bag

 

Comply Bag™ features a multi-layer, low-density polyethylene outer shell that protects valuable shipments and allows manufacturers, buyers, and processors full view of contents to assess quality. Each Comply Bag™ contains financial institution-grade tamper-evident seams, self-sealing closures, and sequential numbering to ensure what is sent is what is received. In addition, because all U.S. states have implemented specific regulations for the tracking and tracing of cannabis shipments from seed to sale, Comply Bags™ features regulator demanded tracking features, such as those required in the California Cannabis Track-and-Trace (CCTT) system, including Unique Identifier Tags (UID) mandated by California via its contracted service provider, METRC, Inc.

 

Cannabis-Related Research and Development

 

Cannabis Global also has an active research and development program primarily focused on creating and commercialize engineered technologies delivering hemp extracts and cannabinoids to the human body. Additionally, we invest, or provide managerial services, in specialized areas of the regulated hemp and cannabis industries. Thus far, the Company has filed six provisional patents, three non-provisional patents and has recently announced its Comply Bag" secure cannabis transport system with integrated track and trace capabilities via smartphones which will be available soon.

 

Our R&D programs included the following;

  1. Development of new routes and vehicles for hemp extract and cannabinoid delivery to the human body.

  2. Production of unique polymeric nanoparticles and fibers for use in oral and dermal cannabinoid delivery.

  3. Research and commercialization of new methodologies to isolate and/or concentrate various cannabinoids and other substances that comprise industrial hemp oil and other extracts.

  4. Establishment of new methods to increase the bioavailability of cannabinoids to the human body utilizing nanoparticles and other proven bioenhancers, including naturally occurring and insect produced glycosides.

  5. Development of other novel inventions for the delivery of cannabinoids to the human body, which at this time are considered trade secrets by the Company.

 

The Company’s strategy is to develop a growing portfolio of intellectual property relating to the processing of hemp extracts and cannabinoids into forms that are easily and efficiently delivered to the human body and to companion animals.

 

 

30 
 
 

 

The Company owns no issued patents. The Company has filed multiple provisional patents and three non-provisional patents as follows:

 

Cannabinoid Delivery System and Method of Making

  September 1, 2020 Original File Date - Cannabinoid Delivery System and Method of Making

 

  September 6, 2021 Second Filing Date - Cannabinoid Delivery System and Method of Making

 

Water Soluble Compositions With Enhanced Bioavailability

 

  September 24, 2019 - Water Soluble Compositions With Enhanced Bioavailability

 

  This provisional patent filing was abandoned, although the Company may refile at a later date.

 

Printed Shape Changing Article for the Delivery of Cannabinoids

 

  October 15, 2019 Original File Date - Printed Shape Changing Article for the Delivery of Cannabinoids.

 

  September 23, 2021 Second File Date - Printed Shape Changing Article for the Delivery of Cannabinoids.

 

Cannabinoid Enriched Composition and Method of Treating a Medical Condition Therewith

 

 

The invention relates to a method of treating a medical condition addressed by one or more cannabinoids, and a cannabinoid enriched treatment composition. In particular, 1) wherein the cannabinoid enriched treatment is produced by honey bees yielding a dry free-flowing solid or 2) wherein the cannabinoid enriched treatment is produced by other insects.

 

November 4, 2019 – Original provisional patent filing - Cannabinoid enriched composition and method for dry free-flowing powder.

 

 

December 15, 2020 Non-provisional Patent Filing - Cannabinoid enriched composition and method of treating a medical condition therewith. This was a non-provisional patent filing.

 

December 15 2020, the Company filed an application under the Patent Cooperation Treaty (PCT) seeking international protection of the Cannabinoid enriched composition and method for dry free-flowing powder.

 

The Company plans to utilize these unique compounds and powdered technologies to produce new cannabinoid infusion technologies for drugs, foods and beverages. The solid form of the bee honey compounds are already being utilized in the Company's Hemp You Can Feel™ branded products. Cannabis Global plans to conduct additional development on its other insect-based technologies to determine the extent of the unique properties of these new insect produced cannabinoid compounds.

 

There can be no assurance any patent protection will be provided, or that we will be successful in protecting our patents if issued.

 

 

 

31 
 
 

Electrosprayed and Electrospun Cannabinoid Compositions

   

 

The application addresses new methods for the creation of highly bioavailable and ultra-fast acting polymeric nanoparticles and nano fibers of cannabinoids for use in beverages, food, topical, and other applications.

 

The non-provisional application expands on the developments and technologies outlined in the provisional applications that were filed on November 4, 2019.

 

November 4, 2020, the Company filed an application under the Patent Cooperation Treaty (PCT) seeking international protection of the Electrosprayed and Electrospun Cannabinoid Compositions and Process to Produce inventions.

 

The Company believes this technology holds significant advantages over legacy cannabis infusion technologies. For example:

 

1) While legacy infusion technologies generally rely on chemicals to maintain stability, the Company invented a chemical free method utilizing only two ingredients. Surfactants and stabilizers are not needed.

 

2) The technology allows manufacturers to use only two ingredients (the “Two Ingredient Method”). Surfactants and stabilizers are not needed. This allows for the production of products with “Clean Labels”.

 

3)  Utilizing the "Two-Ingredient" method, food, beverage, and consumer product formulators can add cannabinoids using very small amounts of product, as each of the two ingredients make up about 50% of the product. For example, the technology allows manufacturers of cannabis-infused foods to add as little as 20 milligrams of material to dose psychoactive cannabinoids at the 10 milligram legal limit within most states. Cannabis Global expects to significantly improve this already high 50% loading rate over the next few months, with loading rates of up to 75% expected.

 

4) by reducing cannabinoid particle sizes to nanometer proportions, ultra-high levels of active ingredients get absorbed into the body in very short periods of time. This allows formulators to use cannabis to gain a desired effect, which can result in significant cost saving, especially relating to the rare cannabinoids, which sell at many times more than common cannabinoids, such as CBD or THC.

 

There can be no assurance any patent protection will be provided, or that we will be successful in protecting our patents if issued.

 

 

32 
 
 

 

Animal Based Cannabosides

 

 

On January 18, 2021, the Company filed a non-provisional patent on a novel method to produce water-soluble cannabinoids. The invention relates to a composition comprising one or more cannabosides and a method of producing one or more cannabosides. In particular, by feeding an insect a cannabinoid and harvesting the insect, excluding honey bees, to improve aqueous solubility and stability of cannabinoids. The patent claims coverage of both the process to create the compounds, and the use of the compounds in foodstuffs and pharmaceutical preparations.

 

We believe this set of technologies represents a new class of nature-based cannabinoid preparations. This technology is separate from our chemical free Two Ingredient nanoparticle and nano fiber infusion technologies for which we filed a patent application during November of 2002. We believe both sets of technologies are consistent with our corporate objective to introduce novel chemical free cannabinoid infusion technologies to the cannabis and hemp marketplaces.

 

On January 18, 2021, the Company filed an application under the Patent Cooperation Treaty (PCT) seeking international protection of a composition comprising one or more cannabosides and a method of producing one or more cannabosides.

 

There can be no assurance any patent protection will be provided, or that we will be successful in protecting our patents if issued.

 

Trademark applications are as follows: 

 

Trade Mark – Hemp You Can Feel™ – On August 27 2019, the Company filed a trademark application with the U.S. Patent and Trademark Office (USPTO) for its Hemp You Can Feel™ trade name. The U.S. Application Serial Number is 88595425. On June 24, 2020, the Company received a Notice of Nonfinal Office Action from the USPTO indicating the Company would have six months to respond to issues presented the Company by USPTO or be abandoned. The Company plans to re-file the application.

  

Trade Mark – Gummies You Can Feel™. The Company received a Notice of Allowance from the USPTO on March 24, 2020. The U.S. Serial Number for the trademark is 88590925

 

Trade Mark – Comply Bag™. During January of 2021, the Company filed a trademark application with the U.S. Patent and Trademark Office (USPTO) for its Comply Bag™. trade name.

 

There can be no assurance any trademark protection will be provided, or that we will be successful in protecting our trademarks if issued.

 

Hemp You Can Feel Products

 

The Hemp You Can Feel product line consists of hemp infused foods and beverages. The infusion technologies utilized are a combination on water soluble preparations invented by the Company’s internal partner research teams.

 

The product line consists of the following:

 

  Hemp You Can Feel™ Alcohol Replacement Cocktail Mixers – This is a line of alcohol-free cocktail mixers marketed on line via our own website site and via our marketing partners. All products in this line test as having non-detectable levels of THC.

 

  Hemp You Can Feel™ Coffee Products – This is a line of hemp infused coffee products. All products in this line test as having non-detectable levels of THC.

 

 

 

33 
 
 

 

  Hemp You Can Feel™ Gummies – This is a line of all natural hemp infused candy products. All products in this line test as having non-detectable levels of THC.

 

  Hemp You Can Feel™ Kombucha Beverages. This is a line of hemp infused fermented tea products. All products in this line test as having non-detectable levels of THC.

 

  Hemp You Can Feel™ Sweeteners – This is a line of natural and artificial sweeteners consisting of:

 

  Hemp You Can Feel Organic Sugar

 

  Hemp You Can Feel Sucralose Blend

 

  Hemp You Can Feel Stevia Blend

 

  Hemp You Can Feel Aspartame

 

  Hemp You Can Feel Saccharin

 

Upcoming additions to the product line will include:

 

  Hemp You Can Feel Monk Fruit Sweetener (monk fruit extract and erythritol)

 

  Hemp You Can Feel Non-Dairy Creamer

 

  Hemp You Can Feel French Vanilla Non-Dairy Creamer

 

  Hemp You Can Feel Non-Dairy Creamy Chocolate Creamer

  

Coffee Pod and Single Serving Beverage Pod Infusion System

 

Based on internally developed technology and those developed by the Company’s contract research organization, the Company is marketing product lines consisting of infusion technologies designed to easily and to accurately dose single serving coffee and other beverage pods.

 

34 
 
 

 

Management Services for Whisper Weed

 

On July 22, 2020, we signed a management agreement with Whisper Weed, Inc., a California corporation (“Whisper Weed”). Edward Manolos, our director, is a shareholder in Whisper Weed (see “Related Party Transactions”). Whisper Weed conducts licensed delivery of cannabis products in California. The material definitive agreement requires the parties to create a separate entity, CGI Whisper W, Inc. in California as a wholly owned subsidiary of the Company. The business of CGI Whisper W, Inc. will be to provide management services for the lawful delivery of cannabis in the State of California. The Company will manage CGI Whisper W, Inc. operations. In exchange for the Company providing management services to Whisper Weed through the auspices of CGI Whisper W, Inc., the Company will receive as consideration a quarterly fee of 51% of the net profits earned by Whisper Weed. As separate consideration for the transaction, the Company agreed to issue to Whisper Weed $150,000 in the Company’s restricted common stock, valued for purposes of issuance based on the average closing price of the Company’s common stock for the twenty days preceding the entry into the material definitive agreement. Additionally, the Company agreed to amend its articles of incorporation to designate a new class of preferred shares. The preferred class will be designated and issued to Whisper Weed in an amount equal to two times the quarterly payment made to the Company. The preferred shares will be convertible into the Company’s common stock after 6 months, and shall be senior to other debts of the Company. The conversion to common stock will be based on a value of common stock equal to at least two times the actual sales for the previous 90 day period The Company agreed to include in the designation the obligation to make a single dividend payment to Whisper Weed equal to 90% of the initial quarterly net profits payable by Whisper Weed. As of February 28, 2021, the Company has not issued the common or preferred shares, and the business is in the development stage.

 

Sales and Marketing

 

The Company recently began sales and marketing activities for its products and inventions. The Company primarily plans to market its non-psychoactive products via a “white label” strategy where the company produces products marketed and sold by other companies. The Company also plans to market its products directly to consumers. The Company

 

Please reference the section labeled “Risk Factors to our Business” for additional information.

 

Significant Customers

 

The company has no significant customers as of the end of the last fiscal quarterly reporting period.

 

Competition

 

We are entering markets that are highly competitive.

 

Relative to our prospects for commercializing polymeric nanoparticles and nanofibers, there are many competitors with various approaches to cannabinoid infusion for foods, beverages and other consumer products. While these currently available technologies are not directly competitive with us, such technologies may be viewed as being directly competitive by the marketplace in the future. Many of the current market participants are well established with considerable financial backing. We expect the quality and composition of the competitive market in the hemp processing environment to continue to evolve as the industry matures. Additionally, increased competition is possible to the extent that new states and geographies enter into the marketplace as a result of continued enactment of regulatory and legislative changes that de-criminalize and regulate cannabis and hemp products, including the 2018 Farm Bill. We believe the contemporaneous growth of the industry as a whole will result in new customers entering the marketplace, thereby further mitigating the impact of competition on our expected operations and results relating to our hemp processing businesses.

 

35 
 
 

 

Relative to our non-psychoactive cannabis extract powdered drink business, there are relatively few market participants in this sector, but management of the Company believes the competitive situation will advance quickly over the coming months as new companies target this potentially lucrative market opportunity. Additionally, while large beverage industry participants have yet to launch products in this area, we believe such market entrances are likely as the regulatory environment is clarified by the FDA. This could significantly affect our ability to achieve market success.

 

We believe the contemporaneous growth of the cannabis beverage sector and the industry as a whole will result in new customers entering the marketplace, thereby further mitigating the impact of competition on our expected operations and results relating to hemp cultivation and processing business and joint venture.

 

The psychoactive cannabis sector is also highly competitive with many participants being better capitalized. The Company plans to distinguish its products based on both quality and brand appearance.

 

Employees

 

As of the end of the last reporting period, the Cannabis Global has one employee, CEO, Arman Tabatabaei. Additionally, the Company relies on the services of numerous consultants who perform various tasks for the Company. Natural Plant Extract of California employs two full time professional managerial staff and between four and ten part time individuals, depending on workload and order levels, engaged in production and administration activities.

 

Our U.S employees are not represented by a labor union.

 

Legal Proceedings

 

On November 22, 2019, the Company filed suit against Jeet Sidhru and Jatinder Bhogal in the District Court of Clark County Nevada, Case number A-19-805943-C. Mr. Sidhru and Mr. Bhogal were formerly directors and officers of the Company. The Company’s complaint alleges that Mr. Sidhru and Mr. Bhogal breached their fiduciary duties to the Company, including their fiduciary duties of due care, good faith and loyalty, by recklessly and intentionally failing to maintain the Company’s statutory corporate filings with the State of Nevada, OTC Markets and the U.S. Securities and Exchange Commission, and abandoning the Company and its shareholders. The Company’s complaint also alleges that Mr. Sidhru and Mr. Bhogal engaged in conflicted transactions involving the Company, in which each were unjustly enriched. The Company served Mr. Bhogal, and received notice of representation of both defendants. The case is currently in its early phase, as neither defendant has responded to the complaint.

 

Market Information

 

Our common stock trades on the OTC Markets Pink under the stock symbol CBGL.

 

Transfer Agent

 

Pacific Stock Transfer Company, located at 6725 Via Austin Pkwy., #300, Las Vegas NV 89119 and telephone number of (702) 361-3033 is the registrar and transfer agent for our common stock. As of April 19, 2021, there were approximately 61 holders of record of our common stock.

 

DESCRIPTION OF PROPERTY

 

Our headquarters are located at 520 S. Grand Avenue, Suite 320, Los Angeles, California 90071 where are we lease office space under a contract effective August 15, 2019, which expired on August 14, 2020. We now rent the office space on a month-to-month basis for $800 per month.

 

Relative to it Natural Plant Extract of California operation, the Company leases a building in Lynwood, CA where it operates a licensed cannabis operation. The Company pays $8,750 per month to occupy the building.

 

Our Company has also entered into a lease for a commercial food production facility, which is also located in Los Angeles, California. The one-year lease at rate of $3,300 per month was entered into as of August 2019. The lease is expired with the location now being rented on a month-to-month basis.

 

We believe that our existing office facilities are adequate for our needs. Should we require additional space at that time, or prior thereto, we believe that such space can be secured on commercially reasonable terms.

 

 

36 
 
 

 

Results of Operations

 

For the Three months Ended February 28, 2021 and February 29, 2020

Product revenues for the quarterly financial period ending February 28, 2021, were $25,816 compared to $0 reported during the quarterly financial period ending February 29, 2020.

 

During the financial period ending February 28, 2021, cost of goods sold was $6,653 compared to $0 for the quarterly financial period ending February 29, 2020. This resulted in a gross margin of $19,163 for the period ending February 28, 2021.

 

Accounts receivable were $218,374 for the period ending February 28, 2021. Compared to $0 for the period ending August 31, 2020. The increase is attributable to consolidate of Natural Plant Extract of California and inclusion of its cannabis related accounts receivables relating to its orders for cannabis products for its customers.

 

For the period ending February 28, 2021, the Company incurred operating expenses of $431,571 compared to $410,915 for the period ending February 29, 2020. The increase was due to the Company launching new products and marketing programs.

 

Interest expenses for the financial period ending February 28, 2021 were $1,933, 728 compared to $522,203 for the financial period ending February 29, 2020. The increase was attributable to an increased number of notes sold during the period aimed at financing our product and marketing programs.

 

During the three months ending February 28, 2021, net loss was $2,110,770 compared to $762,196 for the financial period ending February 29, 2020. The increase in net loss was attributable mainly to increased spending associated with the reorganization of the business, expenses relating to hiring consultants and general costs associated with the design of new product in preparation of customer orders, and increased interest expenses. The net loss for the period ending February 28, 2021, resulted in a loss per share of $0.05, compared to a net loss per share $0.06 during the year ago period.

 

For the Six months Ended February 28, 2021 and February 29, 2020

Product revenues for the six months ending February 28, 2021, were $30,226 compared to $10,003 reported during the quarterly financial period ending February 29, 2020.

 

During the six months ending February 28, 2021, cost of goods sold was $7,953 compared to $2,900 for the quarterly financial period ending February 29, 2020. This resulted in a gross margin of $22,273 for the period ending February 28, 2021.

 

For the six months ending February 28, 2021, the Company incurred operating expenses of $878,962 compared to $784,708 for the six months ending February 29, 2020. The increase was due to the Company launching new products and marketing programs.

 

Interest expenses for the six months ending February 28, 2021 were $2,706,483 compared to $553,453 for the six months ending February 29, 2020. The increase was attributable to an increased number of notes sold during the period aimed at financing our product and marketing programs.

 

During the six months ending February 28, 2021, net loss was $2,463,994 compared to $1,147,633 for the six months ending February 29, 2020. The increase in net loss was attributable mainly to increased spending associated with the reorganization of the business, expenses relating to hiring consultants and general costs associated with the design of new product in preparation of customer orders, and increased interest expenses. The net loss for the period ending February 28, 2021, resulted in a loss per share of $0.06, compared to a net loss per share $0.09 during the year ago period.

 

 

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Liquidity and Capital Resources

 

As of February 28, 2021 and August 31, 2020 our cash and cash equivalent balances were $134,187 and $2,338, respectively.

 

Our primary internal sources of liquidity were provided by proceeds from the sale of unregistered common shares and warrants of the Company as follows:

 

On July 3, 2019, we sold 2,000,000 restricted shares at $0.025 a share for the amount of $50,000 to an accredited investor. The investor also received 2,000,000 warrants to purchase 2,000,000 shares at a price of $0.15 per share. The warrants expire on July 3, 2020. The sale was made pursuant to SEC Rule 506 Section 4(2), which provides exemption from registration for transactions, which are not public offerings.

