10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended November 30, 2021

Commission File Number 000-56002

ALLIED CORP.

(Exact name of registrant as specified in its charter)

Nevada	33-1227173
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1405 St. Paul St., Suite 201, Kelowna, BC, Canada V1Y 9N2

(Address of principal executive offices) (Zip Code)

877-255-4337

(Registrant’s telephone number, including area code)

_____________________________________________

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

Securities registered pursuant to Section 12(b) of the Act

Title of Each Class	Trading Symbol(s)	Name of each Exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the issuer (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,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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     ☒ No

As of January 18, 2022, there were 91,666,131 shares of common stock issued and outstanding.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	46
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	57
Item 4.	Controls and Procedures.	57
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings.	58
Item 1A.	Risk Factors.	59
Item 2.	Unregistered Sales of Securities and Use of Proceeds.	59
Item 3.	Defaults Upon Senior Securities.	59
Item 4.	Mining Safety Disclosure.	59
Item 5.	Other Information.	59
Item 6.	Exhibits.	60

2

ALLIED CORP.

CONSOLIDATED FINANCIAL STATEMENTS

Condensed consolidated interim balance sheets at November 30, 2021 (unaudited) and August 31, 2021	4
Condensed consolidated interim statements of operations and comprehensive loss for the three months ended November 30, 2021 and 2020 (unaudited)	5
Condensed consolidated interim statements of stockholders’ equity (deficit) for the three months ended November 30, 2021 and 2020 (unaudited)	6
Condensed consolidated interim statements of cash flows for the three months ended November 30, 2021 and 2020 (unaudited)	8
Notes to the unaudited condensed consolidated interim financial statements	9

3

ALLIED CORP.

Condensed Consolidated Interim Balance Sheets

(Expressed in US Dollars)

	November 30, 2021			August 31, 2021
	(Unaudited)
Assets
Current assets
Cash	$	275,529		$	419,825
Inventory (Note 3)		155,481			136,261
Other receivables		34,522			82,837
Prepaid expenses		209,433			277,529
Total current assets		674,965			916,452
Deposits and advances (Note 4)		3,233,720			3,156,163
Right-of-use assets (Note 7)		227,780			247,325
Property, plant and equipment (Note 5)		665,119			267,835
Intangible assets (Note 6)		46,000			46,000
Total assets	$	4,847,584		$	4,633,775
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	1,605,420		$	1,871,659
Current portion of lease liabilities (Note 7)		24,495			25,013
Loan payable (Note 8)		1,253,772			1,596,522
Secured convertible notes payable (Note 9)		2,020,526			1,889,050
Total current liabilities		4,904,213			5,382,244
Lease liabilities, net of current portion (Note 7)		203,285			222,312
Total liabilities	$	5,107,498		$	5,604,556
Stockholders’ deficiency
Preferred stock – 50,000,000 shares authorized, $0.0001 par value Nil shares issued and outstanding	$	-		$	-
Common stock – 300,000,000 shares authorized, $0.0001 par value; 91,666,131 shares issued and outstanding (79,858,867 – par value $0.0001 – August 31, 2021)		9,167			7,986
Treasury stock		-			707
Additional paid in capital		29,884,062			18,099,226
Common stock issuable		224664			929,985
Common stock subscription receivable		(250,000	)		-
Accumulated deficit		(29,461,893	)		(19,393,812	)
Accumulated other comprehensive loss		(665,914	)		(614,873	)
Total stockholders’ deficiency		(259,914	)		(970,781	)
Total liabilities and stockholders’ deficiency	$	4,847,584		$	4,633,775

Nature of operations and going concern (Note 1)

Commitments (Note 14)

Subsequent events (Note 19)

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.

4

ALLIED CORP.

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss

(Expressed in US dollars)

(Unaudited)

	For the Three Months Ended November 30, 2021			For the Three Months Ended November 30, 2020
Revenues
Sales	$	10,082		$	4,200
Expenses
Amortization		13,299			169,680
Purchase of inventory		1,182			-
Consulting fees		301,002			327,843
Stock-based compensation - consulting services		3,531,266			-
Stock-based compensation - bonus shares (Note 11)		585,425			-
Stock-based compensation - options		531,255			-
Foreign exchange loss (gain)		143			(4,965	)
Interest expense and bank charges		171,141			112,840
Office and miscellaneous		302,290			126,644
Professional fees		243,788			130,631
Travel		12,700			1,341
Inventory costs write-down to net realizable value (Note 3)		252,639			-
Expenses before other items		9,946,130			864,014
Loss before other items		(9,936,048	)		(859,814	)
Other expenses
Loss on termination of lease		-			(65,565	)
Settlement payments (Note 14)		-			(105,000	)
Loss on extinguishment of convertible debt		-			(110,000)
Accretion		(132,033	)		(55,483	)
Total other expenses		(132,033	)		(336,048	)
Net loss		(10,068,081	)		(1,195,862	)
Other comprehensive income (loss)
Foreign currency translation adjustments		(51,041	)		118,923
Comprehensive loss	$	(10,119,122	)	$	(1,076,939	)
Basic and diluted loss per share	$	(0.11	)	$	(0.01	)
Weighted average number of common shares outstanding		88,784,911			85,163,802

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.

5

ALLIED CORP.

Condensed Consolidated Interim Statements of Stockholders’ Equity (Deficit)

(Expressed in US dollars)

(Unaudited)

	Common stock				Additional				Stock					Accumulated other
	Number of shares		Amount		paid in capital		Stock issuable		subscription receivable		Accumulated deficit			comprehensive income (loss)			Total
Balance, August 31, 2020		85,105,780	$	8,511	$	12,226,382	$	19,952		-	$	(7,908,566	)	$	(642,115	)	$	3,704,164
Shares issued for cash		200,000		20		249,980		-		-		-			-			250,000
Detachable warrants issued with convertible notes payable		-		-		153,764		-		-		-			-			153,764
Shares issuable upon modification of debt		-		-		133,127		-		-		-			-			133,127
Common stock subscribed		-		-				110,000		-		-			-			110,000
Comprehensive loss for the period		-		-				-		-		(1,195,862	)		118,923			(1,076,939	)
Balance, November 30, 2020		85,305,780	$	8,531	$	12,763,253	$	129,952		-	$	(9,104,428	)	$	(523,192	)	$	3,274,116

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.

6

ALLIED CORP.

Condensed Consolidated Interim Statements of Stockholders’ Equity (Deficit)

(Expressed in US dollars)

(Unaudited)

	Common stock				Treasury stock						Additional						Stock						Accumulated other
	Number of shares		Amount		Number of shares			Amount			paid in capital			Stock issuable			subscription receivable			Accumulated deficit			comprehensive loss			Total
Balance, August 31, 2021		79,858,867	$	7,986		7,073,170		$	707		$	18,099,226		$	929,985		$	-		$	(19,393,812	)	$	(614,873	)	$	(970,781	)
Shares issued from treasury		7,073,170		707		(7,073,170	)		(707	)		7,957,316			-			-			-			-			7,957,316
Shares issued for cash		4,458,094		446		-			-			3,343,126			(790,467	)		(250,000	)		-			-			2,303,105
Share issuance costs		-		-		-			-			(253,390	)		-			-			-			-			(253,390	)
Shares subscribed															85,146												85,146
Shares issued for finders fees		8,000		1		-			-			5,999			-			-			-			-			6,000
Shares issued in error not yet cancelled		268,000		27		-			-			27			-			-			-			-			-
Detachable warrants issued with convertible notes payable		-		-		-			-			120,310			-			-			-			-			120,310
Beneficial conversion feature		-		-		-			-			80,247			-			-			-			-			80,247
Stock-based compensation		-		-		-			-			531,255			-			-			-			-			531,255
Comprehensive loss for the period		-		-		-			-			-			-			-			(10,068,081	)		(51,041	)		(10,119,122	)
Balance, November 30, 2021		91,666,131	$	9,167		-			-		$	29,884,062		$	224,664		$	(250,000	)	$	(29,461,893	)	$	(665,914	)	$	(259,914	)

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.

7

ALLIED CORP.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in US dollars)

(Unaudited)

	For the Three Months Ended November 30, 2021			For the Three Months Ended November 30, 2020
Cash provided by (used in):
Operating activities
Net loss for the period	$	(10,068,081	)	$	(1,195,862	)
Adjustment to net loss for the period for non-cash items
Accretion		132,033			55,483
Accrued interest		36,732			-
Inventory write-down to net realizable value		252,639			-
Amortization		13,299			169,680
Loss on debt extinguishment		-			110,000
Loss on termination of lease		-			65,566
Stock-based compensation - consulting services		3,531,266			-
Stock-based compensation - bonus shares (Note 11)		585,425			-
Stock-based compensation – options		531,255			-
Changes in non-cash working capital balance:
Decrease in other receivables		48,315			-
Decrease (increase) in prepaid expenses		(102,998	)		41,921
Increase in due from related parties		-			(11,726	)
Increase (decrease) in accounts payable and accrued liabilities		(403,979	)		78,679
Increase in inventory		(271,859	)		(7,901	)
		(1,715,953	)		(694,160	)
Investing activities
Refunds of deposits		-			129,897
Purchase of property, plant, and equipment		(375,413	)		(21,932	)
		(375,413	)		107,965
Financing activities
Proceeds of convertible notes payable		200,000			286,892
Repayment of loan payable		(342,750	)		-
Repayment of finance lease obligations		-			(12,480	)
Proceeds from the issuance of common stock		2,140,861			250,000
		1,998,111			524,412
Decrease in cash		(93,255	)		(61,783	)
Effect of exchange rate on changes of cash		(51,041	)		(20,869	)
Cash, beginning of period		419,825			94,047
Cash, end of period	$	275,529		$	11,395
Supplemental cash flow disclosures:
Income taxes paid		-			-
Interest paid		147,839			112,840

Non-cash activities: See Note 17

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements

8

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

1.	Nature of operations, reverse take-over transaction and going concern
a)	Nature of operations
	Allied Corp. (the “Company or Allied”) was incorporated in the State of Nevada on February 3, 2013. On July 1, 2019, the Company changed its name to Allied Corp. The head office and the registered office of the Company are located at 1405 St. Paul Street, Kelowna BC V1Y 2E4. The Company’s business plan is to discover new medical technologies some of which are cannabis derived to target full scope therapy and support for trauma survivors, military veterans and first responders, however the Company has not begun such operations nor obtained the required permits to begin such operations. On September 10, 2019, the Company was acquired in a reverse takeover (“RTO”) transaction (see Note 1b) and the RTO is considered a purchase of the Company’s net assets by AM (Advanced Micro) Biosciences, Inc. (“AM Biosciences”). For accounting purposes, the legal subsidiary, AM Biosciences has been treated as the acquirer and Allied Corp., the legal parent, has been treated as the acquiree. Accordingly, these consolidated financial statements reflect a continuation of the financial position, operating results, and cash flow of the Company’s legal subsidiary, AM Biosciences from the date of incorporation on September 13, 2018. On February 18, 2020, the Company acquired all the issued and outstanding share capital of a Colombian company, Allied Colombia S.A.S (“Allied Colombia”). The assets, liabilities and results of Allied Colombia are consolidated in these financial statements beginning from the February 18, 2020 acquisition date. As at November 30, 2021, Allied Colombia has a licensed cannabis farm in Colombia.
b)	Reverse take-over transaction (RTO)
	On July 25, 2019, as amended effective August 27, 2019, the Company entered into a reorganization and stock purchase agreement (the “Reorganization Agreement”) to acquire 100% of the issued and outstanding equity of AM (Advanced Micro) Biosciences, Inc (“AM Biosciences”). Effective September 10, 2019, the parties closed the Reorganization Agreement (the “Acquisition”). As part of the transaction, Pacific Capital Investment Group, Inc., the then majority shareholder of Allied (the “Allied Shareholder”) delivered 51,200,014shares of common stock, representing approximately 65.42% of the outstanding equity of Allied Corp. to SECFAC Exchange Corp. on behalf of the prior shareholders of AM Biosciences and certain other designees of AM Biosciences as a consideration to acquire 100% of the issued and outstanding equity of AM Biosciences. Further, as part of the transaction, the Allied Shareholder submitted for cancellation and return to treasury 10,459,220 and 4,500,000 shares of common stock. As a consequence, immediately subsequent to the close of the Reorganization Agreement, Allied had 78,268,780 shares of common stock outstanding. The Reorganization Agreement constitutes a reverse acquisition, such that AM Biosciences acquired control of Allied Corp. At the time of the Reorganization Agreement, the operations of Allied Corp. did not constitute businesses under ASC 805 Business Combinations and accordingly the transaction is considered a reverse asset acquisition in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). Under this method of accounting, AM Biosciences was deemed to be the accounting acquirer for financial reporting purposes. This determination was primarily based on the facts that, immediately following the acquisition: (i) AM Biosciences’ stockholders owned a substantial majority of the voting rights in the combined company, (ii) AM Biosciences designated a majority of the members of the initial board of directors of the combined company, and (iii) AM Biosciences’ senior management holds all key positions in the senior management of the combined company. As a result, as of the closing date of the acquisition, the net assets of the Company were recorded at their acquisition-date relative fair values in the consolidated financial statements of the Company and the reported operating results prior to the acquisition will be those of AM Biosciences.

9

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

1. Nature of operations, reverse take-over transaction and going concern (continued)

c)	Going concern
	The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a net loss for the three months ended November 30, 2021 of $10,068,081, has generated minimal revenue and as at November 30, 2021 has a working capital deficit of $4,229,248. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise sufficient financing to acquire or develop a profitable business. Management intends on financing its operations and future development activities largely from the sale of equity securities with some additional funding from other traditional financing sources, including related party loans until such time that funds provided by future planned operations are sufficient to fund working capital requirements.
d)	COVID-19 impact
	In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and the related adverse public health developments have adversely affected workforces, economies, and financial markets globally, leading to uncertainty and an economic downturn. Although some product distribution was delayed by COVID-19, management has determined that there has been no significant impact to the Company’s operations, however management continues to monitor the situation.
e)	Business Risks
	While some states in the United States have authorized the use and sale of cannabis, it remains illegal under federal law and the approach to enforcement of U.S. federal laws against cannabis is subject to change. Because the Company plans to engage in cannabis-related activities in the United States, only if and when cannabis operations are federally legalized. On January 4, 2018, the then United States Attorney General Jeff Sessions issued a memorandum to United States district attorneys (the “Sessions Memorandum”) which rescinded previous guidance from the United States Department of Justice specific to cannabis enforcement in the United States, including the Cole Memorandum. With the Cole Memorandum rescinded, United States federal prosecutors no longer have guidance relating to the exercise of their discretion in determining whether to prosecute cannabis related violations of United States federal law. Since that time, United States district attorneys have taken no legal action against state law compliant entities, and the Biden administration is generally anticipated to seek federal decriminalization of state legal cannabis activity. Nevertheless, a significant change in the federal government’s enforcement policy with respect to current federal laws applicable to cannabis could cause significant financial damage to the Company. The Company may be irreparably harmed by a change in enforcement policies of the federal government depending on the nature of such change. Given the current illegality of cannabis under United States federal law, the Company’s ability to access both public and private capital may be hindered by the fact that certain financial institutions are regulated by the United States federal government and are thus prohibited from providing financing to companies engaged in cannabis related activities. The Company’s ability to access public capital markets in the United States is directly hindered as a result. The Company may, however, be able to access public and private capital markets in the United States through institutions which are not regulated by the United States federal government, in Canada, and in many other countries in order to support continuing operations.