 

On July 10, 2019, we sold 1,000,000 restricted shares at $0.025 a share for the amount of $25,000 to an accredited investor. The investor also received 1,000,000 warrants to purchase 1,000,000 shares at a price of $0.15 per share. The warrants expire on July 10, 2020. The sale was made pursuant to SEC Rule 506 Section 4(2), which provides exemption from registration for transactions, which are not public offerings.

 

On July 16, 2019, we sold 1,400,000 restricted shares at $0.025 a share for the amount of $35,000 to an accredited investor. The investor also received 1,400,000 warrants to purchase 1,400,000 shares at a price of $0.15 per share. The warrants expire on July 16, 2020. The sale was made pursuant to SEC Rule 506 Section 4(2), which provides exemption from registration for transactions, which are not public offerings.

 

On July 19, 2019, we sold 1,000,000 restricted shares at $0.025 a share for the amount of $25,000 to an accredited investor. The investor also received 1,000,000 warrants to purchase 1,000,000 shares at a price of $0.15 per share. The warrants expire on July 19, 2020. The sale was made pursuant to SEC Rule 506 Section 4(2), which provides exemption from registration for transactions, which are not public offerings.

 

On August 15, 2019, we sold 2,000,000 restricted shares at $0.025 a share for the amount of $50,000 to an accredited investor. The investor also received 2,000,000 warrants to purchase 2,000,000 shares at a price of $0.15 per share. The warrants expire on August 15, 2020. The sale was made pursuant to SEC Rule 506 Section 4(2), which provides exemption from registration for transactions, which are not public offerings.

 

On August 19, 2019, we sold 1,000,000 restricted shares at $0.025 a share for the amount of $50,000 to an accredited investor. The investor also received 1,000,000 warrants to purchase 1,000,000 shares at a price of $0.15 per share. The warrants expire on August 19, 2020. The sale was made pursuant to SEC Rule 506 Section 4(2), which provides exemption from registration for transactions, which are not public offerings.

 

On August 27, 2019, we sold 1,000,000 restricted shares at $0.025 a share for the amount of $25,000 to an accredited investor. The investor also received 1,000,000 warrants to purchase 1,000,000 shares at a price of $0.15 per share. The warrants expire on August 27, 2020. The sale was made pursuant to SEC Rule 506 Section 4(2), which provides exemption from registration for transactions, which are not public offerings. As of the date of this filing, these shares have not yet been issued to the purchaser.

 

On November 6, 2019, we sold a convertible not to an accredited investor for $20,000. The terms of the six month note allow 7% annual interest and for the conversion into common shares at $0.75. Additionally, the investor received a warrant providing the investor the right to purchase 26,666 common shares at a price of $3.50.

 

On December 30, 2019, The Company sold a convertible note to an accredited investor. The $63,000 note calls for annualized interest of 10% and is due on December 20, 2020. The note converts in common shares at 40% discount. This note is attached as an exhibit hereto.

 

On December 16, 2019, the Company’s board of directors by unanimous written consent caused the authorization of ten million (10,000,000) shares of preferred stock, par value $0.0001 per share, of the Company ("Preferred Stock") in one or more series, and expressly authorized the Board of Directors of the Company (the "Board"), subject to limitations prescribed by law, to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock, and, with respect to each such series, to establish and fix the number of shares to be included in any series of Preferred Stock and the designation, rights, preferences, powers, restrictions, and limitations of the shares of such series.

 

 

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During the quarterly period ended February 29, 2020, the Company issued four convertible promissory notes having an aggregate principal amount of $256,500, aggregate original issue discount (OID) of $10,500, and aggregate legal fees of $11,000, resulting in aggregate net proceeds to the Company of $235,000. The notes mature in one year from the respective issuance date and bear interest at the rate of 10% per annum, payable at maturity. Commencing one hundred eighty (180) days following the issuance date of $198,750 of the notes and commencing immediately following the issuance of $57,750 of the notes, the noteholders shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at variable conversion prices ranging from 50% - 60% of the lowest previous fifteen (15) to twenty (20) trading day closing trade prices of the Company’s common stock, subject to adjustment. As a result of the variable conversion prices, upon issuance, the Company recognized total debt discount of $256,500, which is being amortized to interest expense over the term of the notes. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note.

 

On March 19, 2020, the Company entered into a Securities Purchases Agreement and Convertible Promissory Note in the principal amount of $150,000. The note, which is payable one year after issuance, carries interest at 10% per annum. On March 19, 2020, the Company received its first disbursement under this agreement in the amount of $50,000. Less an original discount and other certain fees, the Company netted $43,000. The note converts to common shares at a 40% discount to the lowest traded price during the 25 days prior to conversion. Additionally, the issuer was granted three-year warrant coverage at $0.48. The note shall not be able to be converted in an amount that would result in the beneficial ownership of more than 4.99% of the Company outstanding common stock.

 

On May 4, 2020 the Company received its Second disbursement under this agreement win the amount of $25,000. Less an original discount and other certain fees, the Company netted $21,000. This note converts to common shares at a 40% discount to the lowest traded price during the 25 days prior to conversion.

 

On May 28, 2020, Mr. Robert L. Hymers III, a former director and former chief financial officer, returned 2,000,000 Series A Preferred shares to the corporate treasury. As of the date of this filing, there were 6,000,000 Series A Preferred shares issued and outstanding.

 

On June 19, 2020, we sold 352,941 registered common shares to an investor in exchange for $60,000 by subscription from our Form S-1 registration, file number 333-238974.

 

On June 23, 2020, we sold 116,667 registered common shares to an investor in exchange for a settlement by subscription form our Form S-1 registration, file number 333-238974.

 

On June 30, 2020, we sold 289,301 registered common shares to an investor in exchange for $50,000 by subscription form our Form S-1 registration, file number 333-238974.

 

On July 7, 2020, we sold 305,810 registered common shares to an investor in exchange for $35,000 by subscription form our Form S-1 registration, file number 333-238974.

 

On July 10, 2020, the Company receives a $25,000 disbursement from a previously signed convertible note. On March 19, 2020, the Company entered into a Securities Purchases Agreement and Convertible Promissory Note in the principal amount of $150,000. The note, which is payable one year after issuance, carries interest at 10% per annum. On March 19, 2020, the Company received its first disbursement under this agreement in the amount of $50,000. Less an original discount and other certain fees, the Company netted $43,000. The note converts to common shares at a 40% discount to the lowest traded price during the 25 days prior to conversion. Additionally, the issuer was granted three-year warrant coverage at $0.48. The note shall not be able to be converted in an amount that would result in the beneficial ownership of more than 4.99% of the Company outstanding common stock.

 

On July 21, 2020, the Company entered into a Securities Purchases Agreement and Convertible Promissory Note in the principal amount of $78,750. The note, which is payable one year after issuance, carries interest at 6% per annum. The note converts to common shares at a 60% discount to the lowest traded price during the 30 days prior to conversion. 

 

On August 6, 2020, we sold 2,899,017 registered common shares to an investor in exchange for $278,338, by subscription form our Form S-1 registration, file number 333-238974. Additionally, the investor was provided with 150,000 commitment shares, and was issued a convertible for $50,000. The note calls for annualized interest of 10% and is due on August 7, 2021. The note converts into common shares at a fixed price of $0.1631.

 

 

39 
 
 

 

 

On August 12, 2020, The Company sold a convertible note to an accredited investor. The $55,000 note calls for annualized interest of 10% and is due on May 21, 2021. The note converts into common shares at a fixed price of $0.1005.

 

On August 14, 2020, The Company sold a convertible note to an accredited investor. The $50,000 note calls for annualized interest of 10% and is due on May 14, 2021. The note converts into common shares at a fixed price of $0.1005.

 

On August 17, 2020, we sold 510,204 registered common shares to an investor in exchange for $51,275.50 by subscription form our Form S-1 registration, file number 333-238974.

 

On August 28, 2020, the Company sold a convertible note to an accredited investor. The $113,000 note calls for annualized interest of 8% and is due on August 28, 2021. The note converts to common shares at a 37% discount to the lowest traded price during the 15 days prior to conversion.

 

On September 2, 2020, the Company issued two convertible promissory notes with an aggregate principal amount of $107,000, with the Company receiving proceeds of $100,000 after original issue discount of $5,000 and deferred finance costs of $2,000. The notes mature in September 2021 and bear interest at 12% per annum. Commencing one hundred eighty (180) days following the issuance date of the notes, the noteholders shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at variable conversion price of 60% of the lowest previous twenty (20) trading day closing trade prices of the Company’s common stock, subject to adjustment. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note.

 

On September 22, 2020, the Company issued a convertible note in the amount of $78,000. The note matures on September 22, 2021 and bears 8% interest rate per annum. The note is convertible into common shares at 37% discount for the average of the two lowest trading price of the common stock during the 15 trading day period ending on the latest complete trading day prior to the conversion date.

 

On September 24, 2020, the Company issued a convertible note in the amount of $78,000. The note matures on June 24, 2021 and bears 10% interest rate per annum. The note is convertible into common shares at a fixed conversion price of $0.06 or a conversion discount at rate of 30% to the lowest trading price during the previous twenty (20) trading days to the date of a conversion notice; whichever is lower.

 

On September 30, 2020, the Company entered into a securities exchange agreement with Marijuana Company of America, Inc., a Utah corporation (“MCOA”). By virtue of the agreement, the Company issued 7,222,222 shares of its restricted common stock to MCOA in exchange for 650,000,000 shares of MCOA restricted common stock. The Company and MCOA also entered into a lock up leak out agreement which prevents either party from sales of the exchanged shares for a period of 12 months. Thereafter the parties may sell not more than the quantity of shares equaling an aggregate maximum sale value of $20,000 per week, or $80,000 per month until all Shares and Exchange Shares are sold.

 

 

40 
 
 

 

On November 16, 2020, the Company sold an aggregate 3,000,000 shares of Company common stock, par value $0.001, equal in value to $177,000 based on the closing price on November 16, 2020. Of the total sold, 1,500,000 shares of common stock were sold to Edward Manolos and 1,500,000 shares of common stock were sold to Thang Nguyen. The sales were made in regards to the Company’s acquisition of Ethos, and its disclosures under Item 1.01 are incorporated herein by reference. The Company issued the above shares of its common stock pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, available to the Company by Section 4(a)(2) promulgated thereunder due to the fact that it was an isolated issuance and did not involve a public offering of securities. Messrs. Manolos and Nguyen were “accredited investors” and/or “sophisticated investors” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning their qualifications as “sophisticated investors” and/or “accredited investors.” The Company provided and made available to Messrs. Manolos and Nguyen full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Messrs. Manolos and Nguyen acquired the restricted common stock for their own accounts, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless subject to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.

 

On December 1, 2020, the Company entered into a Securities Purchase Agreement in connection with the issuance of an 8% convertible note with the principal amount of $33,500, with an accredited investor. The note is convertible anytime after 180 days of issuance at a variable conversion price of 63% of the Market Price at time of conversion. Market Price is defined as the average of the two lowest trading prices during the fifteen (15) days prior to conversion. The Note and Purchase Agreement are attached to this filing. The Company received net cash proceeds of $30,000.

 

On December 1, 2020, the Company entered into an additional Securities Purchase Agreement in connection with the issuance of an 8% convertible note with the principal amount of $33,500, with an accredited investor. The note is convertible anytime after 180 days of issuance at a variable conversion price of 63% of the Market Price at time of conversion. Market Price is defined as the average of the two lowest trading prices during the fifteen (15) days prior to conversion. The Company received net cash proceeds of $30,000.

 

On January 3, 2021, we entered into a settlement agreement with Robert L. Hymers, III (“Hymers”) concerning five delinquent payments totaling $100,000 due under the stock purchase agreement whereby the Company purchased 266,667 shares of common stock of Natural Plant Extract of California Inc., a California corporation (“NPE”), The Company was required to make $20,000 monthly for a period of twenty-seven (27) months to Hymers, with the first payment commencing September 1, 2020 and the remaining payments due and payable on the first day of each subsequent month until Hymers received $540,000. On January 3, 2021, we entered into a settlement concerning the outstanding payments by agreeing to issue to Hymers a total of 1,585,791 shares of registered common stock from our S-1 registration statement made effective during February 2021.

 

On January 5, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of an 10% convertible note with the principal amount of $110,000, with an accredited investor. The note is convertible at a fixed conversion price of $0.005. In the event of default by the Company, or after the public announcement of a change of control transaction as defined in the agreement, the conversion price is $0.001. The Company received net proceeds of $97,500.

 

On January 5, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of an 10% convertible note with the principal amount of $110,000, with an accredited investor. The note is convertible at a fixed conversion price of $0.05. In the event of default by the Company, or after the public announcement of a change of control transaction as defined in the agreement, the conversion price is $0.01. The Company received net proceeds of $97,500.

 

On January 12, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of an 10% convertible note with the principal amount of $115,500, with an accredited investor. The note is convertible beginning 61 days from issuance at a fixed conversion price of $0.10 per share or 60% or the lowest trading price for ten days prior to conversion in the event that the Company’s stock trades at less than $0.10 per share. The Company received net proceeds of $100,000.

 

On January 26, 2021, the Company entered into two Securities Purchase Agreements in connection with the issuance of two 10% convertible note with the principal amount of $487,750, with an accredited investor. The note is convertible at 70% of the average of the three lowest trading prices for 20 days prior to conversion. The Company received net proceeds of $431,000.

 

 

41 
 
 

 

 

On February 3, 2021, the Registrant completed the sale of an aggregate of 4,700,000 registered shares of common stock registered on Form S-1 (File No. 333-250038) in two transactions in exchange for a total purchase price of $282,000. The parties to the transactions were the Registrant and BHP Capital NY, Inc., and Platinum Point Capital, LLC. There was no material relationship, other than in respect of the transactions, between BHP Capital NY, Inc., Platinum Point Capital, LLC and the Registrant or any of its affiliates, or any director or officer of the Registrant, or any associate of any such director or officer. BHP Capital NY, Inc. purchased 2,350,000 registered common shares in exchange for $141,000. Platinum Point Capital, LLC purchased 2,350,000 registered common shares in exchange for $141,000.

 

 

On January 27, 2021 Cannabis Global, Inc. (the “Registrant”) closed a material definitive agreement (MDA) with Edward Manolos, a director and related party. Pursuant to the MDA, the Registrant purchased from Mr. Manolos 266,667 shares of common stock in Natural Plant Extract of California Inc., a California corporation (“NPE”), representing 18.8% of the outstanding capital stock of NPE on a fully diluted basis. NPE operates a licensed psychoactive cannabis manufacturing and distribution business operation in Lynwood, California. NPE is a privately held corporation. Under the terms of the MDA, the Registrant acquired all beneficial ownership over the NPE shares in exchange for a purchase price of two million forty thousand dollars ($2,040,000). In lieu of a cash payment, the Registrant agreed to issue Mr. Manolos 11,383,929 restricted common shares, valued for purposes of the MDA at $0.1792 per share. In connection with the MDA, the Registrant became a party to a Shareholders Agreement by and among Alan Tsai, Hymers, Betterworld Ventures, LLC, Marijuana Company of America, Inc. and NPE. The Shareholders Agreement contains customary rights and obligations, including restrictions on the transfer of the Shares. Additionally, the Registrant intends, upon completion of the terms and conditions of the Material Definitive Agreement, to control the production, manufacturing and distribution of both NPE and the Registrant’s products.

 

On February 16, 2021, we purchased 266,667 shares of common stock of Natural Plant Extract of California Inc., a California corporation (“NPE”), from Alan Tsai, in exchange for the issuance of 1,436,368 common shares. Other than with respect to the transaction, there was no material relationship between Mr. Tsai and the Registrant. By virtue of the transaction, the Registrant acquired 18.8% of the outstanding capital stock of NPE, bringing its total beneficial ownership in NPE to 56.5%. NPE operates a licensed psychoactive cannabis manufacturing and distribution business operation in Lynwood, California. By virtue of its 56.5% ownership over NPE, the Company will control production, manufacturing and distribution of both NPE and Company products. In connection with the MDA, the Registrant became a party to a Shareholders Agreement by and among Edward Manolos, a director of the Company, Robert L. Hymers III, Betterworld Ventures, LLC, Marijuana Company of America, Inc. and NPE. The Shareholders Agreement contains customary rights and obligations concerning operations, management,, including restrictions on the transfer of the Shares.

On February 16, 2021, the Company sold 1,133,334 registered common shares to accredited investors, realizing $68,000.

 

On February 18, 2021, the Company sold 683,333 registered common shares to an accredited investor, realizing proceeds of $41,000.

 

On February 28, 2021, the Company sold 153,000 Preferred Series B shares to an accredited investor, realizing proceeds of $153,000. The proceeds were not received until March 2021, and therefore no preferred stock shares were issued and outstanding as of February 28, 2021.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements. 

Recently Issued Accounting Pronouncements

 

We review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to the Company, we have not identified any standards that we believe merit further discussion. We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our financial position, results of operations, or cash flows.

 

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ITEM 4.  CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Management is responsible for establishing and maintaining adequate disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely and reliable financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America.

 

As of the quarter ended February 28, 2021, our principal executive officer and principal financial officer completed an assessment of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e), to determine the existence of any material weaknesses or significant deficiencies under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant's financial reporting.

 

Based on that evaluation, we concluded that our disclosure controls and procedures over financial reporting were not effective as of February 28, 2021.

 

Changes in Internal Controls over Financial Reporting

 

There have been no changes in our internal control over financial reporting during the quarter ended February 28, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

On November 22, 2019, the Company filed suit against Jeet Sidhru and Jatinder Bhogal in the District Court of Clark County Nevada, Case number A-19-805943-C. Mr. Sidhru and Mr. Bhogal were formerly directors and officers of the Company. The Company’s complaint alleges that Mr. Sidhru and Mr. Bhogal breached their fiduciary duties to the Company, including their fiduciary duties of due care, good faith and loyalty, by recklessly and intentionally failing to maintain the Company’s statutory corporate filings with the State of Nevada, OTC Markets and the U.S. Securities and Exchange Commission, and abandoning the Company and its shareholders. The Company’s complaint also alleges that Mr. Sidhru and Mr. Bhogal engaged in conflicted transactions involving the Company, in which each were unjustly enriched. The Company served Mr. Bhogal, and received notice of representation of both defendants. The case is currently in its early phase, as neither defendant has answered the complaint.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information.

None.

 

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Item 6. Exhibits

 

     Corporate Documents Section   
         
 3   Certificate of Incorporation  Incorporated by reference to the Company’s Form S-1 filed on August 26, 2019.
         
 3i  Amendment to Certificate of Incorporation  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 3.ii  By Laws  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 3.iii  Aidan & Co. Inc. Formation  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
        
 3.iv  Hemp You Can Feel, Inc. Formation  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 3.v  Articles of Domestications Nevada  Incorporated by reference from the Company’s Current Report on Form 8-K filed on April 3, 2020.
         
 3.vi  Certificate of Conversion Delaware  Incorporated by reference from the Company’s Current Report on Form 8-K filed on April 3, 2020.
         
 3.vii  Certificates of Designation Series A Preferred Stock  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 4a.   Convertible Promissory Note  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
       
     Material Contracts and Other   
         
 10.1   Executive Employment Agreement CEO Arman Tabatabaei  Incorporated by reference from the Company’s Form S-1 filed on August 26, 2019
         
 10.2   Change of Control Stock Purchase Agreement  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.3   Director Agreement – Robert L. Hymers III  Incorporated by reference from the Company’s Form S-1 filed on August 26, 2019
         
 10.4   Director Agreement - Dan Van Nguyen  Incorporated by reference from the Company’s Form S-1 filed on August 26, 2019.
         
 10.5   Director Agreement – Edward Manolos  Incorporated by reference from the Company’s Form S-1 filed on August 26, 2019
         
 10.6   Director Agreement – Mellissa Riddell   Incorporated by reference from the Company’s Form 8-K filed February 7, 2020
         
 10.7   Director Agreement – Jim Riley 

Incorporated by reference from the Company’s Form 8-K filed November 3, 2020 .

 

 

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 10.8   Private Placement Memorandum – July 3, 2019  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.9   Private Placement Memorandum – July 10, 2019  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.10   Private Placement Memorandum – July 16, 2019  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.11   Private Placement Memorandum – July 19, 2019  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.12   Private Placement Memorandum – August 15, 2019  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.13   Private Placement Memorandum – August 19, 2019  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.14   Property Lease 520 Grand Ave, Suite 320 Los Angeles, CA 90071  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.15   Property Lease 6130 S Avalon Ave Los Angeles, CA  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020

 

 10.16   Resignation of Former CEO Garry McHenry  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.17   Settlement Agreement BOD Resolution Manolos/Nguyen/Others  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.18   Riddell/Kirby Agreements BOD Resolutions  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.19   Paladin Advisors SPA  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.20   Costello SPA  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.21   K&J SPA November 2019  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.22   K&J SPA April 2020  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.23   K&J SPA May 2020  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.24   Eagle Note January 2020  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.25   Crown Bridge Note March 2020  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.26   GW Holdings Note January 2020  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.27   Power Up Note December 2019  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020

 

 

45 
 
 

 

 

       
 10.28   Power Up Note February 2020  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.29   BOD Action Acquisition of Action Nutraceuticals July 2019  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.30   Hymers Note January 2020  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.31   Tabatabaei Note February 2020  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.32   Tabatabaei Note Conversion  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.33   Pinnacle Consulting Agreement  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.34   Tabular Consulting Agreement  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020
         
 10.35   Crown Bridge Note 2nd tranche May 2020  Incorporated by reference from the Company’s Form S-1 filed on June 5, 2020

 

 10.36   Lelantos Convertible Notes  Incorporated by reference from the Company’s Form 8-K filed on February 20, 2020.
         
 10.37   Modification Agreement; Lelantos Convertible Notes  Incorporated by reference from the Company’s Form 8-K filed on June 18, 2020.
         
 10.38   Management Agreement; Whisper Weed.  Incorporated by reference from the Company’s Form 8-K filed on July 24, 2020.
         
 10.39   Stock Purchase Agreement; GHS Investments, LLC  Incorporated by reference from the Company’s Form 8-K filed on August 13, 2020.
         
 10.40   Stock Purchase Agreement and Form of Convertible Promissory Note; Natural Plant Extract  Incorporated by reference from the Company’s Form 8-K filed September 1, 2020.
         
 10.41   Share Exchange Agreement; Marijuana Company of America, Inc.  Incorporated by reference from the Company’s Form 8-K filed October 2, 2020.
        
 10.42   Securities Purchase Agreement with Redstart Holdings Corp dated September 22, 2020  Incorporated by reference from the Company’s Form 10-Q filed on January 13, 2021
         
 10.43   Convertible Promissory Note with Redstart Holdings Corp. dated September 22, 2020  Incorporated by reference from the Company’s Form 10-Q filed on January 13, 2021
         
 10.44   Securities Purchase Agreement with Redstart Holdings Corp. dated October 30, 2020  Incorporated by reference from the Company’s Form 10-Q filed on January 13, 2021
       
 10.45   Convertible Promissory Note with Redstart Holdings Corp. dated October 30, 2020  Incorporated by reference from the Company’s Form 10-Q filed on January 13, 2021
         
 10.46   Ethos Technology Acquisition Agreement dated November 16, 2020  Incorporated by reference from the Company’s Form 10-Q filed on January 13, 2021
         
 10.47   Securities Purchase Agreement with GW Holdings Group, LLC dated January 12, 2021  Incorporated by reference from the Company’s Form 10-Q filed on January 13, 2021
         
 10.48   Convertible Promissory Note with GW Holdings Group, LLC dated January 12, 2021  Incorporated by reference from the Company’s Form 10-Q filed on January 13, 2021
         
 10.49   Riddell Independent Director Agreement dated February 18, 2021  Incorporated by reference from the Company’s Form S-1 filed on February 26, 2021
         
 10.50   Securities Subscription and Purchase Agreement between Registrant and BHP Capital NY, Inc.  Incorporated by reference from the Company’s Form 8-K filed on February 4, 2021
         
 10.51   Securities Subscription and Purchase Agreement between Registrant and Platinum Point Capital, LLC.  Incorporated by reference from the Company’s Form 8-K filed on February 4, 2021
         
 10.52   Stock Purchase Agreement with Edward Manolos dated January 27, 2021  Incorporated by reference from the Company’s Form 8-K filed on February 2, 2021
         
 10.53   NPE Shareholder Agreement June 5, 2020  Incorporated by reference from the Company’s Form 8-K filed on September 1, 2020
         
 10.54   Convertible Promissory Note with GW Holdings Group, LLC dated January 12, 2021  Incorporated by reference from the Company’s Form 10-Q filed on January 13, 2021
         
  31.1     Certification of Principal Executive Officer Pursuant to Rule 13a-14   Filed Herewith
             
  31.2     Certification of Principal Financial Officer Pursuant to Rule 13a-14   Filed Herewith
             
  32.1     CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act   Filed Herewith
             
  101.INS     XBRL Instance Document   Filed Herewith
  101.PRE     XBRL Taxonomy Extension Presentation Linkbase   Filed Herewith
  101.LAB     XBRL Taxonomy Extension Label Linkbase   Filed Herewith
  101.DEF     XBRL Taxonomy Extension Definition Linkbase   Filed Herewith
  101.CAL     XBRL Taxonomy Extension Calculation Linkbase   Filed Herewith
  101.SCH     XBRL Taxonomy Extension Schema   Filed Herewith

 

 

46 
 
 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

April 19, 2021

  Cannabis Global, Inc.
   
   By: /s/ Arman Tabatabaei
    Arman Tabatabaei
President, Chief Executive Officer, Chief Financial Officer, Director

 

 

 

 

 

47 
 
 

 

EX-31.1 2 ex31x1.htm EXHIBIT 31.1

Exhibit 31.1

 

 

I, Arman Tabatabaei, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q for period ended February 28, 2021 of Cannabis Global, Inc.

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: April 19, 2021  
   By: /s/ Arman Tabatabaei
    Arman Tabatabaei
Chief Executive Officer

EX-31.2 3 ex31x2.htm EXHIBIT 31.2

Exhibit 31.2

 

 

I, Arman Tabatabaei, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q for the period ended February 28, 2021 of Cannabis Global, Inc.

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: April 19, 2021  
   By: /s/ Arman Tabatabaei
    Arman Tabatabaei
Chief Financial Officer

EX-32.1 4 ex32x1.htm EXHIBIT 32.1

Exhibit 32.1

 

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Cannabis Global, Inc. (the “Company”) on Form 10-Q for the period ended February 28, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

 

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: April 19, 2021  
   By: /s/ Arman Tabatabaei
    Arman Tabatabaei
Chief Executive Officer

 

Date: April 19, 2021  
   By: /s/ Arman Tabatabaei
    Arman Tabatabaei
Chief Financial Officer

 

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

 

 

 

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On July 10, 2020, the third tranche of $25,000, less OID of $2,500 was received, resulting in net proceeds to the Company of $22,500, and the Company issued 78,125 three year warrants exercisable at an initial price of $0.48 per share. As a result of the OID and the variable conversion price, upon issuance, the Company recognized total debt discount of $75,000, which is being amortized to interest expense over the respective term of the tranches. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company&#8217;s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. 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Hymers III [Member] Subsequent Event Type [Axis] Subsequent Event [Member] Series B Preferred Stock [Member] Investor [Member] Investor One [Member] Natural Plant Extract Securities Purchase Agreement [Member] Accredited Investor Accredited Investor 1 Accredited Investor 2 Three Sellers Acquisition Promissory Notes Legal custodian Legal custodian 1 Legal custodian 2 Dan Nguyen Mr. Manolos Scenario [Axis] Pro Forma [Member] Modification agreement Common Stock to be issued Stockholders' Equity Attributable to Cannabis Global Inc Noncontrolling Interest Document And Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Amendment description Current Fiscal Year End Date Document Fiscal Period Focus Is Entity a Shell Company? Is Entity's Reporting Status Current? Entity Filer Category Entity File Number Entity Common Stock, Shares Outstanding Entity Interactive Data Current Entity Incorporation, State or Country Code Document Fiscal Year Focus Entity Emerging Growth Company Entity Small Business Entity Ex Transition Period Statement of Financial Position [Abstract] ASSETS Current Assets: Cash Accounts Receivable Notes receivable, current Inventory Total Current Assets Machinery & Equipment- Net Other Assets Long-Term Investments Intangible Assets Right of Use Asset Notes Receivable Security Deposit Goodwill TOTAL ASSETS LIABILITIES & STOCKHOLDER'S EQUITY (DEFICIT) Current Liabilities: Accounts Payable Accounts Payable - Related Party Accrued Interest Right of use liability, current Notes payable, current Convertible Notes, Net of Debt Discount of $1,032,292 and $678,246, respectively Derivative Liability Note Payable - Related Party Total Current Liabilities Right of use liability, long term Notes payable Total Liabilities Stockholder's Equity (Deficit) Preferred Stock, par value $0.0001, 10,000,000 shares Authorized, 6,000,000 shares Issued and Outstanding at February 28, 2021 and August 31, 2020 Common Stock, par value $0.001, 290,000,000 shares Authorized, 66,205,687 and 27,082,419 shares Issued and Outstanding at February 28, 2021 and August 31, 2020, respectively Additional Paid-In Capital Shares to be issued Preferred stock to be issued Accumulated Deficit Total Stockholder's Equity (Deficit) attributable to Cannabis Global, Inc. 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Document and Entity Information - shares
6 Months Ended
Feb. 28, 2021
Apr. 19, 2021
Document And Entity Information    
Entity Registrant Name CANNABIS GLOBAL, INC.  
Entity Central Index Key 0001413488  
Document Type 10-Q  
Document Period End Date Feb. 28, 2021  
Amendment Flag false  
Current Fiscal Year End Date --08-31  
Document Fiscal Period Focus Q2  
Is Entity a Shell Company? false  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Non-accelerated Filer  
Entity File Number 000-27039  
Entity Common Stock, Shares Outstanding   72,133,317
Entity Interactive Data Current Yes  
Entity Incorporation, State or Country Code DE  
Document Fiscal Year Focus 2021  
Entity Emerging Growth Company true  
Entity Small Business true  
Entity Ex Transition Period false  
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CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
Feb. 28, 2021
Aug. 31, 2020
Current Assets:    
Cash $ 134,187 $ 2,338
Accounts Receivable 218,374 0
Notes receivable, current 121,247 0
Inventory 180,155 75,338
Total Current Assets 653,963 77,676
Machinery & Equipment- Net 1,362,177 25,406
Other Assets    
Long-Term Investments 650,000 1,714,903
Intangible Assets 500,000 500,000
Right of Use Asset 607,306 0
Notes Receivable 41,000 0
Security Deposit 7,200 7,200
Goodwill 8,098,603 0
TOTAL ASSETS 11,920,249 2,325,185
Current Liabilities:    
Accounts Payable 463,248 233,568
Accounts Payable - Related Party 1,139 1,139
Accrued Interest 139,401 33,301
Right of use liability, current 62,063 0
Notes payable, current 1,703,579 0
Convertible Notes, Net of Debt Discount of $1,032,292 and $678,246, respectively 1,948,152 1,866,872
Derivative Liability 2,054,739 1,125,803
Note Payable - Related Party 616,844 499,788
Total Current Liabilities 6,989,165 3,760,471
Right of use liability, long term 545,243 0
Notes payable 126,615 0
Total Liabilities 7,661,023 3,760,471
Stockholder's Equity (Deficit)    
Preferred Stock, par value $0.0001, 10,000,000 shares Authorized, 6,000,000 shares Issued and Outstanding at February 28, 2021 and August 31, 2020 600 600
Common Stock, par value $0.001, 290,000,000 shares Authorized, 66,205,687 and 27,082,419 shares Issued and Outstanding at February 28, 2021 and August 31, 2020, respectively 66,203 2,708
Additional Paid-In Capital 8,862,713 4,618,168
Shares to be issued 1,360 187
Preferred stock to be issued 0 0
Accumulated Deficit (8,520,943) (6,056,949)
Total Stockholder's Equity (Deficit) attributable to Cannabis Global, Inc. 409,933 (1,435,286)
Noncontrolling Interest 3,849,293 0
Total Stockholders' Equity (Deficit) 4,259,226 (1,435,286)
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) $ 11,920,249 $ 2,325,185
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CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)
Feb. 28, 2021
Aug. 31, 2020
Statement of Financial Position [Abstract]    
Convertible Notes, Debt Discount Current $ 1,032,292 $ 678,246
Preferred stock, par or stated value per share (in dollars per share) $ 0.0001 $ 0.0001
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 6,000,000 6,000,000
Preferred stock, shares outstanding 6,000,000 6,000,000
Common stock, par or stated value per share (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized 290,000,000 290,000,000
Common stock, shares issued 66,205,687 27,082,419
Common stock, shares outstanding 66,205,687 27,082,419
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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Feb. 28, 2021
Feb. 29, 2020
Feb. 28, 2021
Feb. 29, 2020
Revenues:        
Total Revenue $ 25,816 $ 0 $ 30,226 $ 10,003
Cost of Goods Sold 6,653 0 7,953 2,900
Gross Profit 19,163 0 22,273 7,103
Operating Expenses:        
Advertising fees (498) 14,262 50,524 15,694
Consulting services 20,750 67,662 252,051 103,545
Professional fees 129,263 133,159 179,895 282,114
General and administrative expense 282,056 195,832 396,492 383,355
Total Operating Expenses 431,571 410,915 878,962 784,708
Operating Loss (412,408) (410,915) (856,689) (777,605)
Other Income (Expense)        
Interest expense (1,933,728) (522,203) (2,706,483) (553,453)
Changes in FV of Derivative Liabilities 593,235 170,922 1,308,912 183,425
Other Income 1,522 0 1,642 0
Equity method loss (359,391) 0 (211,376) 0
Total Other Income (Expense) (1,698,362) (351,281) (1,607,305) (370,028)
Net Loss (2,110,770) (762,196) (2,463,994) (1,147,633)
Net loss attributable to noncontrolling interest 0 0 0 0
Net loss attributable to Cannabis Global, Inc. $ (2,110,770) $ (762,196) $ (2,463,994) $ (1,147,633)
Basic & Diluted Loss per Common Share $ (0.05) $ (0.06) $ (0.06) $ (0.09)
Weighted Average Common Shares Outstanding 43,196,439 12,321,639 39,744,494 12,752,506
Product Sales [Member]        
Revenues:        
Total Revenue $ 25,816 $ 0 $ 30,226 $ 5,003
Consulting Revenue Related Party Member        
Revenues:        
Total Revenue $ 0 $ 0 $ 0 $ 5,000
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CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (Unaudited) - USD ($)
Class A Preferred Stock
Common Stock
Common Stock to be issued
Additional Paid-In Capital
Accumulated Deficit
Stockholders' Equity Attributable to Cannabis Global Inc
Noncontrolling Interest
Total
Beginning Balance, Shares at Aug. 31, 2019 12,524,307 1,893,333          
Beginning Balance, Value at Aug. 31, 2019 $ 1,253 $ 189 $ 1,187,574 $ (1,127,601) $ 61,415 $ 61,415
Stock based compensation, Share 95,670 95,670 95,670
Proceeds from common stock subscriptions, Shares 203,333          
Proceeds from common stock subscriptions, Value $ 20 $ 74,980 $ 75,000 $ 75,000
Discount on convertible notes 20,000 20,000 20,000
Proceeds from common stock subscriptions - To be Issued, Shares 260,000          
Proceeds from common stock subscriptions - To be Issued, Value $ 26 64,974 65,000 65,000
Common stock issued for services rendered, Shares 1,893,333 (1,893,333)          
Common stock issued for services rendered, Value $ 189 $ (189)
Shares Issued for Services, Shares 23,333          
Shares Issued for Services, value $ 2 20,881 20,883 20,883
Effects of Reverse stock-split, shares 188,822          
Effects of Reverse stock-split, Value $ 19 (19)
Net Loss (385,437) (385,437) (385,437)
Ending Balance, Shares at Nov. 30, 2019 14,833,128 260,000          
Ending Balance, Value at Nov. 30, 2019 $ 1,483 $ 26 1,464,060 (1,513,038) (47,469) (47,469)
Stock based compensation, Value 94,618 94,618 94,618
Common stock issued for investment, Shares 400,000          
Common stock issued for investment, Value $ 40 112,360 112,400 112,400
Proceeds from common stock subscriptions - To be Issued, Shares 260,000 (260,000)          
Proceeds from common stock subscriptions - To be Issued, Value $ 26 $ (26)
Net Loss (762,196) (762,196) (762,196)
Ending Balance, Shares at Feb. 29, 2020 15,093,128 400,000          
Ending Balance, Value at Feb. 29, 2020 $ 1,509 $ 40 1,671,038 (2,275,234) (602,647) (602,647)
Beginning Balance, Shares at Aug. 31, 2020 6,000,000 27,082,419 1,871,858          
Beginning Balance, Value at Aug. 31, 2020 $ 600 $ 2,708 $ 187 4,618,168 (6,056,949) (1,435,286) (1,435,286)
Stock based compensation, Share 3,400,000          
Stock based compensation, Value $ 3,400   179,600 183,000 183,000
Proceeds from common stock subscriptions, Shares 510,204 89,796          
Proceeds from common stock subscriptions, Value $ 510 $ 90 (600) 0 0
Common stock issued for investment, Shares 7,222,222          
Common stock issued for investment, Value $ 7,222 642,778 650,000 650,000
Common stock issued in settlement of convertible notes payable and accrued interest, Shares 1,500,000          
Common stock issued in settlement of convertible notes payable and accrued interest, Value $ 1,500 28,500 30,000 30,000
Discount on convertible notes
Preferred stock issued, Value
Effects of Par value adjustment 24,372 1,683 (26,055)
Net Loss (353,224) (353,224) (353,224)
Ending Balance, Shares at Nov. 30, 2020 6,000,000 39,714,845 1,961,654          
Ending Balance, Value at Nov. 30, 2020 $ 600 $ 39,712 $ 1,960 5,442,391 (6,410,173) (925,510) (925,510)
Stock based compensation, Share 4,106,543 (600,000)          
Stock based compensation, Value $ 4,107 $ (600) 335,827 339,334 339,334
Proceeds from common stock subscriptions, Shares 6,516,667          
Proceeds from common stock subscriptions, Value $ 6,517 384,483 391,000 391,000
Common stock issued for investment, Shares 12,820,297          
Common stock issued for investment, Value $ 12,820 2,209,355 2,222,175 3,849,293 6,071,468
Common stock issued in settlement of convertible notes payable and accrued interest, Shares 3,047,335          
Common stock issued in settlement of convertible notes payable and accrued interest, Value $ 3,047 213,682 216,729 216,729
Derivative impact of conversions 276,975 276,975 276,975
Net Loss (2,110,770) (2,110,770) (2,110,770)
Ending Balance, Shares at Feb. 28, 2021 6,000,000 66,205,687 1,361,654          
Ending Balance, Value at Feb. 28, 2021 $ 600 $ 66,203 $ 1,360 $ 8,862,713 $ (8,520,943) $ 409,933 $ 3,849,293 $ 4,259,226
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CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($)
6 Months Ended
Feb. 28, 2021
Feb. 29, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net Loss $ (2,463,994) $ (1,147,633)
Adjustments to reconcile net loss to net cash used in operating activities:    
Non-Cash Interest Expense 2,342,280 547,671
Equity method loss from investments 211,376 0
Depreciation Expense 1,798 1,571
Stock Based Compensation 522,334 211,171
Changes in Fair Value of Derivative Liabilities (1,308,912) (183,425)
Changes In:    
Accounts Receivable (24,767) (10,003)
Inventory (104,817) (22,831)
Accounts Payable and accrued expenses (61,053) 79,168
Accounts Payable - Related Party 0 (1,139)
Accrued Interest 111,311 5,782
Net Cash Used in Operating Activities (774,444) (519,668)
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of Machinery & Equipment 0 (3,500)
Cash acquired in acquisition 2,200 0
Net Cash Provided by Investing Activities 2,200 (3,500)
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from Issuance of Common Stock 391,000 140,000
Proceeds from convertible notes payable 1,086,000 388,101
Repayment of convertible notes payable (578,000) 0
Repayment of notes payable 5,093 0
Net Cash Provided by Financing Activities 904,093 528,101
Net (Decrease) Increase in Cash 131,849 4,933
Cash at Beginning of Period 2,338 152,082
Cash at End of Period 134,187 157,015
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:    
Interest 188,292 0
Income Taxes 0 0
Shares issued and loan incurred for acquisition of intangible assets 650,000 612,400
Common stock issued for acquisition of NPE 2,222,175 0
Increase in noncontrolling interest from acquisition of NPE 3,849,293 0
Shares issued for conversion of notes payable and accrued interest $ 246,729 $ 0
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Organization and Description of Business
6 Months Ended
Feb. 28, 2021
Accounting Policies [Abstract]  
Organization and Description of Business

Note 1. Organization and Description of Business

 

Cannabis Global, Inc. is located at 520 S. Grand Avenue, Suite 320, Los Angeles, California 90071. Our telephone number is (310) 986-4929 and our website is accessible at www.cannabisglobalinc.com. Our shares of Common Stock are quoted on the OTC Markets Pink Tier, operated by OTC Markets Group, Inc., under the ticker symbol “CBGL.”