10

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

2.

Significant accounting  policies

Business Presentation These unaudited condensed consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and are expressed in United States dollars. The Company’s fiscal year end is August 31. These interim unaudited financial statements have been prepared in accordance with US GAAP for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by US GAAP for complete financial statements. Therefore, these interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended August 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC. The consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at November 30, 2021, and the results of its operations for the three months ended November 30, 2021, and cash flows for the three months ended November 30, 2021. The results of operations for the period ended November 30, 2021 are not necessarily indicative of the results to be expected for future quarters or the full year. The significant accounting policies followed are:

a)	Principles of consolidation
	The consolidated financial statements include accounts of Allied Corp. and its wholly-owned subsidiaries, including AM Biosciences, Allied US Products LLC, Tactical Relief LLC, Baleno Ltd. and Allied Colombia. Subsidiaries are consolidated from the date of acquisition and control and continue to be consolidated until the date that such control ceases. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect these returns through its power over the investee. All intercompany balances, income, expenses, and unrealized gains and losses resulting from intercompany transactions are eliminated on consolidation.
b)	Cash and cash equivalents
	Cash is comprised of cash on hand, cash held in trust accounts and demand deposits. Cash equivalents are short-term, highly liquid investments with maturities within three months when acquired. The Company did not have any cash equivalents as of November 30, 2021 and August 31, 2021.
c)	Property, plant and equipment
	Property, plant and equipment are stated at cost. The Company depreciates the cost of property, plant and equipment over their estimated useful lives at the following annual rates and methods:

Farm facility and equipment	1 - 10 years straight-line basis
Office and computer equipment	5 - 10 years straight-line basis
Land equipment	10 years straight-line basis

d)	Inventory
	Inventory is comprised of raw materials, supplies, vegetative and flowering plants, dried flower, diluted crude and CBD isolates available for sale, and purchased cannabis products.

11

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

2. Significant accounting policies (continued)

	Inventory is stated at the lower of cost or net realizable value, determined using weighted average cost. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. At the end of each reporting period, the Company performs an assessment of inventory and records write-downs for excess and obsolete inventories based on the Company’s estimated forecast of product demand, production requirements, market conditions, regulatory environment, and spoilage. Actual inventory losses may differ from management’s estimates and such differences could be material to the Company’s consolidated balance sheets, statements of net loss and comprehensive loss and statements of cash flows.
e)	Intangible assets
	Intangible assets include licenses which are being amortized over their estimated useful lives of 10 years. The Company’s licenses are amortized over their economic or legal life on a straight-line basis, whichever is shorter. The licenses have been amortized from the date of acquisition. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives. For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value.
f)	Long-lived assets
	In accordance with ASC 360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

12

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

2. Significant accounting policies (continued)

g)	Foreign currency translation and functional currency conversion
	Items included in these consolidated financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entities operate (the “functional currency”). Prior to September 10, 2019, the Company’s functional currency was the Canadian dollar. Translation gains and losses from the application of the U.S. dollar as the reporting currency during the period that the Canadian dollar was the functional currency are included as part of cumulative currency translation adjustment, which is reported as a component of shareholders’ equity under accumulated other comprehensive loss. The Company re-assessed its functional currency and determined as at September 10, 2019, its functional currency changed from the Canadian dollar to the U.S. dollar based on management’s analysis of changes in our organization. The change in functional currency was accounted for prospectively from September 10, 2019 and prior period financial statements were not restated for the change in functional currency. For periods commencing September 10, 2019, monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates in effect at the balance sheet date. Opening balances related to non-monetary assets and liabilities are based on prior period translated amounts, and non-monetary assets and non-monetary liabilities incurred after September 10, 2019 are translated at the approximate exchange rate prevailing at the date of the transaction. Revenue and expense transactions are translated at the approximate exchange rate in effect at the time of the transactions. Foreign exchange gains and losses are included in the statement of operations and comprehensive loss as foreign exchange gains. The Company assessed the functional currency for Allied Colombia to be the Colombian peso. The functional currency for all other subsidiaries is the U.S. dollar.
h)	Share issuance costs
	Costs directly attributable to the raising of capital are charged against the related share capital. Costs related to shares not yet issued are recorded as deferred share issuance costs. These costs are deferred until the issuance of the shares to which the costs relate, at which time the costs will be charged against the related share capital or charged to operations if the shares are not issued.
i)	Research and development costs
	Research and development costs are expensed as incurred.
j)	Revenue recognition
	The Company’s revenue is comprised of sales of cannabis products. The Company’s revenue-generating activities have a single performance obligation and revenue is recognized at the point in time when control of the product transfers and the Company’s obligations have been fulfilled. This generally occurs when the product is shipped or delivered to the customer, depending upon the method of distribution and shipping terms set forth in the customer contract. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of the Company’s product. Certain of the Company’s customer contracts may provide the customer with a right of return. In certain circumstances the Company may also provide a retrospective price adjustment to a customer. These items give rise to variable consideration, which is recognized as a reduction of the transaction price based upon the expected amounts of the product returns and price adjustments at the time revenue for the corresponding product sale is recognized. The determination of the reduction of the transaction price for variable consideration requires that the Company make certain estimates and assumptions that affect the timing and amounts of revenue recognized.

13

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

2.  Significant accounting policies (continued)

	Sales of products are for cash or otherwise agreed-upon credit terms. The Company’s payment terms vary by location and customer; however, the time period between when revenue is recognized and when payment is due is not significant. The Company estimates and reserves for its bad debt exposure based on its experience with past due accounts and collectability, write-off history, the aging of accounts receivable and an analysis of customer data.
k)	Net income (loss) per common share
	Net income (loss) per share is calculated in accordance with ASC 260, Earnings per Share. The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding to the extent the effect would not be antidilutive. Dilutive potential common shares are additional common shares assumed to be exercised. Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding.
l)	Income taxes
	The Company accounts for income taxes under ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
m)	Related party transactions
	Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. The Company discloses related party transactions that are outside of normal compensatory agreements, such as salaries. Related party transactions are measured at the exchange amounts.
n)	Significant accounting estimates and judgments
	The preparation of the financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Although management uses historical experience and its best knowledge of the amount, events or actions to for the basis for judgments and estimates, actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods. Significant estimates and assumptions included in these financial statements relate to the valuation assumptions related to the estimated useful lives and recoverability of long-lived assets, stock-based compensation, and deferred income tax assets and liabilities. Judgments are required in the assessment of the Company’s ability to continue to as going concern as described in Note 1.

14

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

2. Significant accounting policies (continued)

o)	Financial instruments
	ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The financial instruments consist principally of cash, due from related parties, accounts payable, note payable, and convertible notes payable. The fair value of cash when applicable is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all other financial instruments which are categorized as loans and receivables approximate their current fair values because of their nature and respective relatively short maturity dates or current market rates of interest for similar instruments. For certain of the Company’s financial instruments, including accounts payable, due from related parties, notes and loans payable, the carrying amounts approximate their fair values due to the short maturities. The Company does not have any assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet as of November 30, 2021 and August 31, 2021 other than cash. Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions.
p)	Leases
	In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The standard states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. The Company adopted ASU 2016-02 on September 1, 2019, using the transition relief to the modified retrospective approach, presenting prior year information based on the previous standard. The Company did not have any leases until the acquisition of its wholly owned subsidiary, Allied Colombia S.A.S. on February 18, 2020.

15

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

2. Significant accounting policies (continued)

	The Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease payments arising from the lease. All leases with terms greater than twelve months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. Unless a lease provides all of the information required to determine the implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. The Company uses the implicit interest rate in the lease when readily determinable. Our lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that we will exercise that option. Leases with terms of twelve months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of an asset or liability. See Note 7 – Leases.
q)	Reverse Acquisitions
	Identification of the accounting acquirer The Company considers factors in ASC 805-10-55-10 through 55-15 in identifying the accounting acquirer. The Company uses the existence of a controlling financial interest to identify the acquirer - the entity that obtains control of the acquiree. Other pertinent facts and circumstances also shall be considered in identifying the acquirer in a business combination effected by exchanging equity interests, including the following: (a) The relative voting rights in the combined entity after the business combination, where the acquirer usually is the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity taking into consideration the existence of any unusual or special voting arrangements and options, warrants, or convertible securities; (b) the existence of a large minority voting interest in the combined entity if no other owner or organized group of owners has a significant voting interest, and where the acquirer usually is the combining entity whose single owner or organized group of owners holds the largest minority voting interest in the combined entity; (c) the composition of the governing body of the combined entity, where the acquirer usually is the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity; (d) the composition of the senior management of the combined entity, where the acquirer usually is the combining entity whose former management dominates the management of the combined entity; and (e) the terms of the exchange of equity interests, where the acquirer usually is the combining entity that pays a premium over the pre-combination fair value of the equity interests of the other combining entity or entities, where the acquirer usually is the combining entity whose relative size (measured in, for example, assets, revenues, or earnings) is significantly larger than that of the other combining entity or entities. Pursuant to ASC Paragraph 805-40-05-2, as one example of a reverse acquisition, a private operating entity may arrange for a public entity to acquire its equity interests in exchange for the equity interests of the public entity. In this situation, the public entity is the legal acquirer because it issued its equity interests, and the private entity is the legal acquiree because its equity interests were acquired. However, application of the guidance in ASC 805-10-55-11 through 55-15 results in identifying: (a) The public entity as the acquire for accounting purposes (the accounting acquiree); and (b) the private entity as the acquirer for accounting purposes (the accounting acquirer).

16

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

2. Significant accounting policies (continued)

Measuring the consideration transferred

Pursuant to ASC 805-40-30-2 and 30-3 in a reverse acquisition, the accounting acquirer usually issues no consideration for the acquiree. Instead, the accounting acquiree usually issues its equity shares to the owners of the accounting acquirer. Accordingly, the acquisition-date fair value of the consideration transferred by the accounting acquirer for its interest in the accounting acquiree is based on the number of equity interests the legal subsidiary would have had to issue to give the owners of the legal parent the same percentage equity interest in the combined entity that results from the reverse acquisition. The fair value of the number of equity interests calculated in that way can be used as the fair value of consideration transferred in exchange for the acquiree. The assets and liabilities of the legal acquiree are measured and recognized in the consolidated financial statements at their pre-combination carrying amounts (see ASC 805-40-45-2(a)).

Presentation of consolidated financial statements post reverse acquisition

Pursuant to ASC 805-40-45-1 and 45-2, consolidated financial statements following a reverse acquisition are issued under the name of the legal parent (accounting acquiree) but described in the notes as a continuation of the financial statements of the legal subsidiary (accounting acquirer), with one adjustment, which is to retroactively adjust the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree. That adjustment is required to reflect the capital of the legal parent (the accounting acquiree). Comparative information presented in those consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent (accounting acquiree). The consolidated financial statements reflect all of the following: (a) The assets and liabilities of the legal subsidiary (the accounting acquirer) recognized and measured at their pre-combination carrying amounts; (b) the assets and liabilities of the legal parent (the accounting acquiree) recognized and measured in accordance with the guidance in Topic 805 “Business Combinations”; (c) the retained earnings and other equity balances of the legal subsidiary (accounting acquirer) before the business combination; (d) the amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of the legal subsidiary (the accounting acquirer) outstanding immediately before the business combination to the fair value of the legal parent (accounting acquiree) determined in accordance with the guidance in this topic applicable to business combinations. However, the equity structure (that is, the number and type of equity interests issued) reflects the equity structure of the legal parent (the accounting acquiree), including the equity interests the legal parent issued to effect the combination.

Accordingly, the equity structure of the legal subsidiary (the accounting acquirer) is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent (the accounting acquiree) issued in the reverse acquisition; and (e) the non-controlling interest’s proportionate share of the legal subsidiary’s (accounting acquirer’s) pre-combination carrying amounts of retained earnings and other equity interests as discussed in ASC 805-40-25-2 and 805-40-30-3.

Pursuant to ASC 805-40-45-4 and 45-5, in calculating the weighted-average number of common shares outstanding (the denominator of the earnings-per-share (“EPS”) calculation) during the period in which the reverse acquisition occurs: (a) The number of common shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted-average number of common shares of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the acquisition agreement; and (b) the number of common shares outstanding from the acquisition date to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period.

17

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

2. Significant accounting policies (continued)

	The basic EPS for each comparative period before the acquisition date presented in the consolidated financial statements following a reverse acquisition shall be calculated by dividing (a) by (b): (a) The income of the legal acquiree attributable to common shareholders in each of those periods; and (b) the legal acquiree’s historical weighted average number of common shares outstanding multiplied by the exchange ratio established in the acquisition agreement. As a result of the controlling financial interest of the former stockholders of AMBI, for financial statement reporting purposes, the asset acquisition has been treated as a reverse acquisition with AMBI deemed the accounting acquirer and the Company deemed the accounting acquire under the acquisition method of accounting in accordance with ASC 805-10-55 of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The reverse acquisition is deemed a capital transaction and the net assets of AMBI (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the acquisition. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of AMBI which are recorded at their historical cost. The equity of the Company is the historical equity of AMBI. These consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries, AM Biosciences effective from the date of the reverse take—over transaction on September 10, 2019 and Allied Colombia (from the date of acquisition, February 18, 2020). All intercompany balances and transactions have been eliminated upon consolidation.
r)	Recent accounting pronouncements
	The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the three months ended November 30, 2021, are of significance or potential significance to the Company.

3.	Inventory
	Inventory is comprised of the following items:

	November 30, 2021		August 31, 2021
Work in progress	$	37,425	$	51,831
Finished goods		118,056		84,430
Total inventory	$	155,481	$	136,261

The costs of inventory include but are not limited to labor, utilities, nutrition and irrigation, overhead and the depreciation of manufacturing equipment and production facilities, and amortization of licenses determined at normal capacity. Manufacturing overhead and related expenses include salaries, wages, employee benefits, utilities, maintenance and rent of grow facility. The Company began productions in Colombia in late 2020, when the Company obtained approval for its strains of products. During the current period, certain costs were determined based on the actual usage of production space as compared to the normal predetermined operational production of the facility based on capacity as the Company gradually started to grow products and prepared the facility ready. Management determined that during the current period, the Company was operating at 24% of predesigned capacity and as a result 24% of rent, amortization expenses, and certain overhead costs are included in costs of inventory.

During the current period, the Company recorded a write-down of inventory costs which include labor, utilities, nutrition, and irrigation, overhead and depreciation to net realizable value of $252,639.

The Company’s sales were generated from cannabis products purchased from certain third-party supplier during the three month periods ended November 30, 2021 and November 30, 2020.