 

Historical Development

 

We incorporated in Nevada in 2005 under the name MultiChannel Technologies Corporation, a wholly owned subsidiary of Octillion Corporation, a development stage technology company focused on the identification, acquisition and development of emerging solar energy and solar related technologies. In April, 2005, we changed our name to MicroChannel Technologies, Inc., and in June, 2008, began trading on the OTC Markets under the trading symbol “MCTC.” Our business focused on research and development of a patented intellectual properties combining physical, chemical and biological cues at the “cellular” level to facilitate peripheral nerve regeneration.

 

On June 27, 2018, we changed domiciles from the State of Nevada to the State of Delaware, and thereafter reorganized under the Delaware Holding Company Statute. On or about July 12, 2018, we formed two subsidiaries for the purpose of effecting the reorganization. We incorporated MCTC Holdings, Inc. and MCTC Holdings Inc. incorporated MicroChannel Corp. We then effected a merger involving the three constituent entities, and under the terms of the merger we were merged into MicroChannel Corp., with MicroChannel Corp. surviving and our separate corporate existence ceasing. Following the merger, MCTC Holdings, Inc. became the surviving publicly traded issuer, and all of our assets and liabilities were merged into MCTC Holdings, Inc.’s wholly owned subsidiary MicroChannel Corp. Our shareholders became the shareholders of MCTC Holdings, Inc. on a one for one basis.

 

On May 25, 2019, Lauderdale Holdings, LLC, a Florida limited liability company, and beneficial owner 70.7% of our issued and outstanding common stock, sold 130,000,000 common shares, to Mr. Robert Hymers, Mr. Edward Manolos and Mr. Dan Nguyen, all of whom were previously unaffiliated parties of the Company. Each individual purchased 43,333,333 common shares for $108,333,333 or an aggregate of $325,000. These series of transactions constituted a change in control.

 

On August 9, 2019, we filed a DBA in California registering the operating name Cannabis Global. On July 1, 2019, the Company entered into a 100% business acquisition with Action Nutraceuticals, Inc., a company owned by our CEO, Arman Tabatabaei in exchange for $1,000 (see “Related Party Transactions”). 

 

Subsequent to the closing of the fiscal year ending August 31, 2019, we affected a reverse split of our common shares effective as of September 30, 2019 at the rate of 1:15.

 

On September 11, 2019, we formed a subsidiary Aidan & Co, Inc. (“Aidan”) a California corporation as a wholly owned subsidiary of the Company. Aidan will be engaged in various related business opportunities. At this time Aidan has no operations.

 

On December 4, 2019, our shareholders approved and authorized (i) re-domiciling the Company from Delaware to Nevada; (ii) changing the name of the Company from MCTC Holdings, Inc. to Cannabis Global, Inc.; and, (iii) seeking a corresponding change of name and new trading symbol for the Company with FINRA.

 

On March 30, 2020, we filed Articles of Conversion with the Delaware Secretary of State, electing to convert and re-domicile the Company from a Delaware corporation to a newly formed Nevada corporation named Cannabis Global, Inc. Concurrently, the Registrant filed Articles of Incorporation and Articles of Domestication with the Nevada Secretary of State incorporating the Registrant in Nevada under the name Cannabis Global, Inc. and accepting the re-domicile of Registrant’s Delaware corporation. There was no change to the Registrant’s fiscal year end. As a result of our FINRA corporate action, our name was changed to Cannabis Global, Inc. and our trading symbol changed to “CBGL.”

 

On April 18, 2020, we formed a subsidiary Hemp You Can Feel, Inc., a California corporation (“HYCF”), as a wholly owned subsidiary of the Company. HYCF will be engaged in various related business opportunities. At this time HYCF has no operations.

 

On May 6, 2020, we signed a joint venture agreement with RxLeaf, Inc. (“RxLeaf”) a Delaware corporation, creating a joint venture for the purpose of marketing the Company’s products to consumers. Under the terms of the agreement, the Company will produce products, which will be sold by RX Leaf via its digital marketing assets. The Company agreed to share the profits from the joint venture on a 50/50 basis.

 

On July 22, 2020, we signed a management agreement with Whisper Weed, Inc., a California corporation (“Whisper Weed”). Edward Manolos, our director, is a shareholder in Whisper Weed (see “Related Party Transactions”). Whisper Weed conducts licensed delivery of cannabis products in California. The material definitive agreement requires the parties to create a separate entity, CGI Whisper W, Inc. in California as a wholly owned subsidiary of the Company. The business of CGI Whisper W, Inc. will be to provide management services for the lawful delivery of cannabis in the State of California. The Company will manage CGI Whisper W, Inc. operations. In exchange for the Company providing management services to Whisper Weed through the auspices of CGI Whisper W, Inc., the Company will receive as consideration a quarterly fee of 51% of the net profits earned by Whisper Weed. As separate consideration for the transaction, the Company agreed to issue to Whisper Weed $150,000 in the Company’s restricted common stock, valued for purposes of issuance based on the average closing price of the Company’s common stock for the twenty days preceding the entry into the material definitive agreement. Additionally, the Company agreed to amend its articles of incorporation to designate a new class of preferred shares. The preferred class will be designated and issued to Whisper Weed in an amount equal to two times the quarterly payment made to the Company. The preferred shares will be convertible into the Company’s common stock after 6 months, and shall be senior to other debts of the Company. The conversion to common stock will be based on a value of common stock equal to at least two times the actual sales for the previous 90 day period The Company agreed to include in the designation the obligation to make a single dividend payment to Whisper Weed equal to 90% of the initial quarterly net profits payable by Whisper Weed. As of February 24, 2021, the Company has not issued the common or preferred shares, and the business is in the development stage.

 

On August 31, 2020, we entered into a stock purchase agreement with Robert L. Hymers III (“Hymers”). Pursuant to the Stock Purchase Agreement, the Company purchased from Hymers 266,667 shares of common stock of Natural Plant Extract of California Inc., a private California corporation (“NPE”), in exchange for $2,040,000. The purchased shares of common stock represents 18.8% of the outstanding capital stock of NPE on a fully diluted basis. NPE operates a licensed psychoactive cannabis manufacturing and distribution business operation in Lynwood, California. In connection with the stock purchase agreement, we became a party to a Shareholders Agreement, dated June 5, 2020, by and among Alan Tsai, Hymers, Betterworld Ventures, LLC, Marijuana Company of America, Inc. and NPE. The Shareholders Agreement contains customary rights and obligations, including restrictions on the transfer of the Shares.

 

On September 30, 2020, the Company entered into a securities exchange agreement with Marijuana Company of America, Inc., a Utah corporation (“MCOA”). By virtue of the agreement, the Company issued 7,222,222 shares of its unregistered common stock to MCOA in exchange for 650,000,000 shares of MCOA unregistered common stock. The Company and MCOA also entered into a lock up leak out agreement which prevents either party from sales of the exchanged shares for a period of 12 months. Thereafter the parties may sell not more than the quantity of shares equaling an aggregate maximum sale value of $20,000 per week, or $80,000 per month until all Shares and Exchange Shares are sold.

 

On November 16, 2020, we entered into a business acquisition agreement with Ethos Technology LLC, dba Comply Bag, a California limited liability company (“Ethos”). Ethos is a development stage business in the process of entering the market for cannabis trackable storage bags. By virtue of the agreement, Ethos sold, assigned, and transferred to the Company all of Ethos’ business, including all of its assets and associated liabilities, in exchange for the Company’s issuance of an aggregate of 6,000,000 common shares. 3,000,000 shares were due at signing, with 1,500,000 shares being issued to Edward Manolos, and 1,500,000 shares being issued to Thang Nguyen. Mr. Manolos is our director and a related party. Mr. Nguyen is the brother of Dan Van Nguyen, our director and a related party. After Ethos ships orders for Ethos products equaling $1,000,000 to unaffiliated parties, the Company will issue to Messrs. Manolos and Nguyen an additional 1,500,000 shares of common stock each. At the closing we sold an aggregate 3,000,000 shares of Company common stock, par value $0.001, equal in value to $177,000 based on the closing price on November 16, 2020. Of the total sold, 1,500,000 shares of common stock were sold to Edward Manolos and 1,500,000 shares of common stock were sold to Thang Nguyen. We issued the above shares of its common stock pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, available to the Company by Section 4(a)(2) promulgated thereunder due to the fact that it was an isolated issuance and did not involve a public offering of securities.

 

 On January 27, 2021, we closed a material definitive agreement (MDA) with Edward Manolos, our director and related party. Pursuant to the MDA, the Company purchased from Mr. Manolos 266,667 shares of common stock in Natural Plant Extract of California Inc., a California corporation (“NPE”), representing 18.8% of the outstanding capital stock of NPE on a fully diluted basis. NPE operates a licensed psychoactive cannabis manufacturing and distribution business operation in Lynwood, California. NPE is a privately held corporation. Under the terms of the MDA, we acquired all beneficial ownership over the NPE shares in exchange for a purchase price of two million forty thousand dollars ($2,040,000).. In lieu of a cash payment, we agreed to issue Mr. Manolos 11,383,929 restricted common shares, valued for purposes of the MDA at $0.1792 per share. In connection with the MDA, we became a party to a Shareholders Agreement by and among Alan Tsai, Hymers, Betterworld Ventures, LLC, Marijuana Company of America, Inc. and NPE. The Shareholders Agreement contains customary rights and obligations, including restrictions on the transfer of the Shares. Mr. Manolos is our director as well as a directly of Marijuana Company of America and is therefore a related party.

On February 16, 2021, we purchased 266,667 shares of common stock of Natural Plant Extract of California Inc., a California corporation (“NPE”), from Alan Tsai, in exchange for the issuance of 1,436,368 common shares. Other than with respect to the transaction, there was no material relationship between Mr. Tsai and the Registrant. By virtue of the transaction, the Registrant acquired 18.8% of the outstanding capital stock of NPE, bringing its total beneficial ownership in NPE to 56.5%. NPE operates a licensed psychoactive cannabis manufacturing and distribution business operation in Lynwood, California. By virtue of its 56.5% ownership over NPE, the Company will control production, manufacturing and distribution of both NPE and Company products. In connection with the MDA, the Registrant became a party to a Shareholders Agreement by and among Edward Manolos, a director of the Company, Robert L. Hymers III, Betterworld Ventures, LLC, Marijuana Company of America, Inc. and NPE. The Shareholders Agreement contains customary rights and obligations concerning operations, management, including restrictions on the transfer of the Shares.

Current Business Operations

 

Cannabis Global conducts research and development and operates multiple cannabis businesses in California and hemp-related business in the United States. We recently announced our acquisition of a 56.5%, controlling interest in Natural Plant Extract (NPE), which operates a licensed cannabis manufacturing and distribution business in Lynwood, California, holding a Type 7 California Manufacturing and a distribution license, allowing for cannabis product distribution anywhere in the state. We plan to use the Lynwood NPE operation, combined with our internally developed technologies, as a testbed to launch multi-state operations as soon as possible after the expected removal of cannabis as a Scheduled substance from the federal CSA is completed, and interstate commerce in cannabis is approved by the federal government. As of the date of this filing, cannabis remains a Schedule 1 controlled substance and so illegal under the CSA. However, As a result of the November, 2020 federal elections, and the election of Joseph R. Biden as president, it is expected that the federal government will move to amend parts of the CSA and de-schedule cannabis as a Schedule 1 drug. In late January, 2021, Senate Majority Leader Chuck Schumer said lawmakers are in the process of merging various cannabis bills, including his own legalization legislation. He is working to enact reform in this Congressional session. This would include the Marijuana Freedom and Opportunity Act, that would federally de-schedule cannabis, reinvest tax revenue into communities most affected by the drug war, and fund efforts to expunge prior cannabis records. It is likely that the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act would be incorporated. Other federal legislation under review for possible submission includes the SAFE Banking Act (or Secure and Fair Enforcement Act), a bill that would allow cannabis companies to access the federally-insured banking system and capital markets without the risk of federal enforcement action, and the Strengthening the Tenth Amendment Through Entrusting States Act (or STATES Act), a bill that seeks protections for businesses and individuals in states that have legalized and comply with state laws).

Our operations at the Natural Plant Extract facility emphasizes cannabis product manufacturing and distribution. In addition to business opportunities available from cannabis product manufacturing and distribution to all parts of the State of California, we also sees strong synergies between NPE operations and our developing technologies in the areas of secure cannabis transport, cannabis infusions, and all-natural polymeric nanoparticle technologies.

 

We also have an active research and development program primarily focused on creating and commercializing engineered technologies that deliver hemp extracts and cannabinoids to the human body. Additionally we invest, or provide managerial services, in specialized areas of the regulated hemp and cannabis industries. Thus far, the Company has filed six provisional patents, three non-provisional patents and recently announced its "Comply Bag" secure cannabis transport system with integrated track and trace capabilities via smartphones, which will be available soon.

 

Our R&D programs included the following:

  1. Development of new routes and vehicles for hemp extract and cannabinoid delivery to the human body.

 

  2. Production of unique polymeric nanoparticles and fibers for use in oral and dermal cannabinoid delivery.

 

  3. Research and commercialization of new methodologies to isolate and/or concentrate various cannabinoids and other substances that comprise industrial hemp oil and other extracts.

 

  4. Establishment of new methods to increase the bioavailability of cannabinoids to the human body utilizing nanoparticles and other proven bioenhancers, including naturally occurring and insect produced glycosides.

 

  5. Development of other novel inventions for the delivery of cannabinoids to the human body, which at this time are considered trade secrets by the Company.
XML 18 R8.htm IDEA: XBRL DOCUMENT v3.21.1
Going Concern Uncertainties
6 Months Ended
Feb. 28, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern Uncertainties

Note 2. Going Concern Uncertainties

 

During recent financial reporting periods, the Company began reporting revenue and has been active in reorganizing its business operations, these revenues being generated are nominal. The Company has an accumulated deficit of $8,520,943 as of February 28, 2021, and does not have positive cash flows from operating activities. Furthermore, as shown in the accompanying financial statements for six months ended February 28, 2021, the Company had a net loss of $2,463,994 and used cash in operations of $774,444. The Company expects to incur additional losses as it executes its business strategy in the cannabis, hemp and cannabinoid marketplaces. The Company will be subject to the risks, uncertainties, and difficulties frequently encountered by early-stage companies. The Company may not be able to successfully address any or all of these risks and uncertainties. Failure to adequately do so could cause the Company’s business, results of operations, and financial condition to suffer. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance date of these financial statements.  

The Company’s ability to continue as a going concern is an issue due to its net losses and negative cash flows from operations, and its need for additional financing to fund future operations. Management plans to obtain necessary funding from outside sources and through the sales of Company shares. There can be no assurance that such funds, if available, can be obtained on terms reasonable to the Company. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty.

Based on the Company’s current level of expenditures, management believes that cash on hand is not adequate to fund operations for the next twelve months. Management of the Company is estimating approximately $1,000,000 will be required over the next twelve months to fully execute its business strategy. These can be no assurance the Company will be able to obtain such funds.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies
6 Months Ended
Feb. 28, 2021
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

Note 3.  Summary of Significant Accounting Policies

 

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the amounts reported in those statements. We have made our best estimates of certain amounts contained in our consolidated financial statements. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. However, application of our accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties, and, as a result, actual results could differ materially from these estimates. Management believes that the estimates, assumptions, and judgments involved in the accounting policies described below have the most significant impact on our consolidated financial statements.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

 

Derivative Instruments

 

The fair value of derivative instruments is recorded and shown separately under current liabilities. Changes in the fair value of derivatives liability are recorded in the consolidated statement of operations under non-operating income (expense).

We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, we use a weighted average Binomial option-pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Action Nutraceuticals, Inc. and Aidan & Co, Inc. All intercompany balances and transactions have been eliminated in consolidation.

 

Cash and Cash Equivalents

 

We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are held in operating accounts at a major financial institution.

 

Inventory

 

Inventory is primarily comprised of work in progress. Inventory is valued at cost, based on the specific identification method, unless and until the market value for the inventory is lower than cost, in which case an allowance is established to reduce the valuation to market value. As of February 28, 2021, and August 31, 2020, market values of all of our inventory were at cost, and accordingly, no such valuation allowance was recognized.

 

Deposits

 

Deposits is comprised of advance payments made to third parties, primarily for inventory for which we have not yet taken title. When we take title to inventory for which deposits are made, the related amount is classified as inventory, then recognized as a cost of revenues upon sale (see “Costs of Revenues” below). There were no deposits as of February 28, 2021.

 

Prepaid Expenses and Other Current Assets

 

Prepaid expenses and other current assets is primarily comprised of advance payments made to third parties for independent contractors’ services or other general expenses. Prepaid services and general expenses are amortized over the applicable periods which approximate the life of the contract or service period.

 

Accounts Receivable

 

Accounts receivable are recorded at the net value of face amount less any allowance for doubtful accounts. On a periodic basis, we evaluate our accounts receivable and, based on a method of specific identification of any accounts receivable for which we deem the net realizable value to be less than the gross amount of accounts receivable recorded, we establish an allowance for doubtful accounts for those balances. In determining our need for an allowance for doubtful accounts, we consider historical experience, analysis of past due amounts, client creditworthiness and any other relevant available information. However, our actual experience may vary from our estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay our fees, we may need to record additional allowances or write-offs in future periods. This risk is mitigated to the extent that we collect retainers from our clients prior to performing significant services.

 

The allowance for doubtful accounts, if any, is recorded as a reduction in revenue to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. To the extent the provision relates to a client's inability to make required payments on accounts receivables, the provision is recorded in operating expenses. As of February 28, 2021, and February 29, 2020, we had $0 and $0 allowance for doubtful accounts, respectively.

 

Property and Equipment, net

 

Property and Equipment is stated at net book value, cost less depreciation. Maintenance and repairs are expensed as incurred. Depreciation of owned equipment is provided using the straight-line method over the estimated useful lives of the assets, ranging from two to seven years. Depreciation of capitalized construction in progress costs, a component of property and equipment, net, begins once the underlying asset is placed into service and is recognized over the estimated useful life. Property and equipment are reviewed for impairment as discussed below under “Accounting for the Impairment of Long-Lived Assets.”

 

Accounting for the Impairment of Long-Lived Assets

 

We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the assets.

 

Beneficial Conversion Feature

 

market value at issuance, this feature is characterized as a beneficial conversion feature (“BCF”). We record a BCF as a debt discount pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ACF”) Topic 470-20 Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and we amortize the discount to interest expense over the life of the debt using the effective interest method.

 

Revenue Recognition

 

For annual reporting periods after December 15, 2017, the Financial Accounting Standards Board (“FASB”) made effective ASU 2014-09 “Revenue from Contracts with Customers” to supersede previous revenue recognition guidance under current U.S. GAAP. Revenue is now recognized in accordance with FASB ASC Topic 606, Revenue Recognition. The guidance presents a single five-step model for comprehensive revenue recognition that requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Two options are available for implementation of the standard which is either the retrospective approach or cumulative effect adjustment approach. The guidance becomes effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. We determined to implement the cumulative effect adjustment approach to our implementation of FASB ASC Topic 606, with no restatement of the comparative periods presented. We intend to apply this method to any incomplete contracts we determine are subject to FASB ASC Topic 606 prospectively. As is more fully discussed below, we are of the opinion that none of our contracts for services or products contain significant financing components that require revenue adjustment under FASB ASC Topic 606.

 

In accordance with FASB ASC Topic 606, Revenue Recognition, we will recognize revenue when persuasive evidence of a significant financing component exists in our consulting and product sales contracts. We examine and evaluate when our customers become liable to pay for goods and services; how much consideration is paid as compared to the cash selling price of the goods or services; and, the length of time between our performance and the receipt of payment.

 

Product Sales

 

Revenue from product sales, including delivery fees, is recognized when an order has been obtained from the customer, the price is fixed and determinable when the order is placed, the product is shipped, and collectability is reasonably assured. For any shipments with destination terms, the Company defers revenue until delivery to the customer. Given the facts that (1) our customers exercise discretion in determining the timing of when they place their product order; and, (2) the price negotiated in our product sales is fixed and determinable at the time the customer places the order, we are not of the opinion that our product sales indicate or involve any significant customer financing that would materially change the amount of revenue recognized under the sales transaction, or would otherwise contain a significant financing component for us or the customer under FASB ASC Topic 606.

 

Costs of Revenues

 

Our policy is to recognize the costs of revenue in the same manner in conjunction with revenue recognition. Costs of revenues include the costs directly attributable to revenue recognition and include compensation and fees for services, travel and other expenses for services and costs of products and equipment. Selling, general and administrative expenses are charged to expense as incurred.

Stock-Based Compensation

Restricted shares are awarded to employees and entitle the grantee to receive shares of restricted common stock at the end of the established vesting period. The fair value of the grant is based on the stock price on the date of grant. We recognize related compensation costs on a straight-line basis over the requisite vesting period of the award, which to date has been one year from the grant date. Stock-based compensation during the quarterly reporting period ended February 28, 2021 was $0.

 

Income Taxes

 

We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns in accordance with applicable accounting guidance for accounting for income taxes, using currently enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. For the quarterly reporting periods ending February 28, 2021 and February 29, 2020, we incurred no income taxes and had no liabilities related to federal or state income taxes.

 

Loss Contingencies

 

From time to time the Company is subject to various legal proceedings and claims that arise in the ordinary course of business. On at least a quarterly basis, consistent with ASC 450-20-50-1C, if the Company determines that there is a reasonable possibility that a material loss may have been incurred, or is reasonably estimable, regardless of whether the Company accrued for such a loss (or any portion of that loss), the Company will confer with its legal counsel, consistent with ASC 450. If the material loss is determinable or reasonably estimable, the Company will record it in its accounts and as a liability on the balance sheet. If the Company determines that such an estimate cannot be made, the Company's policy is to disclose a demonstration of its attempt to estimate the loss or range of losses before concluding that an estimate cannot be made, and to disclose it in the notes to the financial statements under Contingent Liabilities.

 

Net Income (Loss) Per Common Share

 

We report net income (loss) per common share in accordance with FASB ASC 260, “Earnings per Share”. This statement requires dual presentation of basic and diluted earnings with a reconciliation of the numerator and denominator of the earnings per share computations. Basic net income (loss) per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period and excludes the effects of any potentially dilutive securities. Diluted net income (loss) per share gives effect to any dilutive potential common stock outstanding during the period. The computation does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.21.1
Net Loss Per Share
6 Months Ended
Feb. 28, 2021
Earnings Per Share [Abstract]  
Net Loss Per Share

Note 4. Net Loss Per Share

 

During three and six months ending February 28, 2021 and February 28, the Company recorded a net loss. Basic and diluted net loss per share are the same for those periods. The dilutive weighted average shares for each period reported excludes the effect of shares issuable upon conversion of debt, as the effect would have been anti-dilutive. As of February 28, 2021, the Company’s convertible debt was convertible into 13,385,151 shares of common stock.

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.21.1
Notes Receivable – Related Party
6 Months Ended
Feb. 28, 2021
Notes to Financial Statements  
Notes Receivable – Related Party

Note 5. – Notes Receivable – Related Party

 

On May 25, 2019, the Company issued two notes payable to Company directors Edward Manolos and Dan Nguyen, each in the amount of $16,666,67. The notes, which do not have a defined due date, outline a 5% per annum interest rate. These notes are additionally described herein in Footnote 5- Notes Receivable, Related Party and in the footnote outlining Related Party Transactions. These notes are additionally described herein in Footnote 6- Notes to Shareholders, Related Party and in the footnote outlining Related Party Transactions. Because of Mr. Manolos’ and Mr. Nguyen’s associations as directors, the Company believes these transactions are defined by 17 CFR § 229.404 - (Item 404) Transactions with related persons, promoters and certain control persons, which would require specific disclosures under the section cited.

 

On July 9, 2019, the Company, through its Action Nutraceuticals subsidiary, loaned, Split Tee, LLC (“Split Tee”), a venture associated with Director Edward Manolos, $20,000 to engage in an exploratory research project. An additional $20,000 was supplied to Split Tee on August 23, 2019. The loans carry interest at the rate of 10% per annum and are due in one year for issuance. In addition, The Company, via Action Nutraceuticals subsidiary, invoiced Split Tee $5,000 as a consulting fee. Because of Mr. Manolos’ association as a director, the Company believes these transactions are defined by 17 CFR § 229.404 - (Item 404) Transactions with related persons, promoters and certain control persons, which would require specific disclosures under the section cited.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.21.1
Intangible Assets
6 Months Ended
Feb. 28, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets

Note 6. Intangible Assets

 

On February 20, 2020, the Company entered into a material definitive agreement with Lelantos Biotech, Inc., a Wyoming corporation (“Lelantos”), and its owners. On June 15, 2020, the Company and Lelantos entered into a modification agreement cancelling the Company's obligation to issue 400,000 shares of common stock and the convertible promissory notes. The Company and Lelantos agreed to a purchase price of five hundred thousand dollars ($500,000), payable by the issuance of a promissory note. The aggregate unpaid principal amount of the note is paid in monthly payments of seven thousand, five hundred dollars ($7,500) beginning on September 1, 2020, terminating on February 1, 2025. There is no interest on the note or on the unpaid balance.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.21.1
Acquisition of Natural Plant Extract of California, Inc.
6 Months Ended
Feb. 28, 2021
Notes to Financial Statements  
Acquisition of Natural Plant Extract of California, Inc.

Note 7. Acquisition of Natural Plant Extract of California, Inc.

 

NPE Acquisition

 

On August 21, 2020 the Company, issued a convertible note pursuant to a Stock Purchase Agreement (the “SPA) to acquire 266,667 shares of common stock of Natural Plant Extract of California Inc., a California corporation (“NPE”), representing 18.8% of the outstanding capital stock of NPE on a fully diluted basis. With the exception of the entry into the subject material definitive agreements, no material relationship exists between the Registrant, or any of the Registrant’s affiliates or control persons and Hymers. Under the terms of the SPA, the Registrant acquired all rights and responsibilities of the equity stake for a purchase price of Two Million Forty Thousand United States Dollars ($2,040,000) (the “Purchase Price”). Relative to the payment of the Purchase Price, the registrant agreed to: 1) pay Hymers Twenty Thousand United States Dollars ($20,000) each month for a period of twenty-seven (27) months, with the first payment commencing September 1, 2020 and the remaining payments due and payable on the first day of each subsequent month until Hymers has received Five Hundred Forty Thousand United Stated Dollars ($540,000), and 2) issue Hymers a convertible promissory note in the amount of One Million Five Hundred Thousand United States Dollars ($1,500,000) (the “Note”). The Note bears interest at ten percent (10%) per annum. The Holder shall have the right at any time six (6) months after the Issuance Date to convert all or any part of the outstanding and unpaid principal, interest, fees, or any other obligation owed pursuant to the note. Conversion Price shall be calculated as follows: 60% of the lowest Trading Price of the common shares during the ten (10) days preceding the date the Company receive a notice of conversion. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Registrant issue upon conversion of or otherwise pursuant to the note and the other notes issued more than the maximum number of shares of Common Stock that the Company can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded, which shall be 4.99% of the total shares outstanding at any time. A debt discount of $54,212 on the note payable at issuance was calculated based on the present value of the note using an implied interest rate of 10%. A debt discount of $270,886 was recognized. Accordingly, the Company recorded an initial value of its investment in NPE of $1,714,903.

 

On January 27, 20201, the Company acquired an additional 18.8% interest in NPE from Edward Manolos, a Director of the Company and a related party. The Company issued 11,383,929 shares of common stock, which had a fair value of $1,821,429.

 

On February 16, 2021, the Company purchased 266,667 shares of common stock of NPE from Alan Tsai, in exchange for the issuance of 1,436,368 common shares of the Company, with a fair value of $400,747. Other than with respect to the transaction, there was no material relationship between Mr. Tsai and the Company. By virtue of the transaction, the Company acquired 18.8% of the outstanding capital stock of NPE, bringing its total beneficial ownership in NPE to 56.5%. The transfer of control constituted an acquisition of NPE by the Company (the “NPE Acquisition”). For the three month period following the one year anniversary of the closing date, Mr. Tsai has the sole and irrevocable option to require the Company to repurchase the common shares issued to Mr. Tsai. If the value of the shares at the time notice is given is less than $150,000, Mr. Tsai will receive $150,000. If the value of the shares at the time notices is given is greater than $150,000, then Mr. Tsai will receive the market value of the shares.

 

As a result of the transaction, the Company also became party to a Shareholder Agreement with respect to its ownership over the NPE Shares, dated June 5, 2020, by and among Alan Tsai, Robert Hymers III, Betterworld Ventures, LLC (“BWV”), Marijuana Company of America, Inc. and NPE. The Joinder Agreement contains terms and conditions including, but not limited to: the ownership and management of NPE, rights of shareholders concerning the transfer of shares in NPE, pre-emptive rights, drag-along rights, confidentiality, and term and termination. 

 

The NPE acquisition is being accounted for as a business combination under ASC 805 as a result of the transfer of control. Immediately prior to obtaining control, the total investment of the Company in NPE was adjusted to fair value of $3,684,347, resulting in a loss on investment of $359,391.

 

The following information summarizes the provisional purchase consideration and preliminary allocation of the fair values assigned to the assets at the purchase date:

 

Preliminary Purchase Price Allocation:    
Cash     2,200  
Accounts receivable     193,607  
Notes receivable     162,247  
Property and equipment     1,338,569  
Right of use asset – operating lease     607,306  
Goodwill     8,098,603  
Total assets acquired   $ 10,402,532  
         
Accounts payable and accrued expenses     289,591  
Right of use liability – operating lease     607,306  
Notes payable     1,825,101  
Notes payable – related party     105,539  
Total Liabilities Assumed   $ 2,827,537  

  

As a result of the NPE acquisition, the Company recognized a non-controlling interest as of the date of the acquisition of $3,849,293. The Company’s consolidated revenues and net loss for the three and six months ended February 28, 2021 included the results of operations since the acquisition date of NPE of $18,864 and net loss of $17,797, respectively.

 

Unaudited Pro Forma Financial Information

 

The following table sets forth the pro-forma consolidated results of operations for the three and six months ended February 28, 2021 and February 29, 2020 as if the NPE acquisition occurred on September 1, 2019. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisitions had taken place on the dates noted above, or of results that may occur in the future.

 

    For the three months ended   For the six months ended
    February 28, 2021   February 29, 2020   February 28, 2021   February 29, 2020
    Pro Forma   Pro Forma   Pro Forma   Pro Forma
Revenue   $ 126,820     $ 229,597     $ 979,866     $ 334,144  
Operating loss     (1,693,708 )     (557,425 )     (1,626,929 )     (973,276 )
Net loss attributable to common shareholders     (3,392,070 )     (1,019,316 )     (4,065,390 )     1,521,976  
Net loss per common share   $ (0.06 )   $ (0.04 )   $ (0.08 )   $ (0.06 )
XML 24 R14.htm IDEA: XBRL DOCUMENT v3.21.1
Note Payable to Shareholders
6 Months Ended
Feb. 28, 2021
Notes to Financial Statements  
Note Payable to Shareholders

Note 8. Note Payable to Shareholders

 

On May 25, 2019, the Company issued two notes payable to Company directors Edward Manolos and Dan Nguyen, each in the amount of $16,666,67. The notes, which do not have a defined due date, outline a 5% per annum interest rate. These notes are additionally described herein in Footnote 5- Notes Payable, Related Party and in the footnote outlining Related Party Transactions. Because of Mr. Manolos’ and Mr. Nguyen’s associations as directors, the Company believes these transactions are defined by 17 CFR § 229.404 - (Item 404) Transactions with related persons, promoters and certain control persons, which would require specific disclosures under the section cited.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.21.1
Related Party
6 Months Ended
Feb. 28, 2021
Related Party  
Related Party

Note 9. Related Party

 

In October 2017 – August 31, 2018, the Company incurred a related party debt in the amount of $10,000 to an entity related to the legal custodian of the Company for professional fees. As of August 31, 2018, this balance was forgiven and was included as part of the $168,048 Cancellation of Debt Income on the Statement of Operations.

 

In November 30, 2017 – August 31, 2018, the Company issued a $35,554 in multiple notes payable to an entity related to the legal custodian of the Company. The notes payable bear interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. On May 8, 2018, $13,000 of the principal balance on notes payable were converted to common stock. The remaining principal balance was forgiven and included as Cancellation of Debt Income on the Income Statement for the year ended August 31, 2019.

 

In March 2018 and May 2018, a legal custodian of the Company funded the Company $600 in advances. On August 31, 2018, this amount was reclassified as a note payable, that bears interest at an annual rate of 10% and is payable upon demand.

 

In connection with the above notes, the Company recognized a beneficial conversion feature of $27,954, representing the intrinsic value of the conversion features at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended August 31, 2018.

 

On May 25, 2019, the Company issued two notes payable to Company directors Edward Manolos and Dan Nguyen for loans made to the Company, each in the amount of $16,666,67 for a total balance of $33,334. The notes bear interest at 5% per annum and do not have a fixed payment schedule or maturity date. These notes are additionally described herein in Footnote 6 - Notes Payable.

 

On July 9, 2019, the Company, through its Action Nutraceuticals subsidiary, loaned, Split Tee, LLC (“Split Tee”), a venture associated with Director Edward Manolos, $20,000 to engage in an exploratory research project. An additional $20,000 was supplied to Split Tee on August 23, 2019. The loans carry interest at the rate of 10% per annum and are due in one year for issuance. In addition, The Company, via Action Nutraceuticals subsidiary, invoiced Split Tee $5,000 as a consulting fee. Because of Mr. Manolos’ association as a director, the Company believes these transactions are defined by 17 CFR § 229.404 - (Item 404) Transactions with related persons, promoters and certain control persons, which would require specific disclosures under the section cited.

 

During the three months ended February 29, 2020, the Company issued two convertible promissory notes having an aggregate principal amount of $133,101 in exchange for accrued expenses owed to related parties, of which $79,333 is payable to the Company’s Chief Executive Officer and $53,768 is payable to the Company’s previous Chief Financial Officer, Robert L. Hymers III. The notes mature two years from the respective issuance date and bear interest at the rate of 10% per annum, payable at maturity. The noteholders shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a variable conversion price of 50% of the average of the previous twenty (20) trading day closing prices of the Company’s common stock, subject to adjustment. As a result of the variable conversion prices, upon issuance, the Company recognized total debt discount of $133,101, which is being amortized to interest expense over the term of the notes. On May 22, 2020, Mr. Tabatabaei converted the principal amount of $79,333 and interest of $2,608, for a total amount of $81,941.55 into 694,902 common shares. As of August 31, 2020, the carrying value of the remaining note with the former chief financial officer was $15,884, net of debt discount of $37,884 and accrued interest was $3,138.

On April 30, 2020, the Company entered into a settlement agreement with Robert L. Hymers III, its Chief Financial Officer (the “CFO”), whereby the CFO resigned and the Company issued a promissory note for $30,000, which represented the remaining amount owed to the CFO for services rendered. The note matures December 31, 2020 and bears interest at the rate of 10% per annum, payable at maturity. The noteholder has the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a fixed conversion price of $0.02 per share, subject to adjustment. As a result of the beneficial conversion price, upon issuance, the Company recognized debt discount of $30,000, which is being amortized to interest expense over the term of the note. As of August 31, 2020, the carrying value of the note was $15,061, net of debt discount of $14,939 and accrued interest was $1,011.

On August 31, 2020, the Company issued a convertible note payable and a note payable to Robert L. Hymers III in connection with the acquisition of an 18.8% equity interest in NPE.

On November 16, 2020, the Company entered into a business acquisition agreement with Ethos Technology LLC, dba Comply Bag, a California limited liability company (“Ethos”). Ethos is a development stage business in the process of entering the market for cannabis trackable storage bags. By virtue of the agreement, Ethos sold, assigned, and transferred to the Company all of Ethos’ business, including all of its assets and associated liabilities, in exchange for the Company’s issuance of an aggregate of 6,000,000 common shares. 3,000,000 shares were due at signing, with 1,500,000 shares being issued to Edward Manolos, and 1,500,000 shares being issued to Thang Nguyen. Mr. Manolos is a director of the Company and a related party. Mr. Nguyen is the brother of Dan Van Nguyen, a director of the Company and a related party. After Ethos ships orders for Ethos products equaling $1,000,000 to unaffiliated parties, the Company will issue to Messrs. Manolos and Nguyen an additional 1,500,000 shares of common stock each. 