18

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

4. Deposits and advances

	November 30, 2021		August 31, 2021
a) Towards the purchase of prefabricated buildings	$	2,656,695	$	2,656,695
b) Vitalis equipment deposit		233,496		233,496
c) Deposit towards a license acquisition		150,000		150,000
d) Prepayments for construction facility in Colombia		77,829		115,972
e) Eteros equipment deposit		115,700		-
Total deposits and advances	$	3,233,720	$	3,156,163

a)	In 2019, the Company entered to a separate modular building purchase agreement to acquire and construct an 8,700 square foot facility to be used as a certified Cannabis Cultivation and extraction facility. At November 30, 2021, Company had deposits of $2,656,695 (August 31, 2021 - $2,656,695) to purchase prefabricated buildings. As of November 30, 2021, the Company had not yet received the buildings and the amounts have been recorded as deposits.
b)	At November 30, 2021 and August 31, 2021, the Company had paid $233,496 to purchase equipment as described in Note 14(c). At November 30, 2021, the Company had not yet received the equipment and the amount paid has been recorded as a deposit.
c)	At November 30, 2021 and August 31, 2021, the Company had paid $150,000 to acquire a license through an asset purchase agreement as described in Note 19(a). At November 30, 2021, the asset purchase has not closed and the amount paid has been recorded as a deposit.
d)	The Company paid certain vendors for the construction of farm facilities in Colombia in advance. As at November 30, 2021, the prepayments totaled $77,829.
e)	At November 30, 2021, the Company had paid $115,700 to purchase equipment. At November 30, 2021, the Company had not yet received the equipment and the amount paid has been recorded as a deposit.

5.	Property, plant and equipment
	At November 30, 2021, property, plant and equipment (“PPE”) consisted of:

	Construction in process			Farm facility and equipment			Office and computer equipment			Land equipment			Total
August 31, 2021	$	27,469		$	274,776		$	10,653		$	16,310		$	329,208
Additions		334,383			93,657			5,815			9,329			443,184
Foreign exchange		(15,143	)		(19,329	)		(838	)		(1,300	)		(36,610	)
November 30, 2021	$	346,709		$	349,104		$	15,629		$	24,339		$	735,782
Accumulated depreciation
August 31, 2021	$	-		$	58,519		$	1,935		$	919		$	61,373
Additions		-			12,374			490			435			13,299
Foreign exchange		-			(3,810	)		(130	)		(69	)		(4,009	)
November 30, 2021	$	-		$	67,083		$	2,295		$	1,285		$	70,663
Net book value
August 31, 2021	$	27,469		$	216,257		$	8,718		$	15,391		$	267,835
November 30, 2021	$	346,709		$	282,021		$	13,335		$	23,054		$	665,119

As of November 30, 2021 and August 31, 2021, the construction in process has not been in use.

During the period ended November 30, 2021, the Company included depreciation of PPE of $9,100 in cost of inventory.

19

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

6.	Intangible assets
	At November 30, 2021, intangible assets consisted of:

	Cost $		Foreign exchange $			Accumulated amortization $			Accumulated impairment $			November 30, 2021 Net carrying value $		August 31, 2021 Net carrying value $
Cannabis licenses		5,435,334		(464,973	)		(1,122,694	)		(3,801,667	)		46,000		46,000
		5,435,334		(464,973	)		(1,122,694	)		(3,801,667	)		46,000		46,000

On February 17, 2020, the Company acquired $5,435,334 of licenses as part of the acquisition of Allied Colombia. The licenses acquired are issued by the Republic of Colombia and include the use of seeds for growing Cannabis, production of derivatives from Cannabis for medicinal and scientific use, cultivation of Cannabis plants, and producer of seeds. The Company recorded amortization of these licenses of $658,836 for the year ended August 31, 2021, of which $158,121 was included in cost of inventory.

Management acquired the licenses with a plan to operate in Colombia and believed the amounts paid for the licenses would be recovered from future operations. The Company has only recently started its operations in Colombia and has limited history on which to base future outcomes from operations including cash flows. Cannabis and hemp are considered to be an emerging industry and Colombia does not yet have a sufficiently established observable legal market in which the Company could sell its Cannabis or hemp flower and CBD or THC extracts. Laws and regulations in Colombia are evolving and there is uncertainty in what will be legally permissible in a future market and what prices and demand there would be in Colombia for the Company’s products. At the present, the Company’s export activities are regulated and restricted by Colombian law and it is uncertain whether future changes in law would favorably impact the Company’s operations. Due to the uncertainty in the timing and amount of future cash flows from operations the Company has written down its licenses to the estimated recoverable amount of $46,000. During the year ended August 31, 2021, the Company recorded impairment of intangible assets in the amount of $2,687,695.

7.

Leases

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability, measured on a discounted basis, on the balance sheet for all leases with terms longer than 12 months. The Company also elected to keep all leases with an initial term of 12 months or less off the balance sheet. The Company did not have any leases until the acquisition of Allied Colombia during the year ended August 31, 2020. The acquisition resulted in the addition of $82,398 of operating lease assets and liabilities. During the year ended August 31, 2021, the Company re-measured its lease liabilities under this lease as the criteria has met for additional monthly payment when the Company started production as outlined in the lease agreement, resulting in additional lease liabilities of $70,705. On August 10, 2021, the Company entered into another lease for additional land in Colombia with monthly payment of $2,647 (COP9,970,675) for 12.5 hectares which is intended for use of outdoor cultivation, resulting in addition of lease liabilities of $104,902. The lease is for 5 years, and expires in July 2026. The management has assessed the lease as an operating lease.

20

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

7. Leases (continued)

The Company entered into an agreement to lease the land described in 14(a) with a commencement date of June 1, 2020. The lease requires the Company to make monthly payments of $4,501 (CAD$5,870) per month. The lease is for a 10-year term, expiring on May 31, 2030, with one 10-year renewal option and an option for the Company to purchase the land for approximately $920,000 (CAD$1,200,000). Effective November 1, 2020, the Company terminated the lease. Pursuant to ASC 842-20 upon the termination of the lease, the Company derecognized the lease related asset and liability and included any consideration paid or received upon termination that was not already included in the lease payments in the gain or loss on termination of the lease. After recording the proceeds from the landlord and derecognizing the capitalized building costs as well as the right of use asset and liability, the Company recorded a loss of $65,565 on the termination of the lease.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the ROU asset results in front-loaded expense over the lease term. ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. At November 30, 2021, the Company did not have any finance leases.

At November 30, 2021, the weighted average remaining operating lease term was 6.68 years and the weighted average discount rate associated with operating leases was 15%.

The components of lease expenses were as follows:

	$
Operating lease cost:
Amortization of right-of-use assets		5,810
Interest on lease liabilities		9,050
Total operating lease cost		14,860

The following table provides supplemental cash flow and other information related to leases for three months ended November 30, 2021:

	$
Lease payments	14,860

Supplemental balance sheet information related to leases as of November 30, 2021 are as below:

	$
Cost	282,273
Accumulated amortization	(13,240	)
Foreign exchange	(41,253	)
Net carrying value at November 30, 2021	227,780

21

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

7. Leases (continued)

Future minimum lease payments related to lease obligations are as follows:

	$
2022	42,767
2023	57,023
2024	57,023
Thereafter	206,234
Total minimum lease payments	363,047
Less: amount of lease payments representing effects of discounting	(135,267	)
Present value of future minimum lease payments	227,780
Less: current obligations under leases	(24,495	)
Lease liabilities, net of current portion	203,285

8.	Loans payable
	a)	In June 2020, the Company entered into a financing agreement to finance the buildings described in Note 4(a). Pursuant to the agreement, the Company financed $1,253,772 of the purchase price. The Company paid $71,023 at commencement date on May 29, 2020, and would make six monthly interest payments of $37,613 commencing June 20, 2020 and repay the principal of $1,253,772 on November 20, 2020. The loan was extended after the initial maturity date. During the three months ended November 30, 2021, the Company further amended the loan agreement to extend the repayment due date to December 20, 2021. During the three months ended November 30, 2021, the Company paid interest in the amount of $112,839 (2020 - $112,840). Subsequent to November 30, 2021, the Company amended the financing agreement as described in Note 19(e)).
	b)	On January 24, 2021, the Company entered into an acquisition agreement to acquire all common shares of Pacific Sun Fungi Inc. (“PSF”) in consideration for the issuance of a promissory note of $85,500 and 200,000 common shares of the Company with a fair value of $74,000. The note is non-interest bearing and is due 10 days after demand. During the three months ended November 30, 2021, the Company made the final $42,750 payment towards the promissory note.
	c)	On March 1, 2021, the Company entered into a $300,000 promissory note with simple interest of 10% per annum and maturity date of June 1, 2021. As additional compensation the Company issued 100,000 shares of the Company with a fair value of $90,000, which was treated as discount on the promissory note. During the year ended August 31, 2021, the accretion on the promissory note totalled $90,000. During the three months ended November 30, 2021, the Company made the final payment of $315,000 which included interest payment of $15,000.

9.	Secured convertible notes payable
	The Company has granted each and every of the secured convertible note holders a continuing security interest in, a general lien upon, and a right of set-off against all existing and future assets and property under the terms of a security agreement.
	a)	On January 23, 2020, the Company issued two convertible notes with principal amounts of $400,000 and $200,000, respectively, with a total face value of $600,000 (the “Notes”) and warrants to purchase 240,000 shares of the Company’s common stock at $1.25 per share for 1 year. The Notes were issued with an original discount of $12,000, and bear interest at 10% per annum compounded monthly. The notes mature on July 20, 2020 and are convertible into shares of the Company’s common stock at any time prior to maturity at a conversion price of $1.25 per share.

22

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants would not meet derivative classification. The relative fair values of the convertible notes and the warrants were $470,467 and $117,533 respectively. The effective conversion price was then determined to be $0.98. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $115,383 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $108,100 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $364,517. The beneficial conversion feature of $115,383, the original issue discount of $12,000 and the relative fair value of the warrants of $108,100discounted the carrying value of the convertible debt on the date of issue. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. On June 30, 2020, the Company repaid $200,000 of the $600,000 note which left $200,000 outstanding on each note.
i.	First Modification:
	On July 1, 2020, the Company entered into amendments to the convertible notes. Pursuant to the amendments, beginning on July 1, 2020, the convertible notes bear simple interest at 5% per annum. The maturity date of the convertible notes was amended to due on demand on or before October 31, 2020. In consideration for extending the maturity date, the Company issued to the convertible note holders 16,000 common shares of the Company and warrants to purchase additional 320,000 common shares of the Company at $1.25 per share expiring October 31, 2021. Each note holder received 8,000 common shares and 160,000 warrants. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting. The extended convertible notes had a total carrying value of $400,000. As the common shares and warrants were issued as consideration for extending the convertible notes, the fair value of the common share and warrants of $218,397 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $220,065.
ii.	Second Modification:
	On November 1, 2020, the Company entered into amendments to the convertible notes. Pursuant to the amendments, the maturity date of the convertible notes was amended to due on demand on or before March 31, 2021. In consideration for extending the maturity date, the Company agreed to issue to the convertible note holders 100,000 common shares of the Company. Each note holder received 50,000 common shares.

23

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

	The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting. The extended convertible notes had a total carrying value of $400,000. As the common shares were issued as consideration for extending the convertible notes, the fair value of the common share of $110,000 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $110,000.
iii.	Third Modification:
	On March 31, 2021, the Company entered into amendments to the convertible notes. Pursuant to the amendments, beginning on April 1, 2021, the convertible notes bear simple interest at 10% per annum. Pursuant to the amendments, the maturity date of the convertible notes was amended to due on demand on or before September 30, 2021. In consideration for extending the maturity date, the Company agreed to issue to the convertible note holders 20,000 common shares of the Company. Each note holder received 10,000 common shares. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting. The extended convertible notes had a total carrying value of $400,000. As the common shares were issued as consideration for extending the convertible notes, the fair value of the common share of $20,000 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $20,000.
iv.	Fourth Modification:
	On October 1, 2021, the Company entered into amendments to the convertible notes. Pursuant to the amendments, beginning on April 1, 2021, the convertible notes bear simple interest at 10% per annum. Pursuant to the amendments, the maturity date of the convertible notes was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.

24

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

	During the three months ended November 30, 2021, the Company made interest payments of 20,000. As at November 30, 2021, the Company has recorded accrued interest of $26,630, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.
b)	On September 29, 2020, the Company issued a convertible note with a fair value of $163,341 (the “Note”) and warrants to purchase 130,673 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note was due on demand after March 27, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to March 27, 2021 at a conversion price of $1.25 per share.
	The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $85,330 and $78,011 respectively. The effective conversion price was then determined to be $0.65. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $85,330 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $78,011 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.

i.

First Modification:

On March 31, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the convertible note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before September 30, 2021. In consideration for extending the maturity date, the Company issued to the convertible note holder 8,268 common shares of the Company. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting. The extended convertible note had a total carrying value of $163,341. As the common shares were issued as consideration for extending the convertible note, the fair value of the common share of $8,268 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $8,268.

25

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

	ii.	Second Modification:
		On June 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on June 1, 2021, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before November 30, 2021 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.
	iii.	Third Modification:
		On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.
	As at November 30, 2021, the Company has recorded accrued interest of $19,109, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.
c)	On October 26, 2020, the Company issued a convertible note with a face value of $37,613 (the “Note”) and warrants to purchase 30,090 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note was due on demand after April 23, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share.

26

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $20,176 and $17,437 respectively. The effective conversion price was then determined to be $0.65. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $20,176 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $17,437 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.
i.	First Modification:
	On June 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on June 1, 2021, the convertible note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before November 30, 2021 for no additional consideration The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.
ii.	Second Modification:
	On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied.

27

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.

As at November 30, 2021, the Company has recorded accrued interest of $4,122, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

d)

On November 11, 2020, the Company issued a convertible note with a face value of $85,937 (the “Note”) and warrants to purchase 68,750 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note was due on demand after May 9, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $48,258 and $37,679 respectively. The effective conversion price was then determined to be $0.70. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $48,258 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $37,679 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.

i.

First Modification:

On June 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on June 1, 2021, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before November 30, 2021 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.

28

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

ii.

Second Modification:

On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $9,041, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

e)

On December 2, 2020, the Company issued a convertible note with a face value of $600,000 (the “Note”) and warrants to purchase 240,000 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note was due on demand after November 27, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to November 27, 2021 at a conversion price of $1.25 per share.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $457,436 and $142,564 respectively. The effective conversion price was then determined to be $0.95. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $457,436 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $22,564 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On October 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before March 31, 2022 for no additional consideration.

29

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

	The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $59,671, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.
f)	On January 7, 2021, the Company issued a convertible note with a face value of $300,000 (the “Note). The Note bears interest at 10% per annum and was due on demand after November 27, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share.
	The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features do not meet derivative classification. As the stock price at the issuance date was less than the conversion price, it was determined that there was no beneficial conversion feature (“BCF”). Modification: On October 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $30,247, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

30

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

g)	On March 26, 2021, the Company issued a convertible note with a face value of $18,000 (the “Note”) and warrants to purchase 18,000 shares of the Company’s common stock at $0.50 per share for 1 year. The Note bears interest at 10% per annum. The Note was due on demand after September 26, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share.
	The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $10,096 and $7,904 respectively. The effective conversion price was then determined to be $0.70. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $4,016 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $7,904 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $6,080. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $1,228, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.
h)	On March 26, 2021, the Company issued a convertible note with a face value of $100,000 (the “Note”) and warrants to purchase 100,000 shares of the Company’s common stock at $0.50 per share for 1 year. The Note bears interest at 10% per annum. The Note was due on demand after September 26, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share.