On November 16, 2020, the Company sold an aggregate 3,000,000 shares of Company common stock, par value $0.001, equal in value to $177,000 based on the closing price on November 16, 2020. Of the total sold, 1,500,000 shares of common stock were sold to Edward Manolos and 1,500,000 shares of common stock were sold to Thang Nguyen. The sales were made in regards to the Company’s acquisition of Ethos, and its disclosures under Item 1.01 are incorporated herein by reference. The Company issued the above shares of its common stock pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, available to the Company by Section 4(a)(2) promulgated thereunder due to the fact that it was an isolated issuance and did not involve a public offering of securities. Messrs. Manolos and Nguyen were “accredited investors” and/or “sophisticated investors” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning their qualifications as “sophisticated investors” and/or “accredited investors.” The Company provided and made available to Messrs. Manolos and Nguyen full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Messrs. Manolos and Nguyen acquired the restricted common stock for their own accounts, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless subject to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.

 

On January 27, 2021 Cannabis Global, Inc. (the “Registrant”) closed a material definitive agreement (MDA) with Edward Manolos, a director and related party. Pursuant to the MDA, the Registrant purchased from Mr. Manolos 266,667 shares of common stock in Natural Plant Extract of California Inc., a California corporation (“NPE”), representing 18.8% of the outstanding capital stock of NPE on a fully diluted basis. NPE operates a licensed psychoactive cannabis manufacturing and distribution business operation in Lynwood, California. NPE is a privately held corporation. Under the terms of the MDA, the Registrant acquired all beneficial ownership over the NPE shares in exchange for a purchase price of two million forty thousand dollars ($2,040,000). In lieu of a cash payment, the Registrant agreed to issue Mr. Manolos 11,383,929 restricted common shares, valued for purposes of the MDA at $0.1792 per share. In connection with the MDA, the Registrant became a party to a Shareholders Agreement by and among Alan Tsai, Hymers, Betterworld Ventures, LLC, Marijuana Company of America, Inc. and NPE. The Shareholders Agreement contains customary rights and obligations, including restrictions on the transfer of the Shares. Additionally, the Registrant intends, upon completion of the terms and conditions of the Material Definitive Agreement, to control the production, manufacturing and distribution of both NPE and the Registrant’s products

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.21.1
Note Payable
6 Months Ended
Feb. 28, 2021
Note Payable  
Note Payable

Note 10. - Notes Payable

 

On May 25, 2019, the Company issued two notes payable to Company directors Edward Manolos and Dan Nguyen, each in the amount of $16,666,67. The notes, which do not have a defined due date, outline a 5% per annum interest rate. These notes are additionally described herein in Footnote 7- Notes Payable, Related Party and in Footnote 11 – Related Party Transactions.

 

On July 9, 2019, the Company, through its Action Nutraceuticals subsidiary, loaned, Split Tee, LLC (“Split Tee”), a venture associated with Director Edward Manolos, $20,000 to engage in an exploratory research project (see “Related Party Transactions”). An additional $20,000 was supplied to Split Tee on August 23, 2019. The loans carry interest at the rate of 10% per annum and are due in one year for issuance. In addition, The Company, via Action Nutraceuticals subsidiary, invoiced Split Tee $5,000 as a consulting fee.

 

On February 12, 2020, the Company issued three Sellers Acquisition promissory notes having an aggregate principal amount of $500,000 pursuant to an Acquisition Agreement to acquire Lelantos Biotech. The notes mature May 31, 2020; $450,000 (two tranches of $225,000) and $50,000 of the notes bear interest at the rate of 8% and 5% per annum, respectively. In the event, the notes are not paid within the Cash Repayment Period (prior to the Maturity Date), the notes specify the holder shall have two options for repayment including: [a] an Alternative Payment Stake Option equal to a 6.75%, 6.75% and 1.5% (or a pro-rated amount if the debt has been partially paid) fully diluted ownership position in the Company after August 4, 2020, August 12, 2020 and August 30, 2020, respectively; or [b] a Buy Out Option, anytime after the note has been outstanding for at least one year, equal to the total outstanding shares of the Company on the day of election, times 6.75%, 6.75% and 1.5%, respectively, times the average closing price of the Company’s common stock over the preceding 30 trading days, times 40% (due and payable within 90 days). Anti-dilution rights are provided for five years on the Sellers Acquisition notes and for 182 days after conversion to an Alternative Payment Stake. The notes include a Leak Out provision, should the Alternative Payment Stake option be elected, whereby no more than 30% of the holdings may be sold during the first 30 days after clearance for trading and no more than 25% of the remaining shares sold during any subsequent 30-day period. The notes are secured by a Security Agreement, require common shares to be reserved, are transferrable and are Senior to other debt of the Company. At maturity, on May 31, 2020, (i) the Company received forbearance agreements for the two tranches of $225,000 each whereby the maturity date was extended to July 15, 2020 and the interest rate was increased to 9%; and (ii) the $50,000 note and all accrued interest thereon, in the amount of $747, was forgiven. Accordingly, the Company recognized a gain for debt forgiveness of $50,747. On June 15, 2020, the Company entered into a modification agreement relative to the February 12, 2020 issued notes. Pursuant to the modification agreement, the Company issued a promissory note to Lantos in the amount of five hundred thousand dollars ($500,000). The Company may prepay the note in whole or in part at any time or from time to time without penalty or premium by paying the principal amount to be prepaid. The aggregate unpaid principal amount of the note is paid in monthly payments of seven thousand, five hundred dollars ($7,500) beginning on September 1, 2020, terminating on February 1, 2025. There is no interest on the note or on the unpaid balance. As of February 28, 2021, the carrying value of the notes was $450,000 and accrued interest payable was $37,676. As of August 31, 2020, the carrying value of the notes was $450,000 and accrued interest payable was $19,824.

  

On February 12, 2020, the Company entered into an Independent Consulting Agreement with a consultant to provide services from February 12, 2020 through December 14, 2020 (the “Consulting Agreement”). Pursuant to the Consulting Agreement, the Company issued to the consultant a Compensation promissory note having a principal amount of $100,000 for the Deferred Compensation portion of the Consulting Agreement. The note matures August 4, 2020 and bears interest at the rate of 8% per annum. In the event, the note is not paid within the Cash Repayment Period (prior to the Maturity Date), the note specifies the holder shall have two options for repayment including: [a] an Alternative Payment Stake Option equal to a 8.5% (or a pro-rated amount if the debt has been partially paid) fully diluted ownership position in the Company after August 4, 2020; or [b] a Buy Out Option, any time after the note has been outstanding for at least one year, equal to the total outstanding shares of the Company on the day of election, times 8.5% times the average closing price of the Company’s common stock over the preceding 30 trading days, times 40% (due and payable within 90 days). Anti-dilution rights are provided for five years on the Compensation note and for 182 days after conversion to an Alternative Payment Stake. The note includes a Leak Out provision, should the Alternative Payment Stake option be elected, whereby no more than 30% of the holdings may be sold during the first 30 days after clearance for trading and no more than 25% of the remaining shares sold during any subsequent 30-day period. The note is secured by a Security Agreement, requires common shares to be reserved, is transferrable and is Senior to other debt of the Company. As of February 28, 2021, the carrying value of the note was $100,000 and accrued interest payable was $8,372. As of August 31, 2020, the carrying value of the note was $100,000 and accrued interest payable was $4,405.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.21.1
Convertible Note Payable
6 Months Ended
Feb. 28, 2021
Notes to Financial Statements  
Convertible Note Payable

Note 11. Convertible Notes Payable

 

On March 19, 2020, the Company issued a convertible promissory note, payable in tranches, having an aggregate principal amount of $150,000, aggregate original issue discount (OID) of $15,000, and an aggregate of 468,750 three-year warrants exercisable at $0.48/share, which contain certain exercise price reset provisions in the event of dilutive issuances. The notes mature one year from the respective issuance date of each tranche and bear interest at the rate of 10% per annum, payable at maturity. Commencing immediately following the issuances, the noteholder shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a variable conversion price equal to the lower of 60% of the lowest closing trade price of the Company’s common stock, subject to adjustment, during the 25 trading days prior to: (i) the issuance date; or (ii) the conversion date. On March 19, 2020, the first tranche of $50,000, less OID of $5,000, was received, resulting in net proceeds to the Company of $45,000, and the Company issued 156,250 three-year warrants exercisable at $0.48 per share. On May 4, 2020, the second tranche of $25,000, less OID of $2,500, was received, resulting in net proceeds to the Company of $22,500, and the Company issued 78,125 three-year warrants exercisable at $0.48 per share. On July 10, 2020, the third tranche of $25,000, less OID of $2,500 was received, resulting in net proceeds to the Company of $22,500, and the Company issued 78,125 three year warrants exercisable at an initial price of $0.48 per share. As a result of the OID and the variable conversion price, upon issuance, the Company recognized total debt discount of $75,000, which is being amortized to interest expense over the respective term of the tranches. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. During the six months ended February 28, 2021, the Company repaid all principal and accrued interest in full.

On July 21, 2020, the Company issued a convertible promissory note with a principal amount of $78,750, with the Company receiving proceeds of $71,250 after original issue discount of $3,750 and deferred finance costs of $3,750. The note matures on July 21, 2021 and bears interest at 6% per annum. Commencing immediately following the issuances, the noteholder shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a variable conversion price equal to the 60% of the lowest closing trade price of the Company’s common stock, subject to adjustment, during the 30 trading days prior to: the conversion date. As a result of the OID and the variable conversion price, upon issuance, the Company recognized total debt discount of $78,750, which is being amortized to interest expense through the maturity date. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. During the six months ended February 28, 2021, the note and accrued interest were repaid in full.

In August 2020, the Company issued two convertible promissory notes with an aggregate principal amount of $129,250, with the Company receiving proceeds of $117,500 after original issue discount of $11,750. The notes mature in May 2021 and bear interest at 10% per annum. Commencing immediately following the issuances, the noteholder shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a fixed price of $0.1005 per share of common stock. The conversion price may reset to a lower price if the Company issues common stock to any suppliers or vendors. As a result of the OID and the potential result for dilutive issuances, upon issuance, the Company recognized total debt discount of $129,250, which is being amortized to interest expense through the maturity date. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. During the six months ended February 28, 2021, the two notes and accrued interest were repaid in full.

The Company also entered into common stock subscription agreements with this lender, totaling share issuances of 3,409,221 (of which 510,204 are to be issued as of August 31, 2020), for cash proceeds of $329,613. In connection with these subscriptions, the Company issued a convertible promissory note of $50,000 for no consideration. The note matures on August 7, 2021 and bears interest at 10$% and is convertible at a fixed price of $0.1631 per share, subject to potential rest in the event the Company issues shares to vendors or suppliers. The Company recognized total debt discount of $50,000, which is being amortized to interest expense over the respective term of the tranches. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. During the six months ended February 28, 2021, the note and accrued interest was repaid in full.

During the six months ended February 28, 2021, the Company issued four convertible promissory notes to a lender with an aggregate principal amount of $279,500, with the Company receiving proceeds of $267,000 after deferred finance costs of $12,500. The notes matures in August, September, October and December 2021 and bear interest at 8% per annum. Commencing one hundred eighty (180) days following the issuance date of the note, the noteholder shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at variable conversion prices of 63% of the two lowest trading prices during previous fifteen (15) trading day of the Company’s common stock, subject to adjustment. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. As a result of the variable exercise price and deferred finance costs, the Company recognized total debt discount of $279,500, which is being amortized to interest expense through the maturity date. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. One note with principal of $113,000 and accrued interest of $4,557 was repaid during the period. As of February 28 2021, the carrying value of these notes was $60,379, net of debt discount of $106,121 and accrued interest was $4,830.

 

On September 2, 2020, the Company issued a convertible promissory note with an aggregate principal amount of $107,000, with the Company receiving proceeds of $100,000 after original issue discount of $5,000 and deferred finance costs of $2,000. The notes mature in September 2021 and bear interest at 12% per annum. Commencing one hundred eighty (180) days following the issuance date of the notes, the noteholders shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at variable conversion price of 60% of the lowest previous twenty (20) trading day closing trade prices of the Company’s common stock, subject to adjustment. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. As a result of the variable exercise price and deferred finance costs, upon issuance, the Company recognized total debt discount of $107,000, which is being amortized to interest expense through the maturity date. This note was repaid in full during the six months ended February 28, 2021, together with accrued interest of $5,101.

 

On January 5, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of a 10% convertible note with the principal amount of $110,000, with an accredited investor. The note is convertible at a fixed conversion price of $0.005. In the event of default by the Company, or after the public announcement of a change of control transaction as defined in the agreement, the conversion price is $0.001. The Company received net proceeds of $97,500. As a result of the variable exercise price of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $110,000, which is being amortized to interest expense through the maturity date.

 

On January 12, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of a 10% convertible note with the principal amount of $115,500, with an accredited investor. The note is convertible beginning 61 days from issuance at a fixed conversion price of $0.10 per share or 60% or the lowest trading price for ten days prior to conversion in the event that the Company’s stock trades at less than $0.10 per share. The Company received net proceeds of $100,000. As a result of the variable exercise price of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $115,500, which is being amortized to interest expense through the maturity date. During the three months ended February 28, 2021, the lender converted principal and accrued interest of $57,750 and $585 into 583,354 shares of common stock. As of February 28, 2021, the carrying value of the note was $14,873, net of discount of $42,877, and accrued interest was $902.

 

On January 26, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of a 10% convertible note with the principal amount of $243,875, with an accredited investor. The note is convertible at 70% of the average of the three lowest trading prices for 20 days prior to conversion. The Company received net proceeds of $215,500. As a result of the variable exercise price of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $243,875, which is being amortized to interest expense through the maturity date. As of February 28, 2021, the carrying value of the note was $22,049, net of discount of $221,826, and accrued interest was $2,205.

 

On January 26, 2021, the Company entered into a second Securities Purchase Agreement in connection with the issuance of a 10% convertible note with the principal amount of $243,875, with an accredited investor. The note is convertible at 70% of the average of the three lowest trading prices for 20 days prior to conversion. The Company received net proceeds of $215,500. As a result of the variable exercise price of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $243,875, which is being amortized to interest expense through the maturity date. As of February 28, 2021, the carrying value of the note was $22,049, net of discount of $221,826, and accrued interest was $2,205.

 

Related Parties

During the three months ended February 29, 2020, the Company issued two convertible promissory notes having an aggregate principal amount of $133,101 in exchange for accrued expenses owed to related parties, of which $79,333 is payable to the Company’s Chief Executive Officer and $53,768 is payable to the Robert L. Hymers III. The notes mature two years from the respective issuance date and bear interest at the rate of 10% per annum, payable at maturity. The noteholders shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a variable conversion price of 50% of the average of the previous twenty (20) trading day closing prices of the Company’s common stock, subject to adjustment. As a result of the variable conversion prices, upon issuance, the Company recognized total debt discount of $133,101, which is being amortized to interest expense over the term of the notes. On May 22, 2020, the Chief Executive Officer converted $79,333 in principal and $2,608 of accrued interest into 694,902 shares of common stock to be issued having a fair value of $232,792. The conversion resulted in the elimination of $70,313 of remaining debt discount, the elimination of $231,632 of derivative liabilities, and a $10,468 gain on conversion that resulted from a related party and was therefore included in Additional paid-in capital. On December 9, 2020, Mr. Hymers converted all principal of $53,768 and all accrued interest of $4,626 into 878,190 shares of common stock.

On April 30, 2020, the Company entered into a settlement agreement with its former Chief Financial Officer (Robert L. Hymers III, hereinafter referred to as the “CFO”) whereby the CFO resigned and the Company issued a promissory note for $30,000, which represented the remaining amount owed to the CFO for services rendered. The note matures December 31, 2020 and bears interest at the rate of 10% per annum, payable at maturity. The noteholder has the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a fixed conversion price of $0.02 per share, subject to adjustment. As a result of the beneficial conversion price, upon issuance, the Company recognized debt discount of $30,000, which is being amortized to interest expense over the term of the note. On October 9, 2020, Mr. Hymers converted the note payable into 1,500,000 shares of common stock.

On August 21, 2020 the Company, issued a convertible note pursuant to a Stock Purchase Agreement (the “SPA) to acquire 266,667 shares of common stock of Natural Plant Extract of California Inc., a California corporation (“NPE”), representing 18.8% of the outstanding capital stock of NPE on a fully diluted basis. With the exception of the entry into the subject material definitive agreements, no material relationship exists between the Registrant, or any of the Registrant’s affiliates or control persons and Hymers. Under the terms of the SPA, the Registrant acquired all rights and responsibilities of the equity stake for a purchase price of Two Million Forty Thousand United States Dollars ($2,040,000) (the “Purchase Price”). Relative to the payment of the Purchase Price, the registrant agreed to: 1) pay Hymers Twenty Thousand United States Dollars ($20,000) each month for a period of twenty-seven (27) months, with the first payment commencing September 1, 2020 and the remaining payments due and payable on the first day of each subsequent month until Hymers has received Five Hundred Forty Thousand United Stated Dollars ($540,000), and 2) issue Hymers a convertible promissory note in the amount of One Million Five Hundred Thousand United States Dollars ($1,500,000) (the “Note”). The Note bears interest at ten percent (10%) per annum. The Holder shall have the right at any time six (6) months after the Issuance Date to convert all or any part of the outstanding and unpaid principal, interest, fees, or any other obligation owed pursuant to the note. Conversion Price shall be calculated as follows: 60% of the lowest Trading Price of the common shares during the ten (10) days preceding the date the Company receive a notice of conversion. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Registrant issue upon conversion of or otherwise pursuant to the note and the other notes issued more than the maximum number of shares of Common Stock that the Company can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded, which shall be 4.99% of the total shares outstanding at any time. A debt discount of $54,212 on the note payable at issuance was calculated based on the present value of the note using an implied interest rate of 10%. A debt discount of $270,886 was recognized. Accordingly, the Company recorded an initial value of its investment in NPE of $1,714,903. At the time the note becomes convertible, the Company will recognize a derivative liability at fair value related to the embedded conversion option at that time. Prior to these transactions, Robert Hymers III and Alan Tsai each sold equity interest representing a total of 18.8% of the outstanding equity interest of NPE to Edward Manolos, a Director and preferred stockholder of the Company in a private transaction. As a result of these transactions, the Company beneficially controls approximately 56.5% of the equity of NPE. After this transaction, a Better World Ventures LLC controls 40% of the equity interests in NPE and one other entity controls 3.5%.

The Company is in default of the $540,000 note payable to Robert Hymers. On January 3, 2021, the Company entered into a settlement agreement with Robert Hymers concerning five delinquent payments totaling $100,000, whereby 1,585,791 shares of common stock were issued in settlement of those payments. As of February 28, 2021, the Company missed two additionally $20,000 payments, i.e., January and February 2021 payments, and remains in default of this agreement.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.21.1
Derivative Liability and Fair Value Measurements
6 Months Ended
Feb. 28, 2021
Notes to Financial Statements  
Derivative Liability and Fair Value Measurements

Note 12. Derivative Liability and Far Value Measurement

Upon the issuance of the convertible promissory notes with variable conversion prices and fixed conversion prices with reset provisions, the Company determined that the features associated with the embedded conversion option embedded in the debentures should be accounted for at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares would be available to settle all potential future conversion transactions.