31

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $56,086 and $43,914 respectively. The effective conversion price was then determined to be $0.70. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $22,314 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $43,914 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $33,772. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $6,822, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

i)

On April 30, 2021, the Company issued a convertible note with a face value of $100,000 (the “Note”) and warrants to purchase 100,000 shares of the Company’s common stock at $1.00 per share for 1 year. The Note bears interest at 10% per annum. The Note was due on demand after October 31, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to October 31, 2021 at a conversion price of $1.00 per share.

32

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $61,493 and $38,507 respectively. The effective conversion price was then determined to be $0.61. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $27,272 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $38,507 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $34,221. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $5,863, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

j)

On April 29, 2021, the Company issued a convertible note with a face value of $180,000 (the “Note”) and warrants to purchase 180,000 shares of the Company’s common stock at $1.00 per share for 1 year. The Note bears interest at 10% per annum. The Note was due on demand after October 29, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to October 29, 2021 at a conversion price of $1.00 per share.

33

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $111,422 and $68,578 respectively. The effective conversion price was then determined to be $0.62. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $46,078 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $68,578 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $65,344. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $10,603, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

k)

On July 25, 2021, the Company issued a convertible note with a face value of $35,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after January 25, 2022. The Note was convertible into shares of the Company’s common stock at any time prior to January 25, 2022 at a conversion price of $1.25 per share.

34

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features do not meet derivative classification. As the stock price at the issuance date was less than the conversion price, it was determined that there was no beneficial conversion feature (“BCF”).

Modification:

On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration.

The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-50 was applied. As present value of the cash flows under the new debt instrument differed by less than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was not substantially different

which resulted in modification accounting.

If a convertible debt instrument is modified or exchanged in a transaction that is not accounted for as an extinguishment, an increase in the fair value of the embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) shall reduce the carrying amount of the debt instrument (increasing a debt discount or reducing a debt premium) with a corresponding increase in additional paid-in capital.

The Company recognized the increase in the fair value of the embedded beneficial conversion feature of $1,090 as additional-paid-in capital and an equivalent discount that reduced the carrying value of the convertible debt to $33,910 at November 1, 2021.

As at November 30, 2021, the Company has recorded accrued interest of $1,208, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

l) On July 25, 2021, the Company issued a convertible note with a face value of $15,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after January 25, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to January 25, 2022 at a conversion price of $1.25 per share.

35

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features do not meet derivative classification. As the stock price at the issuance date was less than the conversion price, it was determined that there was no beneficial conversion feature (“BCF”). Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-50 was applied. As present value of the cash flows under the new debt instrument differed by less than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was not substantially different which resulted in modification accounting. If a convertible debt instrument is modified or exchanged in a transaction that is not accounted for as an extinguishment, an increase in the fair value of the embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) shall reduce the carrying amount of the debt instrument (increasing a debt discount or reducing a debt premium) with a corresponding increase in additional paid-in capital. The Company recognized the increase in the fair value of the embedded beneficial conversion feature of $467 as additional-paid-in capital and an equivalent discount that reduced the carrying value of the convertible debt to $14,533 at November 1, 2021. As at November 30, 2021, the Company has recorded accrued interest of $518, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

m)

On October 1, 2021, the Company issued a convertible note with a face value of $100,000 (the “Note”) and warrants to purchase 100,000 shares of the Company’s common stock at $1.25 per share for 1 year. The Note bears interest at 10% per annum. The Note is due on demand after April 1, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to April 1, 2022 at a conversion price of $1.25 per share.

36

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible note payable (continued)

The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. Per ASC 815-10-15-74(a), contracts that are both indexed to its own stock and classified in stockholders’ equity in its statement of financial position are not considered to be derivative instruments. The conversion feature is indexed to the Company’s own stock and is classified in stockholders’ equity in the Company’s statement of financial position. As the conversion features would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $40,117 and $59,883 respectively. The effective conversion price was then determined to be $0.40. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $40,117 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $59,883 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. note bearsPursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-50 was applied. As present value of the cash flows under the new debt instrument differed by less than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was not substantially different which resulted in modification accounting. If a convertible debt instrument is modified or exchanged in a transaction that is not accounted for as an extinguishment, an increase in the fair value of the embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) shall reduce the carrying amount of the debt instrument (increasing a debt discount or reducing a debt premium) with a corresponding increase in additional paid-in capital. There was no change in the fair value of the embedded beneficial conversion feature immediately before and after the modification. As a result, the Company did not adjust the carrying amount of $1,546 of the convertible debt at November 1, 2021. As at November 30, 2021, the Company has recorded accrued interest of $1,644, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

n)

On October 25, 2021, the Company issued a convertible note with a face value of $100,000 (the “Note”) and warrants to purchase 100,000 shares of the Company’s common stock at $1.25 per share for 1 year. The Note bears interest at 10% per annum. The Note is due on demand after March 31, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to March 31, 2022 at a conversion price of $1.25 per share.

37

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. Per ASC 815-10-15-74(a), contracts that are both indexed to its own stock and classified in stockholders’ equity in its statement of financial position are not considered to be derivative instruments. The conversion feature is indexed to the Company’s own stock and is classified in stockholders’ equity in the Company’s statement of financial position. As the conversion features would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification.

The relative fair values of the convertible note and the warrants were $39,573 and $60,427 respectively. The effective conversion price was then determined to be $0.40. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $39,573 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $60,427 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.

As at November 30, 2021, the Company has recorded accrued interest of $986, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

10.

Equity

During the three months ended November 30, 2020: On September 30, 2020, the Company issued 120,000 shares of common stock at $1.25 per share for gross cash proceeds of $150,000. In connection with the extension of convertible notes payable, as of November 30, 2020, the Company has common stock issuable of $129,952 (August 31, 2020 - $19,952). During the three months ended November 30, 2021: On September 2, 2021, the Company issued 2,175,933 common shares at fair value of $2,447,925 on issuance date from treasury to the CFO and COO (Note 11) and 1,900,000 common shares at fair value of $2,137,500 to certain employees of the Company as bonuses for past services, which is recorded as stock-based compensation. On September 2, 2021, the Company issued 2,997,237 common shares measured at fair value on issuance date of $3,371,892 from treasury for consulting services related to business development for a 12-month period from the issuance date. As the future benefit of the consulting services to be performed cannot be determined, the entire amount was expensed during the three months ended November 30, 2021. During the year ended August 31, 2021, the Company re-issued 750,000 shares of common stock with total fair value of $637,500 for consulting services, out of which, $425,000 was expensed as consulting fees during the prior year and $159,374 was expensed during the three months ended November 30, 2021. As at November 30, 2021, $53,126 was deferred compensation included in prepaid expenses on the consolidated balance sheet. On October 20, 2021, the Company issued 3,753,094 units at $0.75 per unit for proceeds of $2,814,821, of which $790,467 was received during the year ended August 31, 2021, and $250,000 was receivable at November 30, 2021. Each unit consists of one common share of the Company and one warrant to purchase the Company’s one common shares at $1.25 for a period of two years. During the three months ended November 30, 2021, the Company received an additional $85,146 in cash for units subscribed at $0.75 per unit. In connection with the financing, the Company incurred brokerage commission fees of $205,735. On November 5, 2021, the Company issued 705,000 units at $0.75 per unit for proceeds of $528,750. Each unit consists of one common share of the Company and one warrant to purchase the Company’s one common shares at $1.25 for a period of two years. In connection with the financing, the Company issued 8,000 shares of common stock with a fair value of $6,000 as a finder’s fee and incurred other finders’ fees of $41,654. During the three months ended November 30, 2021, the Company issued 268,000 common shares to certain investors for no consideration by error. The Company is in the process of retracting the shares.

38

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

11.	Related party transactions and balances
	All transactions with related parties have occurred in the normal course of operations and are recorded at the exchange amount which is the amount agreed to by the Company and the related party.

a)	Key management compensation and related party transactions
	The Company has identified its directors and certain senior officers as its key management personnel. The compensation costs for key management personnel were as follows:

	November 30, 2021		November 30, 2020
Consulting fees and benefits	$	91,986	$	88,865

b)

Amounts due to/from related parties

In the normal course of operations, the company shares certain administrative resources with companies related by common management and directors. The administrative resources and services, which were provided in the normal course of operations, were measured at the exchange. All amounts payable and receivable are non-interest bearing, unsecured and due on demand. The following table summarizes the amounts were due from related parties:

	November 30,  2021			August 31, 2021
CEO and Director	$	(61,796	)	$	(65,254	)
COO and Director		(76,960	)		(76,574	)
An entity controlled by the CFO		(37,961	)		(34,655	)
	$	(176,717	)	$	(176,483	)

	As of November 30, 2021, the Company had $176,717 (August 31, 2021 - $176,483) payable to related parties for expenses incurred or expensed paid on behalf of the Company by the parties which has been presented in accounts payable and accrued liabilities.
c)	Stock-based compensation
	On September 2, 2021, the Company issued 400,000 common shares from treasury at fair value of $450,000 to an entity controlled by the CFO as a bonus for past services provided. On September 2, 2021, the Company issued 1,775,933 common shares from treasury at fair value of $1,997,925 to entities controlled by the COO and Director for as a bonus for past services provided.

12.	Financial risk factors
	The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

a)	Credit risk:
	Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash account. Cash accounts are held with major banks in Canada. The Company has deposited its cash with a bank from which management believes the risk of loss is low.

39

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

12. Financial risk factors (continued)

b)	Liquidity risk:
	Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to meet liabilities when due. Accounts payable are due within the current operating period. The Company has a working capital deficit and requires additional financing to meet its current obligations (see Note 1).
c)	Market risk:
	Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The Company is not exposed to market risk.
d)	Interest rate risk:
	Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk, from time to time, on its cash balances. Surplus cash, if any, is placed on call with financial institutions and management actively negotiates favorable market related interest rates.
e)	Foreign exchange risk:
	Foreign currency risk is limited to the portion of the Company’s business transactions denominated in currencies other than the Canadian dollar. The Company has not entered into any foreign currency contracts to mitigate risk, but manages the risk my minimizing the value of financial instruments denominated in foreign currency. The Company is exposed to foreign currency risk to the extent that the following monetary assets and liabilities are denominated in Canadian dollars:

	November 30, 2021
Balance in Canadian dollars:
Cash and cash equivalents	$	70,163
Accounts payable		(454,262	)
Net exposure
Balance in US dollars:	$	(384,099	)

A 10% change in the US dollar to the Canadian dollar exchange rate would impact the Company’s net loss by approximately $38,410 for the three months ended November 30, 2021 (November 30, 2020 – $35,296).

The Company is exposed to foreign currency risk to the extent that the following monetary assets and liabilities are denominated in Colombian Pesos:

	November 30, 2021
Balance in Colombian Pesos dollars:
Cash and cash equivalents	$	281,751,039
Other receivables		83,072,204
Accounts payable		(3,170,820,800	)
Net exposure		(2,805,997,557	)
Balance in US dollars:	$	(702,870	)

A 10% change in the US dollar to the Colombian Peso exchange rate would impact the Company’s net loss by approximately $70,287 for the three months ended November 30, 2021 (November 30, 2020 - $74,408).

40

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

13.

Capital management

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the business and continue as a going concern. The Company considers capital to be all accounts in equity. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The Company has a working capital deficit and requires additional capital to finance is future business plans. The Company is not subject to any externally imposed capital requirements.

14. Commitments

a)	In August 2019, the Company entered into an agreement for the construction and installation of equipment (Note 4a), as of August 31, 2021, $208,279 remained payable upon completion of the construction.
b)	On August 30, 2019, the Company entered into sales agreement to purchase an extraction system to be use in future at its operation in Colombia. The equipment has a value of CAD$658,260. The terms of the agreement require the Company to pay the full amount in monthly installments starting September 1, 2019 and will continue to February 2020. The equipment will be paid in full before the equipment is shipped to Colombia and title transfers to the Company. At November 30, 2021, the $233,496 (Note 4(b)) has been recorded as a deposit until the remaining purchase price is paid and the equipment is received.
c)	On June 30, 2021, the Company entered into certain construction agreements for building an energy network and transformer and a water treatment system with an aggregated cost of $437,673 (COP$1,747,279,680). As at November 30, 2021, the weighted average percentage of completion is 73% or $319,240 (COP$1,280,665,381), of the work related to the construction agreement, which has been capitalized as construction in process. As at November 30, 2021, the Company held deposits of $77,829 (COP$298,175,238) and is obligated to pay the remaining $111,032 (COP$443,261,101) prior to completion of the construction.
d)	As of November 30, 2021, the Company recorded a contingent liability of $547,190 (CAD$700,000) for expenses in connection with Allied Colombia acquisition, which is included in the balance of accounts payable and accrued liabilities on the consolidated balance sheets.
e)	During the year ended August 31, 2021, the Company settled amounts owed to certain previous management of $108,500, which was presented as settlement payments in the consolidated statement of operations and comprehensive loss. As at November 30, 2021, $90,000 remained outstanding and was included in accounts payable and accrued liabilities in the consolidated balance sheet.
f)	The Company has entered into leases for farm land in Colombia. See Note 7 for details.

41

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

15.	Share purchase warrants
	The following table summarizes the continuity of share purchase warrants:

	Number of warrants			Weighted average exercise price $
Balance, August 31, 2021		3,663,135			1.21
Issued		3,717,666			1.25
Expired		(320,000	)		1.25
Balance, November 30, 2021		7,060,801			1.23

As at November 30, 2021, the following share purchase warrants were outstanding:

Number of warrants		Exercise price $		Expiry date
	130,673		1.25	September 29, 2022
	30,090		1.25	October 16, 2022
	68,750		1.25	November 11, 2022
	240,000		1.25	November 28, 2022
	118,000		0.50	March 26, 2022
	180,000		1.00	April 29, 2022
	1,446,666		1.25	June 11, 2023
	50,000		1.25	July 17, 2023
	103,956		1.25	July 26, 2023
	200,000		1.25	August 18, 2023
	775,000		1.25	August 28, 2023
	100,000		1.25	October 1, 2023
	2,812,666		1.25	October 20, 2023
	100,000		1.25	October 25, 2023
	705,000		1.25	November 6, 2023

16.	Stock options
	A summary of the Company’s stock option activity is as follows:

	Number of Options		Weighted Average Exercise Price $		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value $
Balance, August 31, 2021		4,450,000		0.77		4.42		1,334,000
Granted		100,000		1.125		4.76
Outstanding, November 30, 2021		4,550,000		0.78		4.19		5,014,000
Exercisable, November 30, 2021		1,583,333		0.79		4.21		1,721,667

42

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

16. Stock options (continued)

During the three months ended November 30, 2021, the Company recorded stock-based compensation of $531,255 for options granted on the consolidated statement of operations. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	Three Months Ended November 30, 2021			Three Months Ended November 30, 2020
Expected dividend yield		0	%	-%
Expected volatility		166	%	-%
Expected life (in years)		5			-
Risk-free interest rate		0.78	%	-%

At November 30, 2021, there was $765,815 of unrecognized compensation costs related to non-vested stock-based compensation arrangements granted under the Plan.

17. Non-cash activities

	For the Three Months Ended November 30, 2021		For the Three Months Ended November 30, 2020
Non-cash activities:
Shares issued from treasury for services and bonuses		7,957,316		-
Beneficial conversion feature		80,247		153,764
Relative fair value of warrants issuable with convertible note		120,310		133,127
Relative fair value of shares issued on modification of convertible notes		-		110,000

43

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

18.	Segment disclosure
	The Company has two operating segments including:

a)	Allied Colombia, a Colombian based company through which the Company intends to commence commercial production in Colombia. (Allied Colombia)
b)	Allied Corp. which consists of the rest of the Company’s operations. (Allied)
Factors used to identify the Company’s reportable segments include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance. The Company’s operating segments have been broken out based on similar economic and other qualitative criteria. The Company operates the Allied reporting segment in one geographical area (Canada), and the Allied Colombia reporting segment in one geographical area (Colombia). Financial statement information by operating segment for the three month period ended November 30, 2021 is presented below:

	Allied $			Allied Colombia $			Total $
Net sales		(4,679	)		14,761			10,082
Net loss		(9,662,598	)		(405,483	)		(10,068,081	)
Accretion		132,033			-			132,033
Depreciation and amortization		-			13,299			13,299
Total assets as of November 30, 2021		3,617,195			1,230,389			4,847,584

Geographic information for the three-month  period ended and as at November 30, 2021 is presented below:

	Revenues $		Total Assets $
Canada				3,617,195
Colombia		10,081		1,230,389
Total		10,081		4,847,584

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ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

November 30, 2021

(Expressed in US dollars)

19. Subsequent events

a)

On March 30, 2021, the Company entered into an asset purchase agreement (“APA”) to acquire two privileged licenses issued by the Nevada Department of Taxation purposed for the cultivation of cannabis (the “Licenses”). In consideration for the licenses, the Company agreed to pay $150,000, issue a $1,350,000 promissory note and assume certain liabilities. At November 30, 2021, the asset purchase has not been closed and the amount paid has been recorded as a deposit (Note 4 (c)).

The promissory note bears interest at the Short Term Applicable Federal Rate of 0.11% per annum and shall be repaid through quarterly payments of a minimum of 50% of the net operating income received in connection with the Nevada cannabis operation associated with the acquired Licenses. All outstanding principal and accrued interest is due two years after issuance of the note. As of November 30, 2021, the Company has not issued any considerations under the APA. The Company has not received any assets outlined in the APA. The asset purchase has not been closed. Concurrent with the APA, the Company entered into a services agreement (the “Services Agreement”) and a land lease agreement (the “Lease Agreement”) with the seller of the Licenses. Pursuant to the Services agreement the seller of the licenses will provide consulting services to the Company in exchange for the reimbursement of expenses incurred. Pursuant to the Lease Agreement, the Company leased land in North Las Vegas to accommodate an approximately 9,000 square foot building to be used for the cultivation, marketing or sale of cannabis for a period of 25 years. Lease payments shall commence on the date which the first cannabis plant is planted, and monthly lease payments are as follows:

· $1,500 per month for the first five years.

· $1,800 per month for years 6 to 10 of the lease.

· $2,025 per month for years 11 to 15 of the lease.

· $2,280 per month for years 16 to 20 of the lease.

· $2,565 per month for years 21 to 25 of the lease.

	In addition, for the term of the lease, the Company shall pay the landlord 50% of the net operating income derived from the cannabis cultivation operation located at the leased premises.
The Company is currently negotiating to significantly revise this agreement and structure.  Effectively the APA, the Lease Agreement and the Service Agreement will be terminated and replaced by an Option to Purchase Agreement. Our wholly owned subsidiary, Allied US Products LLC, a Nevada limited liability company, intends to revise the structure to enter into an Option to Purchase Agreement (the “ Option Purchase Agreement”) which allows for the purchase of a Nevada State US-based cannabis license from a subsidiary of Fiore Cannabis, Ltd. only upon on the occurrence or waiver of the changes in U.S. federal law to permit the general cultivation, distribution and possession of marijuana or to remove the regulation of such activities from the federal laws of the United States (the “Triggering Event”). While the Company has begun to enter into arrangements with United States based companies that may themselves participate in the United States cannabis market, we do not hold any US assets, but rather have a call option to purchase that can be exercisable or exchangeable upon cannabis becoming legal or permissible in the United States under Federal law. The Company will only conduct business activities related to growing or processing cannabis in jurisdictions, including the United States, when it is federally permissible to do so. The Company is not considered a United States Marijuana Issuer (as defined in the Canadian Securities Administrators Staff Notice 51-352 – Issuers with United States Marijuana-Related Activities (the “Staff Notice”)) nor does it have material ancillary involvement in the United States. cannabis industry in accordance with the Staff Notice. While the Company has several arrangements with United States based companies that may themselves participate in the United States cannabis market, these relationships do not violate the federal laws of the United States respecting cannabis and in no manner involve the Company in any activities in the United States respecting cannabis.
b)	On December 23, 2021, the Company issued two secured convertible notes with a face value of $200,000. The note bears interest at 10% per annum and is due on demand on or after June 23, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to June 23, 2022 at a conversion price of $1.25 per share.
c)	On January 11, 2022, the Company issued a secured convertible note with a face value of $150,000. The note bears interest at 10% per annum and is due on demand on or after July 10, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to July 10, 2022 at a conversion price of $1.25 per share.
d)	Subsequent to November 30, 2021, the Company received $27,000 for subscription to 36,000 units at $0.75 per unit. Each unit consists of one common share of the Company and one warrant to purchase the Company’s one common share at $1.25 for a period of two years.
e)	Subsequent to November 30, 2021, the Company entered into an amendment agreement for the financing agreement as described in Note 8 a). Pursuant to the amendment, the Company will make monthly payments of $37,613. For the remaining 24 months, the Company will make monthly payments of $66,288. If the first 6 monthly payments are made on time, the Company may prepay the unamortized loan balance with a 2% penalty of the remaining balance.

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

The following discussion relates to the historical operations and financial statements of Allied Corp. for the three months ended November 30, 2021 and 2020.

Forward-Looking Statements

The following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this Quarterly Report. The Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Annual Report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risks Factors” in our various filings with the Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report.

The following discussion highlights the Company’s results of operations and the principal factors that have affected its consolidated financial condition as well as its liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the Company’s consolidated financial condition and results of operations presented herein. The following discussion and analysis are based upon Allied Corp’s unaudited financial statements contained in this Current Report on Form 10-Q, which have been prepared in accordance with generally accepted accounting principles in the United States. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Overview

Allied Corp. (“Allied” or the “Company”) is a Nevada corporation, based in Kelowna, British Columbia, Canada. Allied is an international medical cannabis production company with a mission to address today’s medical issues by researching, creating and producing targeted cannabinoid health solutions. Allied uses what it considers to be an evidence-informed scientific approach to make this mission possible, through cutting-edge pharmaceutical research and development, innovative plant-based production and unique development of therapeutic products.

References in this periodic report on Form 10-Q to “Allied” or the “Company” may include references to the operations of our subsidiaries AM (Advanced Micro) Biosciences, Inc., Allied Colombia S.A.S., Baleno Ltd., Tactical Relief, LLC, Allied US Products, LLC, and Pacific Sun Fungi Inc. Each of these corporations is a 100% wholly owned subsidiary of Allied and consequentially reports quarterly financials up to a consolidated quarterly submission.

Allied’s focus is on the development of medicinal cannabis and psilocybin products for patients with conditions potentially suitable for treatment therewith. Such conditions include anxiety, insomnia, anorexia, chronic pain, epilepsy, chemotherapy-induced nausea and vomiting, post-traumatic stress disorder (PTSD), Parkinson’s disease, Tourette syndrome, irritable bowel syndrome (IBS) and spasticity associated with multiple sclerosis (MS) and spinal cord injury (SCI).

Allied’s objective is to be a company that controls its own international vertically integrated supply chain or CBD, cannabis, and psilocybin products in order to maximize cash flow and profit margins. Our management team believes that having control over our supply chain should enable us to provide a consistent, rolling-harvest supply to the global cannabis community.

Given the average cost of production in North America being approximately $1.00 to $2.00 per gram, we believe our anticipated cash cost of $0.05 per gram (non-GAAP) of cannabis production based on historical production of our operations and other companies growing raw flowers in Columbia afforded by our Colombian production and cultivation should provide us a competitive advantage.

In addition to what we consider our demonstrated ability to cultivate low-cost, high margin cannabis in Colombia primarily for use in proprietary cannabinoid drug and natural health products for international distribution, we have hemp derived CBD natural health products for sale in the United States, have received commercial approval for sale of medical cannabis being produced in Colombia for export to nations other than the United States, and have initiated human clinical phase I trial for our psilocybin-based pharma products ALID 11, ALID 12 and Psilonex™ which are protected under provisional patent and trademarks in the United States.

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Effects of COVID-19

In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and the related adverse public health developments have adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. While COVID-19 delayed shipment of some of our products, management has determined that there has been no significant impact to the Company’s operations, however management continues to monitor the situation.

Critical Accounting Policies

Business Presentation

The unaudited condensed consolidated interim financial statements and related notes in this Quarterly Report on Form 10-Q are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and are expressed in United States dollars. The Company’s fiscal year end is August 31.

The unaudited condensed consolidated interim financial statements have been prepared in accordance with US GAAP for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by US GAAP for complete financial statements. Therefore, the unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended August 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC.

The unaudited condensed consolidated interim financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at November 30, 2021, and the results of its operations for the three months ended November 30, 2021, and cash flows for the three months ended November 30, 2021. The results of operations for the period ended November 30, 2021 are not necessarily indicative of the results to be expected for future quarters or the full year.

The significant accounting policies followed are:

a) Principles of consolidation

The consolidated financial statements include accounts of Allied Corp. and its majority owned subsidiaries. Subsidiaries are consolidated from the date of acquisition and control and continue to be consolidated until the date that such control ceases. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect these returns through its power over the investee. All intercompany balances, income, expenses, and unrealized gains and losses resulting from intercompany transactions are eliminated on consolidation.

b) Cash and cash equivalents

Cash is comprised of cash on hand, cash held in trust accounts and demand deposits. Cash equivalents are short-term, highly liquid investments with maturities within three months when acquired. The Company did not have any cash equivalents as of November 30, 2021 and August 31, 2021.

c) Property, plant and equipment

Property, plant and equipment are stated at cost. The Company depreciates the cost of property, plant and equipment over their estimated useful lives at the following annual rates and methods:

Farm facility and equipment	1 - 10 years straight-line basis
Office and computer equipment	5 - 10 years straight-line basis
Land equipment	10 years straight-line basis

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d) Inventory

Inventory is comprised of raw materials, supplies, vegetative and flowering plants, dried flower, diluted crude and CBD isolates available for sale, and purchased cannabis products.

Inventory is stated at the lower of cost or net realizable value, determined using weighted average cost. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. At the end of each reporting period, the Company performs an assessment of inventory and records write-downs for excess and obsolete inventories based on the Company’s estimated forecast of product demand, production requirements, market conditions, regulatory environment, and spoilage. Actual inventory losses may differ from management’s estimates and such differences could be material to the Company’s consolidated balance sheets, statements of net loss and comprehensive loss and statements of cash flows.

e) Intangible assets

Intangible assets include licenses which are being amortized over their estimated useful lives of 10 years. The Company’s licenses are amortized over their economic or legal life on a straight-line basis, whichever is shorter. The licenses have been amortized from the date of acquisition.

The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.

For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value.

f) Long-lived assets

In accordance with ASC 360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

g) Foreign currency translation and functional currency conversion

Items included in the consolidated financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entities operate (the “functional currency”).

Prior to September 10, 2019, the Company’s functional currency was the Canadian dollar. Translation gains and losses from the application of the U.S. dollar as the reporting currency during the period that the Canadian dollar was the functional currency are included as part of cumulative currency translation adjustment, which is reported as a component of shareholders’ equity under accumulated other comprehensive loss.

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The Company re-assessed its functional currency and determined as at September 10, 2019, its functional currency changed from the Canadian dollar to the U.S. dollar based on management’s analysis of changes in our organization. The change in functional currency was accounted for prospectively from September 10, 2019 and prior period financial statements were not restated for the change in functional currency.

For periods commencing September 10, 2019, monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates in effect at the balance sheet date. Opening balances related to non-monetary assets and liabilities are based on prior period translated amounts, and non-monetary assets and non-monetary liabilities incurred after September 10, 2019 are translated at the approximate exchange rate prevailing at the date of the transaction. Revenue and expense transactions are translated at the approximate exchange rate in effect at the time of the transactions. Foreign exchange gains and losses are included in the statement of operations and comprehensive loss as foreign exchange gains.

The Company assessed the functional currency for Allied Colombia to be the Colombian peso. The functional currency for all other subsidiaries is the U.S. dollar.

h) Share issuance costs

Costs directly attributable to the raising of capital are charged against the related share capital. Costs related to shares not yet issued are recorded as deferred share issuance costs. These costs are deferred until the issuance of the shares to which the costs relate, at which time the costs will be charged against the related share capital or charged to operations if the shares are not issued.

i) Research and development costs

Research and development costs are expensed as incurred.

j) Revenue recognition

The Company’s revenue is comprised of sales of cannabis products.

The Company’s revenue-generating activities have a single performance obligation and revenue is recognized at the point in time when control of the product transfers and the Company’s obligations have been fulfilled. This generally occurs when the product is shipped or delivered to the customer, depending upon the method of distribution and shipping terms set forth in the customer contract. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of the Company’s product. Certain of the Company’s customer contracts may provide the customer with a right of return. In certain circumstances the Company may also provide a retrospective price adjustment to a customer. These items give rise to variable consideration, which is recognized as a reduction of the transaction price based upon the expected amounts of the product returns and price adjustments at the time revenue for the corresponding product sale is recognized. The determination of the reduction of the transaction price for variable consideration requires that the Company make certain estimates and assumptions that affect the timing and amounts of revenue recognized.

Sales of products are for cash or otherwise agreed-upon credit terms. The Company’s payment terms vary by location and customer; however, the time period between when revenue is recognized and when payment is due is not significant. The Company estimates and reserves for its bad debt exposure based on its experience with past due accounts and collectability, write-off history, the aging of accounts receivable and an analysis of customer data.

k) Net income (loss) per common share

Net income (loss) per share is calculated in accordance with ASC 260, Earnings per Share. The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding to the extent the effect would not be antidilutive. Dilutive potential common shares are additional common shares assumed to be exercised.

Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding.

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l) Income taxes

The Company accounts for income taxes under ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

m) Related party transactions

Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. The Company discloses related party transactions that are outside of normal compensatory agreements, such as salaries. Related party transactions are measured at the exchange amounts.

n) Significant accounting estimates and judgments

The preparation of the financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Although management uses historical experience and its best knowledge of the amount, events or actions to for the basis for judgments and estimates, actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods.

Significant estimates and assumptions included in these financial statements relate to the valuation assumptions related to the estimated useful lives and recoverability of long-lived assets, stock-based compensation, and deferred income tax assets and liabilities. Judgments are required in the assessment of the Company’s ability to continue to as going concern.

o) Financial instruments

ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The financial instruments consist principally of cash, due from related parties, accounts payable, note payable, and convertible notes payable. The fair value of cash when applicable is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all other financial instruments which are categorized as loans and receivables approximate their current fair values because of their nature and respective relatively short maturity dates or current market rates of interest for similar instruments.

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For certain of the Company’s financial instruments, including accounts payable, due from related parties, notes and loans payable, the carrying amounts approximate their fair values due to the short maturities.