At the issuance date of the convertible notes payable during the six months ended February 28, 2021, the Company estimated the fair value of all embedded derivatives of $2,154,823 using the Black-Scholes Pricing Model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 332% to 378%, (3) risk-free interest rate of 0.09% to 0.13%, and (4) expected life of one year.

On February 28, 2021, the Company estimated the fair value of the embedded derivatives of $2,054,739 using the Black-Scholes Pricing Model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 328%, (3) risk-free interest rate of 0.05% to 0.08%, and (4) expected life of 0.5 to 1 year. 

The Company adopted the provisions of ASC 825-10, Financial Instruments (“ASC 825-10”). ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value. 

  Level 1 — Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;

 

  Level 2 — Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and

 

  Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities.

All items required to be recorded or measured on a recurring basis are based upon Level 3 inputs.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

The Company recognizes its derivative liabilities as Level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed are that of volatility and market price of the underlying common stock of the Company.

As of February 28, 2021, the Company did not have any derivative instruments that were designated as hedges.

Items recorded or measured at fair value on a recurring basis in the accompanying financial statements consisted of the following items as of February 28, 2021 and August 31, 2020:

    February 28,
2021
  Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
Derivative liability   $ 2,054,739     $ —       $ —       $ 2,054,739  
                                 

 

    August 31,
2020
  Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
Derivative liability   $ 1,125,803     $ —       $ —       $ 1,125,803  
                                 

 The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the six months ended February 28, 2021:

Balance, August 31, 2020   $ 1,125,803  
Transfers in due to issuance of convertible promissory notes     2,514,823  
Transfers out due to repayments of convertible promissory notes     (1,255,220 )
Transfers out due to conversions of convertible promissory notes     (276,975 )
Change in derivative liability for the six months ended February 28, 2021     (53,692 )
Balance, February 28, 2021   $ 2,054,739  

 

Fluctuations in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period. As the stock price increases for each of the related derivative instruments, the value to the holder of the instrument generally increases, therefore increasing the liability on the Company’s balance sheet. Additionally, stock price volatility is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s derivative instruments. The simulated fair value of these liabilities is sensitive to changes in the Company’s expected volatility. Increases in expected volatility would generally result in higher fair value measurement. A 10% change in pricing inputs and changes in volatilities and correlation factors would not result in a material change in our Level 3 fair value.

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.21.1
Commitments and Contingencies
6 Months Ended
Feb. 28, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 13. Commitments, Contingencies and Leases

 

The Company has entered into a lease for a production and warehouse facility located in Los Angeles, California to produce such products. The term of the lease is 12 months at a base price of $3,600 per month, beginning August 2019. At this time the lease agreement has ended and the Company rents to same facility on a month-to-month basis.

 

Our headquarters are located at 520 S. Grand Avenue, Suite 320, Los Angeles, California 90071 where we leased office space under a contract effective August 15, 2019, expiring on August 14, 2020. We now rent the premises on a month-to-month basis and paying $800 per month.

 

By way of the recent acquisition of a controlling interesting Natural Plant Extract of California, the Company is a party to a lease on a building and property in Lynwood, California. The lease term ends on May 2028. The total base rent is $11,000 a month, but the Company’s portion on the lease is $8,750 as another tenant pays the balance.

XML 30 R20.htm IDEA: XBRL DOCUMENT v3.21.1
Common Stock
6 Months Ended
Feb. 28, 2021
Equity [Abstract]  
Common Stock

Note 14. Common Stock

 

Subsequent to the closing of the fiscal year ending August 31, 2019, the Company affected a reverse split as of September 30, 2019, which had the effect of reducing the number of outstanding shares from 187,864,600 to 12,524,307. All share and per share amounts in this filing have been retrospectively adjusted to reflect the impact of the reverse stock split.

 

As of February 28, 2021, there were 66,205,687 shares of Common Stock issued and outstanding. As of the date of this filing, April 19, 2021, there were 72,133,317 shares of Common Stock issued and outstanding.

XML 31 R21.htm IDEA: XBRL DOCUMENT v3.21.1
Preferred Stock
6 Months Ended
Feb. 28, 2021
Equity [Abstract]  
Preferred Stock

Note 15. Preferred Stock

 

There are 10,000,000 shares of preferred stock, par value $0.0001 per share, of the Company Preferred Stock in one or more series, and expressly authorized the Board of Directors of the Company. On December 16, 2019, the Board of Directors authorized the issuance of 8,000,000 preferred shares as “Series A Preferred Stock.” The Series A Preferred Stock is not convertible into any other form of Securities, including common shares, of the Company. Holders of Series A Preferred Stock shall be entitled to 50 votes for every Share of Series A Preferred Stock beneficially owned as of the record date for any shareholder vote or written consent. On May 28, 2020, Mr. Robert L. Hymers III, a former director and former chief financial officer, returned 2,000,000 Series A Preferred shares to the corporate treasury. As of February 28, 2021, there were 6,000,000 Series A Preferred shares issued and outstanding. 

 

On February 28, 2021, the Company designated 1,000,000 shares of Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock”). The Series B Convertible Preferred Stock earns dividends at 8% per year, and is convertible into shares of common stock at a rate of 63% of the market price, based on the average of the two lowest trading prices during the previous 15 days. Additionally, the Series B Convertible Preferred Stock is mandatorily redeemable 16 months from the issuance date in cash. The Company entered into an agreement with an investor for 153,500 shares of Series B Convertible Preferred Stock on February 28, 2021 for a total purchase amount of $153,500, and an agreement with the same investor for 78,500 shares of Series B Convertible Preferred Stock for a purchase amount of $78,500. In March 2021, the Company received proceeds of $225,000.

XML 32 R22.htm IDEA: XBRL DOCUMENT v3.21.1
Subsequent Events
6 Months Ended
Feb. 28, 2021
Subsequent Events [Abstract]  
Subsequent Events

Note 16. Subsequent Events

 

                On March 8, 2021, the Company sold a convertible note with a face value of $215,000. The note carries interest at 10% annually.

 

                On March 16, 2021, the Company sold a convertible note with a face value of $215,000. The note carries interest at 10% annually.

 

                In March 2021, the Company received $232,000 of gross proceeds for 232,000 of its Series B Convertible Preferred Stock.

 

                On March 25, 2021, the Company sold 1,314,188 registered common shares at a price of $0.06 for a total purchase price of $78,851.28.

XML 33 R23.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Feb. 28, 2021
Accounting Policies [Abstract]  
Derivative Instruments

Derivative Instruments

 

The fair value of derivative instruments is recorded and shown separately under current liabilities. Changes in the fair value of derivatives liability are recorded in the consolidated statement of operations under non-operating income (expense).

We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, we use a weighted average Binomial option-pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Consolidation

Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Action Nutraceuticals, Inc. and Aidan & Co, Inc. All intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are held in operating accounts at a major financial institution.

Inventory

Inventory

 

Inventory is primarily comprised of work in progress. Inventory is valued at cost, based on the specific identification method, unless and until the market value for the inventory is lower than cost, in which case an allowance is established to reduce the valuation to market value. As of February 28, 2021, and August 31, 2020, market values of all of our inventory were at cost, and accordingly, no such valuation allowance was recognized.

Deposits

Deposits

 

Deposits is comprised of advance payments made to third parties, primarily for inventory for which we have not yet taken title. When we take title to inventory for which deposits are made, the related amount is classified as inventory, then recognized as a cost of revenues upon sale (see “Costs of Revenues” below). There were no deposits as of February 28, 2021.

Prepaid Expenses and Other Current Assets

Prepaid Expenses and Other Current Assets

 

Prepaid expenses and other current assets is primarily comprised of advance payments made to third parties for independent contractors’ services or other general expenses. Prepaid services and general expenses are amortized over the applicable periods which approximate the life of the contract or service period.

Accounts Receivable

Accounts Receivable

 

Accounts receivable are recorded at the net value of face amount less any allowance for doubtful accounts. On a periodic basis, we evaluate our accounts receivable and, based on a method of specific identification of any accounts receivable for which we deem the net realizable value to be less than the gross amount of accounts receivable recorded, we establish an allowance for doubtful accounts for those balances. In determining our need for an allowance for doubtful accounts, we consider historical experience, analysis of past due amounts, client creditworthiness and any other relevant available information. However, our actual experience may vary from our estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay our fees, we may need to record additional allowances or write-offs in future periods. This risk is mitigated to the extent that we collect retainers from our clients prior to performing significant services.

 

The allowance for doubtful accounts, if any, is recorded as a reduction in revenue to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. To the extent the provision relates to a client's inability to make required payments on accounts receivables, the provision is recorded in operating expenses. As of February 28, 2021, and February 29, 2020, we had $0 and $0 allowance for doubtful accounts, respectively.

Property and Equipment, net

Property and Equipment, net

 

Property and Equipment is stated at net book value, cost less depreciation. Maintenance and repairs are expensed as incurred. Depreciation of owned equipment is provided using the straight-line method over the estimated useful lives of the assets, ranging from two to seven years. Depreciation of capitalized construction in progress costs, a component of property and equipment, net, begins once the underlying asset is placed into service and is recognized over the estimated useful life. Property and equipment are reviewed for impairment as discussed below under “Accounting for the Impairment of Long-Lived Assets.”

Accounting for the Impairment of Long-Lived Assets

Accounting for the Impairment of Long-Lived Assets

 

We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the assets.

Beneficial Conversion Feature

Beneficial Conversion Feature

 

market value at issuance, this feature is characterized as a beneficial conversion feature (“BCF”). We record a BCF as a debt discount pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ACF”) Topic 470-20 Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and we amortize the discount to interest expense over the life of the debt using the effective interest method.

Revenue Recognition

Revenue Recognition

 

For annual reporting periods after December 15, 2017, the Financial Accounting Standards Board (“FASB”) made effective ASU 2014-09 “Revenue from Contracts with Customers” to supersede previous revenue recognition guidance under current U.S. GAAP. Revenue is now recognized in accordance with FASB ASC Topic 606, Revenue Recognition. The guidance presents a single five-step model for comprehensive revenue recognition that requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Two options are available for implementation of the standard which is either the retrospective approach or cumulative effect adjustment approach. The guidance becomes effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. We determined to implement the cumulative effect adjustment approach to our implementation of FASB ASC Topic 606, with no restatement of the comparative periods presented. We intend to apply this method to any incomplete contracts we determine are subject to FASB ASC Topic 606 prospectively. As is more fully discussed below, we are of the opinion that none of our contracts for services or products contain significant financing components that require revenue adjustment under FASB ASC Topic 606.

 

In accordance with FASB ASC Topic 606, Revenue Recognition, we will recognize revenue when persuasive evidence of a significant financing component exists in our consulting and product sales contracts. We examine and evaluate when our customers become liable to pay for goods and services; how much consideration is paid as compared to the cash selling price of the goods or services; and, the length of time between our performance and the receipt of payment.

Product Sales

Product Sales

 

Revenue from product sales, including delivery fees, is recognized when an order has been obtained from the customer, the price is fixed and determinable when the order is placed, the product is shipped, and collectability is reasonably assured. For any shipments with destination terms, the Company defers revenue until delivery to the customer. Given the facts that (1) our customers exercise discretion in determining the timing of when they place their product order; and, (2) the price negotiated in our product sales is fixed and determinable at the time the customer places the order, we are not of the opinion that our product sales indicate or involve any significant customer financing that would materially change the amount of revenue recognized under the sales transaction, or would otherwise contain a significant financing component for us or the customer under FASB ASC Topic 606.

Costs of Revenues

Costs of Revenues

 

Our policy is to recognize the costs of revenue in the same manner in conjunction with revenue recognition. Costs of revenues include the costs directly attributable to revenue recognition and include compensation and fees for services, travel and other expenses for services and costs of products and equipment. Selling, general and administrative expenses are charged to expense as incurred.

Stock-Based Compensation

Stock-Based Compensation

Restricted shares are awarded to employees and entitle the grantee to receive shares of restricted common stock at the end of the established vesting period. The fair value of the grant is based on the stock price on the date of grant. We recognize related compensation costs on a straight-line basis over the requisite vesting period of the award, which to date has been one year from the grant date. Stock-based compensation during the quarterly reporting period ended February 28, 2021 was $0.

Income Taxes

Income Taxes

 

We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns in accordance with applicable accounting guidance for accounting for income taxes, using currently enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. For the quarterly reporting periods ending February 28, 2021 and February 29, 2020, we incurred no income taxes and had no liabilities related to federal or state income taxes.

Loss Contingencies

Loss Contingencies

 

From time to time the Company is subject to various legal proceedings and claims that arise in the ordinary course of business. On at least a quarterly basis, consistent with ASC 450-20-50-1C, if the Company determines that there is a reasonable possibility that a material loss may have been incurred, or is reasonably estimable, regardless of whether the Company accrued for such a loss (or any portion of that loss), the Company will confer with its legal counsel, consistent with ASC 450. If the material loss is determinable or reasonably estimable, the Company will record it in its accounts and as a liability on the balance sheet. If the Company determines that such an estimate cannot be made, the Company's policy is to disclose a demonstration of its attempt to estimate the loss or range of losses before concluding that an estimate cannot be made, and to disclose it in the notes to the financial statements under Contingent Liabilities.

Net Income (Loss) Per Common Share

Net Income (Loss) Per Common Share

 

We report net income (loss) per common share in accordance with FASB ASC 260, “Earnings per Share”. This statement requires dual presentation of basic and diluted earnings with a reconciliation of the numerator and denominator of the earnings per share computations. Basic net income (loss) per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period and excludes the effects of any potentially dilutive securities. Diluted net income (loss) per share gives effect to any dilutive potential common stock outstanding during the period. The computation does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings.

XML 34 R24.htm IDEA: XBRL DOCUMENT v3.21.1
Acquisition of Natural Plant Extract of California, Inc. (Tables)
6 Months Ended
Feb. 28, 2021
Notes to Financial Statements  
Schedule of Preliminary Purchase Price Allocation

The following information summarizes the provisional purchase consideration and preliminary allocation of the fair values assigned to the assets at the purchase date:

 

Preliminary Purchase Price Allocation:    
Cash     2,200  
Accounts receivable     193,607  
Notes receivable     162,247  
Property and equipment     1,338,569  
Right of use asset – operating lease     607,306  
Goodwill     8,098,603  
Total assets acquired   $ 10,402,532  
         
Accounts payable and accrued expenses     289,591  
Right of use liability – operating lease     607,306  
Notes payable     1,825,101  
Notes payable – related party     105,539  
Total Liabilities Assumed   $ 2,827,537  
Schedule of Unaudited Pro Forma Financial Information
    For the three months ended   For the six months ended
    February 28, 2021   February 29, 2020   February 28, 2021   February 29, 2020
    Pro Forma   Pro Forma   Pro Forma   Pro Forma
Revenue   $ 126,820     $ 229,597     $ 979,866     $ 334,144  
Operating loss     (1,693,708 )     (557,425 )     (1,626,929 )     (973,276 )
Net loss attributable to common shareholders     (3,392,070 )     (1,019,316 )     (4,065,390 )     1,521,976  
Net loss per common share   $ (0.06 )   $ (0.04 )   $ (0.08 )   $ (0.06 )
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.21.1
Derivative Liability and Fair Value Measurements (Tables)
6 Months Ended
Feb. 28, 2021
Notes to Financial Statements  
Fair Value, Assets Measured on Recurring Basis

Items recorded or measured at fair value on a recurring basis in the accompanying financial statements consisted of the following items as of February 28, 2021 and August 31, 2020:

    February 28,
2021
  Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
Derivative liability   $ 2,054,739     $ —       $ —       $ 2,054,739  
                                 

 

    August 31,
2020
  Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
Derivative liability   $ 1,125,803     $ —       $ —       $ 1,125,803  
Summary of changes in fair value of Level 3 financial liabilities

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the six months ended February 28, 2021:

Balance, August 31, 2020   $ 1,125,803  
Transfers in due to issuance of convertible promissory notes     2,514,823  
Transfers out due to repayments of convertible promissory notes     (1,255,220 )
Transfers out due to conversions of convertible promissory notes     (276,975 )
Change in derivative liability for the six months ended February 28, 2021     (53,692 )
Balance, February 28, 2021   $ 2,054,739  
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.21.1
Organization and Description of Business (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended
Jan. 03, 2021
Jan. 27, 2021
Nov. 16, 2020
Sep. 30, 2020
Aug. 31, 2020
Aug. 21, 2020
Jul. 22, 2020
May 25, 2019
Feb. 16, 2021
Jan. 02, 2020
Jul. 01, 2019
Common stock, shares sold     3,000,000                
Proceeds from sale of common stock     $ 177,000                
Ethos Technology LLC [Member]                      
Shares issued for business acquisition     6,000,000                
Stock Purchase Agreement                      
Common stock, shares issued         266,667       266,667    
Shares issued for business acquisition           266,667          
Chief Executive Officer [Member]                      
Accounts Payable                     $ 1,000
Whisper [member]                      
Restricted common stock             $ 150,000        
Shareholder | Stock Purchase Agreement                      
Common stock purchase price         $ 2,040,000       $ 1,436,368    
Debt default                   $ 100,000  
Hymers [Member] | Settlement Agreement [Member]                      
Stock issued under agreement 1,585,791                    
Edward Manolos [Member]                      
Common stock, shares sold     1,500,000                
Edward Manolos [Member] | Ethos Technology LLC [Member]                      
Shares issued for business acquisition     1,500,000                
Additional shares issued to related parties     1,500,000                
Thang Nguyen [Member]                      
Common stock, shares sold     1,500,000                
Thang Nguyen [Member] | Ethos Technology LLC [Member]                      
Shares issued for business acquisition     1,500,000                
Additional shares issued to related parties     1,500,000                
Mr. Manolos                      
Shares issued for business acquisition   266,667                  
Additional shares issued to related parties   11,383,929                  
Lauderdale Holdings, LLC [Member]                      
Common stock, shares outstanding, percentage               70.70%      
Lauderdale Holdings, LLC [Member] | Mr. Robert Hymers [Member]                      
Common stock, shares sold               43,333,333      
Proceeds from sale of common stock               $ 108,333      
Lauderdale Holdings, LLC [Member] | Edward Manolos [Member]                      
Common stock, shares sold               43,333,333      
Proceeds from sale of common stock               $ 108,333      
Lauderdale Holdings, LLC [Member] | Dan Nguyen [Member]                      
Common stock, shares sold               43,333,333      
Proceeds from sale of common stock               $ 108,333      
Lauderdale Holdings, LLC [Member] | Unaffiliated Parties [Member]                      
Common stock, shares sold               130,000,000      
Proceeds from sale of common stock               $ 325,000      
Marijuana Company of America, Inc [Member]                      
Shares issued for exchange of shares       7,222,222              
Number of common stock exchanged       650,000,000              
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.21.1
Going Concern Uncertainties (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Feb. 28, 2021
Feb. 29, 2020
Feb. 28, 2021
Feb. 29, 2020
Aug. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]          
Accumulated Deficit $ (8,520,943)   $ (8,520,943)   $ (6,056,949)
Net loss $ (2,110,770) $ (762,196) (2,463,994) $ (1,147,633)  
Cash used in operating activities     $ (774,444) $ (519,668)  
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Feb. 28, 2021
Feb. 28, 2021
Feb. 29, 2020
Aug. 31, 2020
Accounting Policies [Abstract]        
Valuation allowance $ 0 $ 0   $ 0
Deposits 0 0    
Allowance for doubtful accounts 0 0   $ 0
Income taxes   $ 0 $ 0  
Stock-based compensation $ 0      
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.21.1
Net Loss Per Share (Details Narrative)
6 Months Ended
Feb. 28, 2021
shares
Earnings Per Share [Abstract]  
Conversion of Stock, Shares Converted 13,385,151
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.21.1
Notes Receivable-Related Party (Details Narrative) - USD ($)
Jul. 09, 2019
Feb. 28, 2021
Aug. 31, 2020
Aug. 23, 2019
May 25, 2019
Note Payable   $ 1,703,579 $ 0    
Dan Nguyen          
Note Payable         $ 1,666,667
Interest Rate         5.00%
Edward Manolos          
Note Payable         $ 1,666,667
Interest Rate         5.00%
Split Tee          
Notes Receivable $ 20,000 $ 0   $ 20,000  
Interest rate 10.00%        
Consulting fee $ 5,000        
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.21.1
Intangible Assets (Details Narrative)
1 Months Ended
Jun. 15, 2020
shares
Modification agreement | Lelantos  
Common stock obligations 400,000
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.21.1
Acquisition of Natural Plant Extract of California, Inc. (Details) - USD ($)
Feb. 28, 2021
Feb. 16, 2021
Aug. 31, 2020
Goodwill $ 8,098,603   $ 0
NPE      
Cash   $ 2,200  
Accounts receivable   193,607  
Notes receivable   162,247  
Property and equipment   1,338,569  
Right of use asset - operating lease   607,306  
Goodwill   8,098,603  
Total assets acquired   10,402,532  
Accounts payable and accrued expenses   289,591  
Right of use liability - operating lease   607,306  
Notes payable   1,825,101  
Notes payable - related party   105,539  
Total Liabilities Assumed   $ 2,827,537  
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.21.1
Acquisition of Natural Plant Extract of California, Inc. (Details 1) - Pro Forma [Member] - USD ($)
3 Months Ended 6 Months Ended
Feb. 28, 2021
Feb. 29, 2020
Feb. 28, 2021
Feb. 29, 2020
Revenue $ 126,820 $ 229,597 $ 979,866 $ 334,144
Operating loss (1,693,708) (557,425) (1,626,929) (973,276)
Net loss attributable to common shareholders $ (3,392,070) $ (1,019,316) $ (4,065,390) $ 1,521,976
Net loss per common share $ (0.06) $ (0.04) $ (0.08) $ (0.06)
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.21.1
Acquisition of Natural Plant Extract of California, Inc. (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended
Feb. 16, 2021
Jan. 27, 2021
Aug. 21, 2020
Feb. 28, 2021
Feb. 29, 2020
Feb. 28, 2021
Feb. 29, 2020
Revenue       $ 25,816 $ 0 $ 30,226 $ 10,003
Net loss       (2,110,770) $ (762,196) (2,463,994) $ (1,147,633)
Mr. Manolos              
Shares issued for business acquisition   266,667          
Additional shares issued to related parties   11,383,929          
Additional fair value   $ 1,821,429          
NPE              
Ownership percentage 56.50%            
Fair value adjustment $ 3,684,347            
Gain loss on investment 359,391            
Non-controlling interest $ 3,849,293            
Revenue       18,864   18,864  
Net loss       $ 17,797   $ 17,797  
Stock Purchase Agreement              
Shares issued for business acquisition     266,667        
Stock Purchase Agreement | NPE              
Shares issued for business acquisition 266,667            
Debt discount     $ 270,886        
Initial investment     $ 1,714,903        
Additional shares issued to related parties 1,436,368            
Additional fair value $ 400,747            
Ownership percentage     4.99%        
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.21.1
Note Payable to Shareholders (Details Narrative) - USD ($)
Feb. 28, 2021
Aug. 31, 2020
May 25, 2019
Note Payable $ 1,703,579 $ 0  
Edward Manolos      
Note Payable     $ 1,666,667
Interest Rate     5.00%
Dan Nguyen [Member]      
Note Payable     $ 1,666,667
Interest Rate     5.00%
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.21.1
Related Party (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended 11 Months Ended 12 Months Ended
Jul. 09, 2019
May 08, 2018
Jan. 27, 2021
Nov. 16, 2020
May 22, 2020
Apr. 30, 2020
Aug. 31, 2018
Feb. 28, 2021
Aug. 31, 2018
Aug. 31, 2018
Aug. 31, 2020
Feb. 29, 2020
Aug. 23, 2019
May 25, 2019
Common stock, shares sold       3,000,000                    
Proceeds from sale of common stock       $ 177,000                    
Sale of stock price per share       $ 0.001                    
Notes Payable, Related Party               $ 616,844     $ 499,788      
Conversion of Stock, Shares Converted               13,385,151            
Beneficial conversion feature                   $ 27,954        
Note Payable               $ 1,703,579     0      
Accrued interest payable               139,401     33,301      
Two Convertible Promissory Notes                            
Interest Rate                       10.00%    
Principal amount                       $ 133,101    
Split Tee                            
Consulting fee $ 5,000                          
Notes Receivable $ 20,000             $ 0         $ 20,000  
Ethos Technology LLC [Member]                            
Shares issued for business acquisition       6,000,000                    
Mr. Manolos                            
Shares issued for business acquisition     266,667                      
Additional shares issued to related parties     11,383,929                      
Shares price     $ 0.1792                      
Edward Manolos [Member]                            
Common stock, shares sold       1,500,000                    
Note Payable                           $ 1,666,667
Interest Rate                           5.00%
Edward Manolos [Member] | Ethos Technology LLC [Member]                            
Shares issued for business acquisition       1,500,000                    
Additional shares issued to related parties       1,500,000                    
Thang Nguyen [Member]                            
Common stock, shares sold       1,500,000                    
Thang Nguyen [Member] | Ethos Technology LLC [Member]                            
Shares issued for business acquisition       1,500,000                    
Additional shares issued to related parties       1,500,000                    
Legal custodian                            
Gain on Debt Cancellation                 $ 168,048          
Notes Payable, Related Party             $ 10,000   10,000 10,000        
Legal custodian 1                            
Notes Payable, Related Party             $ 35,554   $ 35,554 $ 35,554        
Conversion Price             $ 0.0001   $ 0.0001 $ 0.0001        
Conversion of Stock, Amount Converted   $ 13,000                        
Legal custodian 2                            
Advances             $ 600              
Interest rate             10.00%              
Dan Nguyen                            
Note Payable                           $ 1,666,667
Interest Rate                           5.00%
Tabatabaei | Two Convertible Promissory Notes                            
Conversion of Stock, Amount Converted         $ 81,942                  
Conversion of Stock, Shares Converted         694,902                  
Tabatabaei | Two Convertible Promissory Notes | Principal                            
Conversion of Stock, Amount Converted         $ 79,333                  
Chief Financial Officer [Member]                            
Conversion Price           $ 0.02                
Interest rate           10.00%                
Beneficial conversion feature           $ 30,000                
Carrying value                     15,884      
Debt discount                     37,884      
Accrued interest payable                     3,138      
Notes Receivable           $ 30,000                
Former Chief Financial Officer [Member]                            
Carrying value                     15,061      
Debt discount                     14,939      
Accrued interest payable                     $ 1,011      
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.21.1
Note Payable (Details Narrative) - USD ($)
1 Months Ended
Feb. 12, 2020
Jul. 09, 2019
Feb. 20, 2020
May 25, 2019
Feb. 28, 2021
Aug. 31, 2020
Aug. 23, 2019
Accrued interest payable         $ 139,401 $ 33,301  
Split Tee              
Note payable   $ 20,000         $ 20,000
Interest rate   10.00%          
Consulting fee   $ 5,000          
Lelantos              
Business acquisition, shares issued     400,000        
Issuance promissory note     $ 500,000        
Edward Manolos              
Note payable       $ 1,666,667      
Interest rate       5.00%      
Compensation Promissory Note | Consulting Agreement | Consultant              
Interest rate 8.00%            
Principal amount $ 100,000            
Maturity date Aug. 04, 2020            
Carrying value         100,000 100,000  
Accrued interest payable         8,372 4,405  
Three Sellers Acquisition Promissory Notes              
Interest rate 8.00%            
Principal amount $ 500,000            
Maturity date May 31, 2020            
Carrying value         450,000 450,000  
Gain for debt forgiveness $ 50,747            
Accrued interest payable         $ 37,676 $ 19,824  
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.21.1
Convertible Note Payable (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Mar. 08, 2021
Jan. 12, 2021
Jan. 05, 2021
Dec. 09, 2020
Oct. 09, 2020
Sep. 02, 2020
Mar. 16, 2021
Jan. 26, 2021
Aug. 31, 2020
Aug. 21, 2020
Jul. 21, 2020
May 22, 2020
Apr. 30, 2020
Mar. 19, 2020
Feb. 29, 2020
Feb. 28, 2021
Feb. 29, 2020
Aug. 31, 2018
Feb. 16, 2021
Proceeds from Convertible debt                               $ 1,086,000 $ 388,101    
Accrued interest payable                 $ 33,301             $ 139,401      
Conversion of Stock, Shares Converted                               13,385,151      
Beneficial Conversion Feature                                   $ 27,954  
Repayment of convertible debt                               $ 578,000 0    
Subsequent Event [Member]                                      
Principal amount $ 215,000           $ 215,000                        
Interest rate 10.00%           10.00%                        
NPE                                      
Beneficial ownership percentage                                     56.50%
Chief Executive Officer [Member]                                      
Principal amount                             $ 79,333   79,333    
Robert L. Hymers III [Member]                                      
Principal amount                             53,768   53,768    
Former Chief Financial Officer [Member]                                      
Conversion price                         $ 0.02            
Chief Financial Officer [Member]                                      
Interest rate                         10.00%            
Interest expense                         $ 30,000            
Maturity date                         Dec. 31, 2020            
Beneficial Conversion Feature                         $ 30,000            
Principal | Chief Financial Officer [Member]                                      
Conversion of Stock, Shares Converted         1,500,000                            
Robert L. Hymers III [Member]                                      
Conversion of Stock, Shares Converted       878,190                              
Robert L. Hymers III [Member] | Principal                                      
Conversion of Stock, Amount Converted       $ 53,768                              
Robert L. Hymers III [Member] | Interest                                      
Conversion of Stock, Amount Converted       $ 4,626                              
Common stock subscription agreements | Lender                                      
Proceeds from Convertible debt                 $ 329,613                    
Interest rate                 10.00%                    
Interest expense                 $ 50,000                    
Convertible debt                               $ 50,000      
Beneficial ownership percentage                               4.99%      
Conversion of Stock, Shares Converted                 3,409,221                    
Maturity date                 Aug. 07, 2021                    
Securities Purchase Agreement [Member] | Accredited Investor                                      
Principal amount     $ 110,000                                
Proceeds from Convertible debt     $ 97,500                                
Interest rate     10.00%                                
Interest expense     $ 110,000                                
Conversion price     $ 0.05                                
Securities Purchase Agreement [Member] | Accredited Investor 1                                      
Principal amount   $ 115,500                                  
Proceeds from Convertible debt   $ 100,000                                  
Interest rate   10.00%                                  
Interest expense   $ 115,500                                  
Carrying value                               $ 14,873      
Debt discount                               42,877      
Accrued interest payable                               $ 902      
Conversion of Stock, Shares Converted                               583,354      
Conversion price   $ 0.10                                  
Securities Purchase Agreement [Member] | Accredited Investor 1 | Principal                                      
Conversion of Stock, Amount Converted                               $ 57,750      
Securities Purchase Agreement [Member] | Accredited Investor 1 | Interest                                      
Conversion of Stock, Amount Converted                               585      
Securities Purchase Agreement [Member] | Accredited Investor 2                                      
Principal amount               $ 243,875                      
Proceeds from Convertible debt               $ 215,500                      
Interest rate               10.00%                      
Interest expense               $ 243,875                      
Carrying value                               22,049      
Debt discount                               221,826      
Accrued interest payable                               2,205      
Stock Purchase Agreement | NPE                                      
Debt discount                   $ 270,886                  
Beneficial ownership percentage                   4.99%                  
Initial investment                   $ 1,714,903                  
Debt default                   $ 100,000                  
Stock Purchase Agreement | NPE                                      
Interest rate                   10.00%                  
Stock Issued During Period, Shares, Acquisitions                   266,667                  
Convertible Promissory Note                                      
Principal amount                           $ 150,000          
Original issue discount                           $ 15,000          
Warrants exercisable                           468,750          
Interest rate                           10.00%          
Interest expense                           $ 75,000          
Warrant grant term                           3 years          
Warrant granted price                           $ 0.48          
Beneficial ownership percentage                           4.99%          
Convertible Promissory Note                                      
Principal amount                     $ 78,750                
Original issue discount                     3,750                
Deferred finance costs                     3,750                
Proceeds from Convertible debt                     $ 71,250                
Interest rate                     6.00%                
Interest expense                     $ 78,750                
Beneficial ownership percentage                     4.99%                
Maturity date                     Jul. 21, 2021                
Two Convertible Promissory Notes                                      
Principal amount                 $ 129,250                    
Original issue discount                 11,750                    
Proceeds from Convertible debt                 $ 117,500                    
Interest rate                 10.00%                    
Interest expense                 $ 129,250                    
Beneficial ownership percentage                 4.99%                    
Maturity date                 May 31, 2021                    
Three Convertible Promissory Notes                                      
Principal amount                               279,500      
Deferred finance costs                               12,500      
Proceeds from Convertible debt                               $ 267,000      
Interest rate                               8.00%      
Interest expense                               $ 279,500      
Carrying value                               60,379      
Debt discount                               106,121      
Accrued interest payable                               $ 4,830      
Beneficial ownership percentage                               4.99%      
Repayment of convertible debt                               $ 113,000      
Repayment of accrued interest                               4,557      
Convertible Promissory Note                                      
Principal amount           $ 107,000                          
Original issue discount           5,000                          
Deferred finance costs           2,000                          
Proceeds from Convertible debt           100,000                          
Interest expense           $ 107,000                          
Beneficial ownership percentage           4.99%                          
Maturity date           Sep. 30, 2021                          
Repayment of convertible debt                               107,000      
Repayment of accrued interest                               $ 5,101      
Two Convertible Promissory Notes                                      
Principal amount                             $ 133,101   $ 133,101    
Interest rate                             10.00%        
Interest expense                             $ 133,101        
Two Convertible Promissory Notes | Tabatabaei                                      
Conversion of Stock, Amount Converted                       $ 81,942              
Conversion of Stock, Shares Converted                       694,902              
Gain on conversion                       $ 10,468              
Two Convertible Promissory Notes | Tabatabaei | Principal                                      
Conversion of Stock, Amount Converted                       79,333              
Two Convertible Promissory Notes | Tabatabaei | Interest                                      
Conversion of Stock, Amount Converted                       $ 2,608              
XML 49 R39.htm IDEA: XBRL DOCUMENT v3.21.1
Derivative Liability and Fair Value Measurements (Details) - USD ($)
Feb. 28, 2021
Aug. 31, 2020
Derivative liability $ 2,054,739 $ 1,125,803
Fair Value, Inputs, Level 1 [Member]    
Derivative liability 0 0
Fair Value, Inputs, Level 2 [Member]    
Derivative liability 0 0
Fair Value, Inputs, Level 3 [Member]    
Derivative liability $ 2,054,739 $ 1,125,803
XML 50 R40.htm IDEA: XBRL DOCUMENT v3.21.1
Derivative Liability and Fair Value Measurements (Details 1)
6 Months Ended
Feb. 28, 2021
USD ($)
Notes to Financial Statements  
Balance at beginning $ 1,125,803
Transfers in due to issuance of convertible promissory notes 2,514,823
Transfers out due to repayments of convertible promissory notes (1,255,220)
Transfers out due to conversions of convertible promissory notes (276,975)
Change in derivative liability (53,692)
Balance at end $ 2,054,739
XML 51 R41.htm IDEA: XBRL DOCUMENT v3.21.1
Derivative Liability and Fair Value Measurements (Details Narrative)
6 Months Ended
Feb. 28, 2021
USD ($)
Fair value of embedded derivatives $ 2,054,739
Dividend yield 0.00%
Expected volatility 328.00%
Minimum [Member]  
Risk-free interest rate 0.05%
Expected life (in years) 6 months
Maximum [Member]  
Risk-free interest rate 0.08%
Expected life (in years) 1 year
Convertible Notes Payable [Member]  
Fair value of embedded derivatives $ 2,154,823
Dividend yield 0.00%
Expected life (in years) 1 year
Convertible Notes Payable [Member] | Minimum [Member]  
Expected volatility 332.00%
Risk-free interest rate 0.09%
Convertible Notes Payable [Member] | Maximum [Member]  
Expected volatility 378.00%
Risk-free interest rate 0.13%
XML 52 R42.htm IDEA: XBRL DOCUMENT v3.21.1
Commitments and Contingencies (Details Narrative)
6 Months Ended
Feb. 28, 2021
USD ($)
Lease expiration date Aug. 14, 2020
Natural Plant Extract  
Lease expiration date May 31, 2028
Base rent $ 11,000
Lease expenses $ 8,750
XML 53 R43.htm IDEA: XBRL DOCUMENT v3.21.1
Common Stock (Details Narrative) - shares
6 Months Ended
Feb. 28, 2021
Apr. 19, 2021
Aug. 31, 2020
Reverse stock split, description Company affected a reverse split as of September 30, 2019, which had the effect of reducing the number of outstanding shares from 187,864,600 to 12,524,307.    
Common stock, shares issued 66,205,687   27,082,419
Common stock, shares outstanding 66,205,687   27,082,419
Subsequent Event [Member]      
Common stock, shares issued   72,133,317  
Common stock, shares outstanding   72,133,317  
XML 54 R44.htm IDEA: XBRL DOCUMENT v3.21.1
Preferred Stock (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended
Mar. 31, 2021
May 28, 2020
Dec. 16, 2019
Feb. 28, 2021
Aug. 31, 2020
Preferred stock, shares authorized       10,000,000 10,000,000
Preferred stock, par or stated value per share       $ 0.0001 $ 0.0001
Preferred stock, shares issued       6,000,000 6,000,000
Preferred stock, shares outstanding       6,000,000 6,000,000
Series B Preferred Stock [Member]          
Proceeds from Issuance of Preferred Stock $ 225,000        
Series B Preferred Stock [Member] | Investor [Member]          
Number of shares issued       153,500  
Purchase Price       $ 153,500  
Series B Preferred Stock [Member] | Investor One [Member]          
Number of shares issued       78,500  
Purchase Price       $ 78,500  
Series A Preferred Stock [Member]          
Preferred stock, shares authorized     8,000,000    
Preferred stock, voting right     Holders of Series A Preferred Stock shall be entitled to 50 votes for every Share of Series A Preferred Stock    
Shares returned during the period   2,000,000      
Preferred stock, shares issued       6,000,000  
Preferred stock, shares outstanding       6,000,000  
XML 55 R45.htm IDEA: XBRL DOCUMENT v3.21.1
Subsequent Events (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended
Mar. 08, 2021
Mar. 31, 2021
Mar. 25, 2021
Mar. 16, 2021
Feb. 28, 2021
Feb. 29, 2020
Proceeds from Convertible debt         $ 1,086,000 $ 388,101
Subsequent Event [Member]            
Principal amount $ 215,000     $ 215,000    
Interest rate 10.00%     10.00%    
Subsequent Event [Member] | Common Stock            
Number of shares issued     1,314,188      
Purchase Price     $ 78,851      
Share price     $ 0.06      
Subsequent Event [Member] | Series B Preferred Stock [Member]            
Proceeds from Convertible debt   $ 232,000        
Interest rate   10.00%        
Number of shares issued   232,000        
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