The Company does not have any assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet as of November 30, 2021 and August 31, 2021 other than cash.

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions.

p) Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The standard states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. The Company adopted ASU 2016-02 on September 1, 2019, using the transition relief to the modified retrospective approach, presenting prior year information based on the previous standard. The Company did not have any leases until the acquisition of its wholly owned subsidiary, Allied Colombia S.A.S. on February 18, 2020.

The Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease payments arising from the lease. All leases with terms greater than twelve months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. Unless a lease provides all of the information required to determine the implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. The Company uses the implicit interest rate in the lease when readily determinable.

Our lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that we will exercise that option. Leases with terms of twelve months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of an asset or liability.

q) Reverse Acquisitions

Identification of the accounting acquirer

The Company considers factors in ASC 805-10-55-10 through 55-15 in identifying the accounting acquirer. The Company uses the existence of a controlling financial interest to identify the acquirer - the entity that obtains control of the acquiree. Other pertinent facts and circumstances also shall be considered in identifying the acquirer in a business combination effected by exchanging equity interests, including the following: (a) The relative voting rights in the combined entity after the business combination, where the acquirer usually is the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity taking into consideration the existence of any unusual or special voting arrangements and options, warrants, or convertible securities; (b) the existence of a large minority voting interest in the combined entity if no other owner or organized group of owners has a significant voting interest, and where the acquirer usually is the combining entity whose single owner or organized group of owners holds the largest minority voting interest in the combined entity; (c) the composition of the governing body of the combined entity, where the acquirer usually is the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity; (d) the composition of the senior management of the combined entity, where the acquirer usually is the combining entity whose former management dominates the management of the combined entity; and (e) the terms of the exchange of equity interests, where the acquirer usually is the combining entity that pays a premium over the pre-combination fair value of the equity interests of the other combining entity or entities, where the acquirer usually is the combining entity whose relative size (measured in, for example, assets, revenues, or earnings) is significantly larger than that of the other combining entity or entities.

Pursuant to ASC Paragraph 805-40-05-2, as one example of a reverse acquisition, a private operating entity may arrange for a public entity to acquire its equity interests in exchange for the equity interests of the public entity. In this situation, the public entity is the legal acquirer because it issued its equity interests, and the private entity is the legal acquiree because its equity interests were acquired. However, application of the guidance in ASC 805-10-55-11 through 55-15 results in identifying: (a) The public entity as the acquiree for accounting purposes (the accounting acquiree); and (b) the private entity as the acquirer for accounting purposes (the accounting acquirer).

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Measuring the consideration transferred

Pursuant to ASC 805-40-30-2 and 30-3 in a reverse acquisition, the accounting acquirer usually issues no consideration for the acquiree. Instead, the accounting acquiree usually issues its equity shares to the owners of the accounting acquirer. Accordingly, the acquisition-date fair value of the consideration transferred by the accounting acquirer for its interest in the accounting acquiree is based on the number of equity interests the legal subsidiary would have had to issue to give the owners of the legal parent the same percentage equity interest in the combined entity that results from the reverse acquisition. The fair value of the number of equity interests calculated in that way can be used as the fair value of consideration transferred in exchange for the acquiree. The assets and liabilities of the legal acquiree are measured and recognized in the consolidated financial statements at their pre-combination carrying amounts (see ASC 805-40-45-2(a)).

Presentation of consolidated financial statements post reverse acquisition

Pursuant to ASC 805-40-45-1 and 45-2, consolidated financial statements following a reverse acquisition are issued under the name of the legal parent (accounting acquiree) but described in the notes as a continuation of the financial statements of the legal subsidiary (accounting acquirer), with one adjustment, which is to retroactively adjust the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree. That adjustment is required to reflect the capital of the legal parent (the accounting acquiree). Comparative information presented in those consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent (accounting acquiree). The consolidated financial statements reflect all of the following: (a) The assets and liabilities of the legal subsidiary (the accounting acquirer) recognized and measured at their pre-combination carrying amounts; (b) the assets and liabilities of the legal parent (the accounting acquiree) recognized and measured in accordance with the guidance in Topic 805 “Business Combinations”; (c) the retained earnings and other equity balances of the legal subsidiary (accounting acquirer) before the business combination; (d) the amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of the legal subsidiary (the accounting acquirer) outstanding immediately before the business combination to the fair value of the legal parent (accounting acquiree) determined in accordance with the guidance in this topic applicable to business combinations. However, the equity structure (that is, the number and type of equity interests issued) reflects the equity structure of the legal parent (the accounting acquiree), including the equity interests the legal parent issued to effect the combination.

Accordingly, the equity structure of the legal subsidiary (the accounting acquirer) is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent (the accounting acquiree) issued in the reverse acquisition; and (e) the non-controlling interest’s proportionate share of the legal subsidiary’s (accounting acquirer’s) pre-combination carrying amounts of retained earnings and other equity interests as discussed in ASC 805-40-25-2 and 805-40-30-3.

Pursuant to ASC 805-40-45-4 and 45-5, in calculating the weighted-average number of common shares outstanding (the denominator of the earnings-per-share (“EPS”) calculation) during the period in which the reverse acquisition occurs: (a) The number of common shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted-average number of common shares of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement; and (b) the number of common shares outstanding from the acquisition date to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period.

The basic EPS for each comparative period before the acquisition date presented in the consolidated financial statements following a reverse acquisition shall be calculated by dividing (a) by (b): (a) The income of the legal acquiree attributable to common shareholders in each of those periods; and (b) the legal acquiree’s historical weighted average number of common shares outstanding multiplied by the exchange ratio established in the acquisition agreement.

As a result of the controlling financial interest of the former stockholders of AMBI, for financial statement reporting purposes, the asset acquisition has been treated as a reverse acquisition with AMBI deemed the accounting acquirer and the Company deemed the accounting acquiree under the acquisition method of accounting in accordance with ASC 805-10-55 of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The reverse acquisition is deemed a capital transaction and the net assets of AMBI (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the acquisition. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of AMBI which are recorded at their historical cost. The equity of the Company is the historical equity of AMBI.

These consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries, AM Biosciences effective from the date of the reverse take—over transaction on September 10, 2019 and Allied Colombia (from the date of acquisition, February 18, 2020). All intercompany balances and transactions have been eliminated upon consolidation.

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r) Recent accounting pronouncements

The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the three months ended November 30, 2021, are of significance or potential significance to the Company.

Financial Condition and Results of Operations

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a net loss for the three months ended November 30, 2021 of $10,068,081, has generated minimal revenue and as at November 30, 2021 has a working capital deficit of $4,229,248. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise sufficient financing to acquire or develop a profitable business. Management intends on financing its operations and future development activities largely from the sale of equity securities with some additional funding from other traditional financing sources, including related party loans until such time that funds provided by future planned operations are sufficient to fund working capital requirements.

Results of Operations

Comparison of Unaudited Results for the Three Months Ended November 30, 2021 compared to the Three Months Ended November 30, 2020

Sales and Revenue

For the three-month periods ended November 30, 2021 we had $10,082 in revenue compared to $4,200 for the three-month period ended November 30, 2020. We are just at the beginning of sales of our products which we expect to improve during the current fiscal year.

Operating Expenses

Operating expenses for the three-month period ended November 30, 2021 totaled $9,946,130 compared to $864,014 for the three-month period ended November 30, 2020. Operating expenses for the three-month period ended November 30, 2021 is mainly a result of stock-based compensation (for consulting services) of $3,531,266, stock-based compensation (bonus shares issued) of $4,585,425, stock-based compensation (options) of $531,255, inventory write-off to net realizable value of $252,639, office and miscellaneous expense of $302,290, professional fees of $243,788, and interest expense of $171,141. Operating expenses for the three-month period ended November 30, 2020 is mainly a result of office and general expense of $105,812, professional fees of $130,631 and consulting fees of $327,843. The increase in operating expense during the quarter ended November 30, 2021 is principally the result of an increase in stock-based compensation of $8,647,946, which was necessary to develop our product lines and inventory write-off to net realizable value of $252,639.

Net Loss

As a result of the changes described above, net loss from operations after income taxes increased to $10,068,081 during the three months ended November 30, 2021 compared to $1,195,862 during the three-month period ended November 30, 2020.

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Liquidity and Capital Resources

The following table sets forth the major components of our statements and consolidated statements of cash flows for the periods presented.

	Three Months Ended November 30, 2021			Three Months Ended November 30, 2020
Cash used in operating activities	$	(1,715,953	)	$	(694,160	)
Cash from financing activities	$	1,998,111		$	524,412
Cash from (used in) investing activities	$	(375,413	)	$	107,965
Change in cash during the period	$	(93,255	)	$	(61,783	)
Effect of exchange rate change	$	(51,041	)	$	(20,869	)
Cash, beginning of period	$	419,825		$	94,047
Cash, end of period	$	275,529		$	11,395

As of November 30, 2021, the Company had $674,965 in current assets, consisting of $275,529 in cash, $155,481 in inventory, $34,522 in receivables, and $209,433 in prepaid expenses. Other assets mainly include deposits and advances of $3,233,720 (principally related to our building to be located in Nevada), property, plant and equipment of $665,119, right-of-use assets of $277,780 and intangible assets of $46,000.

To date, the Company has financed its operations through equity sales and through the sale of convertible notes as reflected below.

On May 17, 2021 the Company commenced a private placement pursuant to Rule 506(c) promulgated under Regulation D of the Securities Exchange Act of 1934, as amended. The private placement terminated on November 5, 2021. The private placement sought to raise $5,250,000 through the sale of Units at $0.75 per Unit, each consisting of one share of common stock and one warrant to purchase one share of common stock for two years at an exercise price of $1.25 per share. Boustead Securities LLC acted as the exclusive Placement Agent for this offering on a best efforts basis. Boustead received compensation in cash of 10 percent of the proceeds from such Offering up to $1,000,000 and 7 percent of the proceeds from such Offering thereafter. We obtained $3,178,572 in gross proceeds from this offering.

Convertible Notes during the Quarter ended November 30, 2020

The Company has granted each and every one of the secured convertible note holders referenced below a continuing security interest in, a general lien upon, and a right of setoff against all existing and future assets and property under the terms of a security agreement.

On September 29, 2020, the Company issued a convertible note with a fair value of $163,341 and warrants to purchase 130,673 shares of the Company’s common stock at $1.25 per share for 2 years. The note bears interest at 10% per annum. The note was due on demand after March 27, 2021. The note was convertible into shares of the Company’s common stock at any time prior to March 27, 2021 at a conversion price of $1.25 per share. On March 31, 2021, the Company amended the note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum and is due on demand on or before September 30, 2021. In consideration for extending the maturity date, the Company issued to the convertible note holder 8,268 common shares of the Company. On June 1, 2021, the Company again amended the note. Pursuant to the amendment, beginning on June 1, 2021, the note bears simple interest at 10% per annum and was due on demand on or before November 30, 2021 for no additional consideration. On November 1, 2021, the Company again amended the note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum and is due on demand on or before March 31, 2022 for no additional consideration.

On October 26, 2020, the Company issued a convertible note with a face value of $37,613 and warrants to purchase 30,090 shares of the Company’s common stock at $1.25 per share for 2 years. The note bears interest at 10% per annum. The note was due on demand after April 23, 2021. The note was convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share. On June 1, 2021, the Company amended the note. Pursuant to the amendment, beginning on June 1, 2021, the note bears simple interest at 10% per annum and was due on demand on or before November 30, 2021 for no additional consideration. On November 1, 2021, the Company again amended the note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum and is due on demand on or before March 31, 2022 for no additional consideration.

54

On November 11, 2020, the Company issued a convertible note with a face value of $85,937 and warrants to purchase 68,750 shares of the Company’s common stock at $1.25 per share for 2 years. The note bears interest at 10% per annum and is due on demand after May 9, 2021. The note was convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share. On June 1, 2021, the Company amended the note. Pursuant to the amendment, beginning on June 1, 2021, the notes bears simple interest at 10% per annum and was due on demand on or before November 30, 2021 for no additional consideration. On November 1, 2021, the Company again amended the note. Pursuant to the amendment, beginning on April 1, 2021, the convertible notes bear simple interest at 10% per annum and is due on demand on or before March 31, 2022 for no additional consideration.

On December 2, 2020, the Company issued a convertible note with a face value of $600,000 and warrants to purchase 240,000 shares of the Company’s common stock at $1.25 per share for 2 years. The note bears interest at 10% per annum and is due on demand after November 27, 2021. The note is convertible into shares of the Company’s common stock at any time prior to November 27, 2021 at a conversion price of $1.25 per share. On October 1, 2021, the Company amended the note. Pursuant to the amendment, the note bears simple interest at 10% per annum and is due on demand on or before March 31, 2022 for no additional consideration.

Convertible Notes during the Quarter ended November 30, 2021

On October 1, 2021, the Company issued a convertible note with a face value of $100,000 and warrants to purchase 100,000 shares of the Company’s common stock at $1.25 per share for 1 year. The note bears interest at 10% per annum and is due on demand after March 31, 2022. The note is convertible into shares of the Company’s common stock at any time prior to March 31, 2022 at a conversion price of $1.25 per share. On November 1, 2021, the Company amended the note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum and is due on demand on or after March 31, 2022 for no additional consideration.

On October 25, 2021, the Company issued a convertible note with a face value of $100,000 and warrants to purchase 100,000 shares of the Company’s common stock at $1.25 per share for 1 year. The note bears interest at 10% per annum and is due on demand after March 31, 2022. The note is convertible into shares of the Company’s common stock at any time prior to March 31, 2022 at a conversion price of $1.25 per share

Equity Transactions during the Quarter ended November 30, 2020

On September 30, 2020, the Company issued 120,000 shares of common stock at $1.25 per share for gross cash proceeds of $150,000.

At November 30, 2020, the Company had common stock issuable of $129,952 in connection with the extension of convertible notes payable.

Equity Transactions during the Quarter ended November 30, 2021

On September 2, 2021, the Company issued 2,175,933 common shares at fair value of $2,447,925 on issuance date from treasury to the CFO and COO (Note 11) and 1,900,000 common shares at fair value of $2,137,500 to certain employees of the Company as bonuses for past services, which is recorded as stock-based compensation.

On September 2, 2021, the Company issued 2,997,237 common shares measured at fair value on issuance date of $3,371,892 from treasury for consulting services related to business development for a 12-month period from the issuance date. As the future benefit of the services to be performed cannot be determined, the entire amount was expensed during the three months ended November 30, 2021.

During the year ended August 31, 2021, the Company re-issued 750,000 shares of common stock with total fair value of $637,500 for consulting services, out of which, $425,000 was expensed as consulting fees during the prior year and $159,374 was expensed during the three months ended November 30, 2021. As at November 30, 2021, $53,126 was deferred compensation included in prepaid expenses on the consolidated balance sheet.

On October 20, 2021, the Company issued 3,753,094 units at $0.75 per unit for proceeds of $2,814,821, of which $790,467 was received during the year ended August 31, 2021, and $250,000 was receivable at November 30, 2021. Each unit consists of one common share of the Company and one warrant to purchase the Company’s one common shares at $1.25 for a period of two years. During the three months ended November 30, 2021, the Company received an additional $85,146 in cash for units subscribed at $0.75 per unit. In connection with the financing, the Company incurred brokerage commission fees of $205,735.

On November 5, 2021, the Company issued 705,000 units at $0.75 per unit for proceeds of $528,750. Each unit consists of one common share of the Company and one warrant to purchase the Company’s one common shares at $1.25 for a period of two years. In connection with the financing, the Company issued 8,000 shares of common stock with a fair value of $6,000 as a finder’s fee and incurred other finders’ fees of $41,654.

During the three months ended November 30, 2021, the Company issued 268,000 common shares to certain investors for no consideration by error. The Company is in the process of retracting the shares.

At November 30, 2021, the Company had received $224,664 in cash for shares subscriptions and has subscriptions receivable of $250,000 for shares issued.

Future Financing

In connection with its proposed business plan and currently ongoing and proposed acquisitions, in addition to the possible proceeds from this offering the Company will be required to complete substantial and significant additional capital formation. Such formation could be through additional equity offerings, debt, bank financings or a combination of any source of financing. There can be no assurance that the Company will be successful in completion of such financings.

Plan of Operations

As noted above, the continuation of our current plan of operations requires us to raise significant additional capital. If we are successful in raising capital through the sale of convertible notes or common shares, we believe that we will have sufficient cash resources to fund our plan of operations through 2022. If we are unable to do so, we may have to curtail and possibly cease some operations. We intend to use the net proceeds from the offering for operating capacity in Colombia, Canada and the United States, regulatory compliance, intellectual property, working capital and general corporate purposes.

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We continually evaluate our plan of operations to determine the manner in which we can most effectively utilize our limited cash resources. The timing of completion of any aspect of our plan of operations is highly dependent upon the availability of cash to implement that aspect of the plan and other factors beyond our control. There is no assurance that we will successfully obtain the required capital or revenues, or, if obtained, that the amounts will be sufficient to fund our ongoing operations.

Capital Expenditures

As of November 30, 2021 the company had purchased property plant and equipment of $665,119 and paid net cash of $3,233,720 in deposits for asset acquisitions. As of August 31, 2021, the Company purchased property plant and equipment of $267,835 and paid net cash of $3,156,163 in deposits and advances for an asset acquisition.

Xtreme Cubes Building

In June 2019, AM Biosciences signed the production and manufacturing contract to begin the manufacturing of a building for an extraction and production facility. This building will be a fully scalable, modular building. The Company made an upfront payment of $230,000 USD in June 2019, an additional payment of $903,385 in August 2019 and an additional payment of $92,000 in March 2020. At November 30, 2021, Company had deposits of $2,656,695 to purchase prefabricated buildings. As of November 30, 2021, the Company had not yet received the building and the amounts have been recorded as deposits.

Commitments and Contractual Obligations

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

Off-balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Going Concern

As reflected in the accompanying financial statements, the Company had an accumulated deficit of approximately $29,461,893 at November 30, 2021 and a net loss of $10,068,081 for the three months ended November 30, 2021.

The Company does not yet have a history of financial stability. Historically, the principal source of liquidity has been the issuance of convertible notes and equity securities. In addition, the Company has generated no revenues since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue operations is dependent on the success of Management’s plans, which include the raising of capital through the issuance of equity securities, until such time that funds provided by operations are sufficient to fund working capital requirements.

The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company believes its current available cash will be sufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Our management evaluated the effectiveness of the Company’s internal control over financial reporting as of November 30, 2021. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on this evaluation, our management concluded that, as of November 30, 2021, our internal control over financial reporting was effective.

This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permits us to provide only management’s report in this quarterly report.

Changes in Internal Control over Financial Reporting.

There were no changes in our internal control over financial reporting that occurred during the period from August 31, 2021 through November 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties other than the following:

On or about April 30, 2020 the Company filed a complaint entitled ALLIED CORP., a Nevada corporation, Plaintiff, v. MALCOLM DAVIDSON, an individual, ANTHONY ZELEN, an individual, and DAVID WEINKAUF, an individual, Defendants, and TACTICAL RELIEF, LLC, a Delaware limited liability company, Nominal Party, filed in the Delaware Chancery Court as Case No. 2020-0321 – PAF (the “Delaware Action”).

On or about May 28, 2020 the Company filed that a complaint entitled ALLIED CORP., a Nevada corporation, and AM (ADVANCED MICRO) BIOSCIENCES, INC., an ALLIED CORP., a Nevada corporation, and AM (ADVANCED MICRO) BIOSCIENCES, INC., a British Columbian corporation, Plaintiffs, vs. MALCOLM DAVIDSON, an individual, ANTHONY ZELEN, an individual, and DAVID WEINKAUF, an individual, Defendants filed on May 28, 2020 in the District Court of Clark County Nevada as Case No. A-20-815610-B (The “Nevada Action”, and collectively with the Delaware action the “CLAIMS”).

On or about September 30, 2020 but effective September 21, 2020 the parties entered into three separate settlement agreements resolving the claims of both the Delaware Action and the Nevada Action.

In December 2018, the Company’s subsidiary AM Biosciences had issued 5,000,000 shares of its common stock to both Mr. Zelen and Mr. Weinkauf as an investment at $0.0001cents. These were converted to 4,311,585 shares (the “SECFAC Shares”) of SECFAC Exchange Corp. (“SECFAC”) at the time of the acquisition of AM Biosciences by Allied Corp. Pursuant to the settlement agreements, Mr. Zelen and Mr. Weinkauf both returned 4,061,585 of the SECFAC Exchangeable Shares to be immediately returned to SECFAC’s treasury. As the SECFAC Exchangeable Shares were readily converted to common shares of the Company at 1:1 at the option of the holders, the return of the SECFAC Exchangeable Shares were treated as return of equivalent unit of common shares of the Company to treasury upon receipt of the SECFAC Exchangeable Shares.

Further, in March 2019, Mr. Calum Hughes and each of Mr. Zelen and Mr. Weinkauf entered into an agreement for the sale of 6,250,000 shares of common stock of AM Biosciences to be sold to Mr. Zelen and Mr. Weinkauf from Mr. Calum Hughes for $0.0001cents each (the “Repudiated Shares”). These were issued back to Calum Hughes after the non-payment and issuance of a letter of acceptance of repudiation in April 2020. (the “Repudiation Letter”). As part of the settlement, each of Mr. Zelen and Mr. Weinkauf acknowledged and accepted the repudiation letter.

Pursuant to the settlement with Mr. Zelen, Allied agreed to pay through his counsel a total of USD$30,000 as a flat fee settlement cash portion, payable in three installments as follows: a. The first installment of $10,000.00 USD is to be paid on or before October 31, 2020, b. The second installment of $10,000 USD is to be paid on or before November 30, 2020; and c. The third installment of $10,000USD is to be paid on or before December 30, 2020. These payments have not been made.

Pursuant to the settlement with Mr. Weinkauf, Allied agreed to pay through his counsel a total of USD$60,000 as a flat fee settlement cash portion, payable in three installments as follows: a. The first installment of $30,000.00 USD is to be paid on or before October 31, 2020, b. The second installment of $20,000 USD is to be paid on or before November 30, 2020; and c. The third installment of $10,000USD is to be paid on or before December 30, 2020. These payments have not been made.

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Pursuant to the original settlement with Mr. Davidson, Allied agreed to pay through his counsel a total of USD$15,000 as a flat fee settlement cash portion payable on or before October 31, 2020 (which is now fully paid).

In addition, each of the defendants agreed to certain confidentiality and non-solicitation covenants in addition to other terms.

As of the date of this report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. We are not aware of any other legal proceedings pending or that have been threatened against us or our properties.

From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings or claims, other than those disclosed above, are pending against or involve the Company that, in the opinion of management, could reasonably be expected to have a material adverse effect on its business and financial condition.

As of the date of this report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. We are not aware of any other legal proceedings pending or that have been threatened against us or our properties.

From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings or claims, other than those disclosed above, are pending against or involve the Company that, in the opinion of management, could reasonably be expected to have a material adverse effect on its business and financial condition.

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On September 2, 2021, the Company issued 2,175,933 common shares at fair value of $2,447,925 on issuance date from treasury to the CFO and COO and 1,900,000 common shares at fair value of $2,137,500 to certain employees of the Company as bonuses for past services, which is recorded as stock-based compensation.

On September 2, 2021, the Company issued 2,997,237 common shares measured at fair value on issuance date of $3,371,892 from treasury for consulting services related to business development for a 12-month period from the issuance date. As the future benefit of the services to be performed cannot be determined, the entire amount was expensed during the three months ended November 30, 2021.

During the year ended August 31, 2021, the Company re-issued 750,000 shares of common stock with total fair value of $637,500 for consulting services, out of which, $425,000 was expensed as consulting fees during the prior year and $159,374 was expensed during the three months ended November 30, 2021. As at November 30, 2021, $53,126 was deferred compensation included in prepaid expenses on the consolidated balance sheet.

On October 20, 2021, the Company issued 3,753,094 units at $0.75 per unit for proceeds of $2,814,821, of which $790,467 was received during the year ended August 31, 2021, and $250,000 was receivable at November 30, 2021. Each unit consists of one common share of the Company and one warrant to purchase the Company’s one common shares at $1.25 for a period of two years. During the three months ended November 30, 2021, the Company received an additional $85,146 in cash for units subscribed at $0.75 per unit. In connection with the financing, the Company incurred brokerage commission fees of $205,735.

 On November 5, 2021, the Company issued 705,000 units at $0.75 per unit for proceeds of $528,750. Each unit consists of one common share of the Company and one warrant to purchase the Company’s one common shares at $1.25 for a period of two years. In connection with the financing, the Company issued 8,000 shares of common stock with a fair value of $6,000 as a finder’s fee and incurred other finders’ fees of $41,654.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information.

Not applicable

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Item 6. Exhibits.

31.1	Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer
31.2	Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer
101	Interactive data files pursuant to Rule 405 of Regulation S-T.
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

60

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.

	Allied Corp. (Registrant)
Date: January 19, 2022	By:	/s/ Calum Hughes
		Calum Hughes
		Chief Executive Officer and Director {Principal and Executive Officer}
Date: January 19, 2022	By:	/s/ Ryan Maarschalk
		Ryan Maarschalk
		Chief Financial Officer
		(Principal Financial Officer Principal Accounting Officer)

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EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Calum Hughes, principal executive officer, certify that:

1.	I have reviewed this quarterly report of Allied Corp.;
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.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such 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)	Designed such internal controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	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
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. 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 equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls 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: January 19, 2022	By:	/s/ Calum Hughes
		Calum Hughes
		Chief Executive Officer and Director
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Ryan Maarschalk, principal accounting officer, certify that:

1.	I have reviewed this quarterly report of Allied Corp.;
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.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such 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)	Designed such internal controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	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
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. 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 equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls 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: January 19, 2022	By:	/s/ Ryan Maarschalk
		Ryan Maarschalk
		Chief Financial Officer,
		(Principal Financial Officer)

EX-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 on Form 10-Q for the period ended November 30, 2021 of Allied Corp., a Nevada corporation (the "Company"), as filed with the Securities and Exchange Commission on the date hereof (the "Quarterly Report"), I, Calum Hughes, Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Quarterly Report fully complies with the requirements of Section 13(a) or15(d) of the Securities and Exchange Act of 1934, as amended; and
2.	The information contained in this Quarterly Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: January 19, 2022	By:	/s/ Calum Hughes
		Calum Hughes
		Chief Executive Officer and Director

EX-32.2

  EXHIBIT 32.2

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 on Form 10-Q for the period ended November 30, 2021 of Allied Corp., a Nevada corporation (the "Company"), as filed with the Securities and Exchange Commission on the date hereof (the "Quarterly Report"), I, Ryan Maarschalk, Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Quarterly Report fully complies with the requirements of Section 13(a) or15(d) of the Securities and Exchange Act of 1934, as amended; and
2.	The information contained in this Quarterly Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: January 19, 2022	By:	/s/ Ryan Maarschalk
		Ryan Maarschalk
		Chief Financial Officer,
		(Principal Financial Officer)

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Cover - shares	3 Months Ended
	Nov. 30, 2021	Jan. 18, 2022
Cover [Abstract]
Entity Registrant Name	ALLIED CORP.
Entity Central Index Key	0001575295
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--08-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Nov. 30, 2021
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2022
Entity Common Stock Shares Outstanding		91,666,131
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-56002
Entity Incorporation State Country Code	NV
Entity Tax Identification Number	33-1227173
Entity Address Address Line 1	1405 St. Paul St.
Entity Address Address Line 2	Suite 201
Entity Address City Or Town	Kelowna
Entity Address State Or Province	BC
Entity Address Country	CA
Entity Address Postal Zip Code	V1Y 9N2
City Area Code	877
Local Phone Number	255-4337
Entity Interactive Data Current	Yes

XML

Condensed Consolidated Interim Balance Sheets - USD ($)	Nov. 30, 2021	Aug. 31, 2021
Condensed Consolidated Interim Balance Sheets
Cash	$ 275,529	$ 419,825
Inventory (Note 3)	155,481	136,261
Other receivables	34,522	82,837
Prepaid expenses	209,433	277,529
Total current assets	674,965	916,452
Deposits and advances (Note 4)	3,233,720	3,156,163
Right-of-use assets (Note 7)	227,780	247,325
Property, plant and equipment (Note 5)	665,119	267,835
Intangible assets (Note 6)	46,000	46,000
Total assets	4,847,584	4,633,775
Current liabilities
Accounts payable and accrued liabilities	1,605,420	1,871,659
Current portion of lease liabilities (Note 7)	24,495	25,013
Loan payable (Note 8)	1,253,772	1,596,522
Secured convertible notes payable (Note 9)	2,020,526	1,889,050
Total current liabilities	4,904,213	5,382,244
Lease liabilities, net of current portion (Note 7)	203,285	222,312
Total liabilities	5,107,498	5,604,556
Stockholders' deficiency
Preferred stock - 50,000,000 shares authorized, $0.0001 par value Nil shares issued and outstanding	0	0
Common stock - 300,000,000 shares authorized, $0.0001 par value; 91,666,131 shares issued and outstanding (79,858,867 - par value $0.0001 - August 31, 2021)	9,167	7,986
Treasury stock	0	707
Additional paid in capital	29,884,062	18,099,226
Common stock issuable	224,664	929,985
Common stock subscription receivable	(250,000)	0
Accumulated deficit	(29,461,893)	(19,393,812)
Accumulated other comprehensive loss	(665,914)	(614,873)
Total stockholders' deficiency	(259,914)	(970,781)
Total liabilities and stockholders' equity	$ 4,847,584	$ 4,633,775

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Condensed Consolidated Interim Balance Sheets (Parenthetical) - $ / shares	Nov. 30, 2021	Aug. 31, 2021
Stockholders' equity (deficit)
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares par value	$ 0.0001	$ 0.0001
Common stock, shares issued	91,666,131	79,858,867
Common stock, shares outstanding	91,666,131	79,858,867

XML

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended
	Nov. 30, 2021	Nov. 30, 2020
Revenues
Sales	$ 10,082	$ 4,200
Expenses
Amortization	13,299	169,680
Purchase of inventory	1,182	0
Consulting fees	301,002	327,843
Stock-based compensation - consulting services	3,531,266	0
Stock-based compensation - bonus shares (Note 11)	585,425	0
Stock-based compensation - options	531,255	0
Foreign exchange loss (gain)	143	(4,965)
Interest expense and bank charges	171,141	112,840
Office and miscellaneous	302,290	126,644
Professional fees	243,788	130,631
Travel	12,700	1,341
Inventory costs write-down to net realizable value (Note 3)	252,639	0
Expenses before other items	9,946,130	864,014
Loss before other items	(9,936,048)	(859,814)
Loss on termination of lease	0	(65,565)
Settlement payments (Note 14)		(105,000)
Loss on extinguishment of convertible debt	0	(110,000)
Accretion	(132,033)	(55,483)
Total other expenses	(132,033)	(336,048)
Net loss	(10,068,081)	(1,195,862)
Other comprehensive income (loss)
Foreign currency translation adjustments	(51,041)	118,923
Comprehensive loss	$ (10,119,122)	$ (1,076,939)
Basic and diluted loss per share	$ (0.11)	$ (0.01)
Weighted average number of common shares outstanding	88,784,911	85,163,802

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Condensed Consolidated Interim Statements of Stockholders Equity (Deficit) (Unaudited) - USD ($)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Stock Issuable [Member]	Stock subscription receivable [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (loss) [Member]	Treasury Stock [Member]
Balance, shares at Aug. 31, 2020		85,105,780
Balance, amount at Aug. 31, 2020	$ 3,704,164	$ 8,511	$ 12,226,382	$ 19,952	$ 0	$ (7,908,566)	$ 642,115
Shares issued for cash, shares		200,000
Shares issued for cash, amount	250,000	$ 20	249,980	0	0	0	0
Detachable warrants issued with convertible notes payable	153,764	0	153,764	0	0	0	0
Shares issuable upon modification of debt	133,127	0	133,127	0	0	0	0
Common stock subscribed	110,000	0	0	110,000	0	0	0
Comprehensive loss for the period	(1,076,939)	$ 0	0	0	0	(1,195,862)	118,923
Balance, shares at Nov. 30, 2020		85,305,780
Balance, amount at Nov. 30, 2020	3,274,116	$ 8,531	12,763,253	129,952	0	(9,104,428)	(523,192)
Balance, shares at Aug. 31, 2021		79,858,867						7,073,170
Balance, amount at Aug. 31, 2021	(970,781)	$ 7,986	18,099,226	929,985	0	(19,393,812)	(614,873)	$ 707
Shares issued for cash, shares		4,458,094
Shares issued for cash, amount	2,303,105	$ 446	3,343,126	(790,467)	(250,000)	0	0	$ 0
Detachable warrants issued with convertible notes payable	120,310		120,310		0
Comprehensive loss for the period	(10,119,122)					(10,068,081)	(51,041)
Shares issued from treasury, shares		7,073,170						(7,073,170)
Shares issued from treasury, amount	7,957,316	$ 707	7,957,316	0	0	0	0	$ (707)
Share issuance costs	(253,390)	$ 0	(253,390)	0	0	0	0	0
Shares subscribed	85,146			85,146
Shares issued for finders fees, shares		8,000
Shares issued for finders fees, amount	6,000	$ 1	5,999	0	0			$ 0
Shares issued in error not yet cancelled, shares		268,000
Shares issued in error not yet cancelled, amount		$ 27	(27)
Beneficial conversion feature	80,247		80,247
Stock-based compensation	531,255		531,255
Balance, shares at Nov. 30, 2021		91,666,131
Balance, amount at Nov. 30, 2021	$ (259,914)	$ 9,167	$ 29,884,062	$ 224,664	$ (250,000)	$ (29,461,893)	$ (665,914)

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Condensed Consolidated Interim Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Nov. 30, 2021	Nov. 30, 2020
Operating activities
Net loss for the period	$ (10,068,081)	$ (1,195,862)
Adjustment to net loss for the period for non-cash items
Accretion	132,033	55,483
Accrued interest	36,732	0
Inventory write-down to net realizable value	252,639	0
Amortization	13,299	169,680
Loss on debt extinguishment	0	110,000
Loss on termination of lease	0	65,566
Stock-based compensation - consulting services	3,531,266	0
Stock-based compensation - bonus shares (Note 11)	585,425	0
Stock-based compensation - options	531,255	0
Changes in non-cash working capital balance:
Decrease in other receivables	48,315	0
Decrease (increase) in prepaid expenses	(102,998)	41,921
Increase in due from related parties	0	(11,726)
Increase (decrease) in accounts payable and accrued liabilities	(403,979)	78,679
Increase in inventory	(271,859)	(7,901)
Net cash used in Operating Activities	(1,715,953)	(694,160)
Investing activities
Refunds of deposits	0	129,897
Purchase of property, plant, and equipment	(375,413)	(21,932)
Net cash used in Invesing activities	(375,413)	107,965
Financing activities
Proceeds of convertible notes payable	200,000	286,892
Repayment of loan payable	(342,750)	0
Repayment of finance lease obligations	0	(12,480)
Proceeds from the issuance of common stock	2,140,861	250,000
Net cash used in financing activities	1,998,111	524,412
Decrease in cash	(93,255)	(61,783)
Effect of exchange rate on changes of cash	(51,041)	(20,869)
Cash, beginning of period	419,825	94,047
Cash, end of period	275,529	11,395
Supplemental cash flow disclosures:
Income taxes paid	0	0
Interest paid	$ 147,839	$ 112,840

XML

Nature of operations reverse takeover transaction and going concern

3 Months Ended

Nov. 30, 2021

Nature of operations reverse takeover transaction and going concern

1. Nature of operations, reverse take-over transaction and going concern

1.	Nature of operations, reverse take-over transaction and going concern
a)	Nature of operations
	Allied Corp. (the “Company or Allied”) was incorporated in the State of Nevada on February 3, 2013. On July 1, 2019, the Company changed its name to Allied Corp. The head office and the registered office of the Company are located at 1405 St. Paul Street, Kelowna BC V1Y 2E4. The Company’s business plan is to discover new medical technologies some of which are cannabis derived to target full scope therapy and support for trauma survivors, military veterans and first responders, however the Company has not begun such operations nor obtained the required permits to begin such operations. On September 10, 2019, the Company was acquired in a reverse takeover (“RTO”) transaction (see Note 1b) and the RTO is considered a purchase of the Company’s net assets by AM (Advanced Micro) Biosciences, Inc. (“AM Biosciences”). For accounting purposes, the legal subsidiary, AM Biosciences has been treated as the acquirer and Allied Corp., the legal parent, has been treated as the acquiree. Accordingly, these consolidated financial statements reflect a continuation of the financial position, operating results, and cash flow of the Company’s legal subsidiary, AM Biosciences from the date of incorporation on September 13, 2018. On February 18, 2020, the Company acquired all the issued and outstanding share capital of a Colombian company, Allied Colombia S.A.S (“Allied Colombia”). The assets, liabilities and results of Allied Colombia are consolidated in these financial statements beginning from the February 18, 2020 acquisition date. As at November 30, 2021, Allied Colombia has a licensed cannabis farm in Colombia.
b)	Reverse take-over transaction (RTO)
	On July 25, 2019, as amended effective August 27, 2019, the Company entered into a reorganization and stock purchase agreement (the “Reorganization Agreement”) to acquire 100% of the issued and outstanding equity of AM (Advanced Micro) Biosciences, Inc (“AM Biosciences”). Effective September 10, 2019, the parties closed the Reorganization Agreement (the “Acquisition”). As part of the transaction, Pacific Capital Investment Group, Inc., the then majority shareholder of Allied (the “Allied Shareholder”) delivered 51,200,014shares of common stock, representing approximately 65.42% of the outstanding equity of Allied Corp. to SECFAC Exchange Corp. on behalf of the prior shareholders of AM Biosciences and certain other designees of AM Biosciences as a consideration to acquire 100% of the issued and outstanding equity of AM Biosciences. Further, as part of the transaction, the Allied Shareholder submitted for cancellation and return to treasury 10,459,220 and 4,500,000 shares of common stock. As a consequence, immediately subsequent to the close of the Reorganization Agreement, Allied had 78,268,780 shares of common stock outstanding. The Reorganization Agreement constitutes a reverse acquisition, such that AM Biosciences acquired control of Allied Corp. At the time of the Reorganization Agreement, the operations of Allied Corp. did not constitute businesses under ASC 805 Business Combinations and accordingly the transaction is considered a reverse asset acquisition in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). Under this method of accounting, AM Biosciences was deemed to be the accounting acquirer for financial reporting purposes. This determination was primarily based on the facts that, immediately following the acquisition: (i) AM Biosciences’ stockholders owned a substantial majority of the voting rights in the combined company, (ii) AM Biosciences designated a majority of the members of the initial board of directors of the combined company, and (iii) AM Biosciences’ senior management holds all key positions in the senior management of the combined company. As a result, as of the closing date of the acquisition, the net assets of the Company were recorded at their acquisition-date relative fair values in the consolidated financial statements of the Company and the reported operating results prior to the acquisition will be those of AM Biosciences.

c)	Going concern
	The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a net loss for the three months ended November 30, 2021 of $10,068,081, has generated minimal revenue and as at November 30, 2021 has a working capital deficit of $4,229,248. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise sufficient financing to acquire or develop a profitable business. Management intends on financing its operations and future development activities largely from the sale of equity securities with some additional funding from other traditional financing sources, including related party loans until such time that funds provided by future planned operations are sufficient to fund working capital requirements.
d)	COVID-19 impact
	In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and the related adverse public health developments have adversely affected workforces, economies, and financial markets globally, leading to uncertainty and an economic downturn. Although some product distribution was delayed by COVID-19, management has determined that there has been no significant impact to the Company’s operations, however management continues to monitor the situation.
e)	Business Risks
	While some states in the United States have authorized the use and sale of cannabis, it remains illegal under federal law and the approach to enforcement of U.S. federal laws against cannabis is subject to change. Because the Company plans to engage in cannabis-related activities in the United States, only if and when cannabis operations are federally legalized. On January 4, 2018, the then United States Attorney General Jeff Sessions issued a memorandum to United States district attorneys (the “Sessions Memorandum”) which rescinded previous guidance from the United States Department of Justice specific to cannabis enforcement in the United States, including the Cole Memorandum. With the Cole Memorandum rescinded, United States federal prosecutors no longer have guidance relating to the exercise of their discretion in determining whether to prosecute cannabis related violations of United States federal law. Since that time, United States district attorneys have taken no legal action against state law compliant entities, and the Biden administration is generally anticipated to seek federal decriminalization of state legal cannabis activity. Nevertheless, a significant change in the federal government’s enforcement policy with respect to current federal laws applicable to cannabis could cause significant financial damage to the Company. The Company may be irreparably harmed by a change in enforcement policies of the federal government depending on the nature of such change. Given the current illegality of cannabis under United States federal law, the Company’s ability to access both public and private capital may be hindered by the fact that certain financial institutions are regulated by the United States federal government and are thus prohibited from providing financing to companies engaged in cannabis related activities. The Company’s ability to access public capital markets in the United States is directly hindered as a result. The Company may, however, be able to access public and private capital markets in the United States through institutions which are not regulated by the United States federal government, in Canada, and in many other countries in order to support continuing operations.

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Significant accounting policies

3 Months Ended

Nov. 30, 2021

Significant accounting policies

2. Significant accounting policies

2.

Significant accounting  policies

Business Presentation These unaudited condensed consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and are expressed in United States dollars. The Company’s fiscal year end is August 31. These interim unaudited financial statements have been prepared in accordance with US GAAP for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by US GAAP for complete financial statements. Therefore, these interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended August 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC. The consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at November 30, 2021, and the results of its operations for the three months ended November 30, 2021, and cash flows for the three months ended November 30, 2021. The results of operations for the period ended November 30, 2021 are not necessarily indicative of the results to be expected for future quarters or the full year. The significant accounting policies followed are:

a)	Principles of consolidation
	The consolidated financial statements include accounts of Allied Corp. and its wholly-owned subsidiaries, including AM Biosciences, Allied US Products LLC, Tactical Relief LLC, Baleno Ltd. and Allied Colombia. Subsidiaries are consolidated from the date of acquisition and control and continue to be consolidated until the date that such control ceases. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect these returns through its power over the investee. All intercompany balances, income, expenses, and unrealized gains and losses resulting from intercompany transactions are eliminated on consolidation.
b)	Cash and cash equivalents
	Cash is comprised of cash on hand, cash held in trust accounts and demand deposits. Cash equivalents are short-term, highly liquid investments with maturities within three months when acquired. The Company did not have any cash equivalents as of November 30, 2021 and August 31, 2021.
c)	Property, plant and equipment
	Property, plant and equipment are stated at cost. The Company depreciates the cost of property, plant and equipment over their estimated useful lives at the following annual rates and methods:

Farm facility and equipment	1 - 10 years straight-line basis
Office and computer equipment	5 - 10 years straight-line basis
Land equipment	10 years straight-line basis

d)	Inventory
	Inventory is comprised of raw materials, supplies, vegetative and flowering plants, dried flower, diluted crude and CBD isolates available for sale, and purchased cannabis products.

	Inventory is stated at the lower of cost or net realizable value, determined using weighted average cost. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. At the end of each reporting period, the Company performs an assessment of inventory and records write-downs for excess and obsolete inventories based on the Company’s estimated forecast of product demand, production requirements, market conditions, regulatory environment, and spoilage. Actual inventory losses may differ from management’s estimates and such differences could be material to the Company’s consolidated balance sheets, statements of net loss and comprehensive loss and statements of cash flows.
e)	Intangible assets
	Intangible assets include licenses which are being amortized over their estimated useful lives of 10 years. The Company’s licenses are amortized over their economic or legal life on a straight-line basis, whichever is shorter. The licenses have been amortized from the date of acquisition. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives. For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value.
f)	Long-lived assets
	In accordance with ASC 360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

g)	Foreign currency translation and functional currency conversion
	Items included in these consolidated financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entities operate (the “functional currency”). Prior to September 10, 2019, the Company’s functional currency was the Canadian dollar. Translation gains and losses from the application of the U.S. dollar as the reporting currency during the period that the Canadian dollar was the functional currency are included as part of cumulative currency translation adjustment, which is reported as a component of shareholders’ equity under accumulated other comprehensive loss. The Company re-assessed its functional currency and determined as at September 10, 2019, its functional currency changed from the Canadian dollar to the U.S. dollar based on management’s analysis of changes in our organization. The change in functional currency was accounted for prospectively from September 10, 2019 and prior period financial statements were not restated for the change in functional currency. For periods commencing September 10, 2019, monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates in effect at the balance sheet date. Opening balances related to non-monetary assets and liabilities are based on prior period translated amounts, and non-monetary assets and non-monetary liabilities incurred after September 10, 2019 are translated at the approximate exchange rate prevailing at the date of the transaction. Revenue and expense transactions are translated at the approximate exchange rate in effect at the time of the transactions. Foreign exchange gains and losses are included in the statement of operations and comprehensive loss as foreign exchange gains. The Company assessed the functional currency for Allied Colombia to be the Colombian peso. The functional currency for all other subsidiaries is the U.S. dollar.
h)	Share issuance costs
	Costs directly attributable to the raising of capital are charged against the related share capital. Costs related to shares not yet issued are recorded as deferred share issuance costs. These costs are deferred until the issuance of the shares to which the costs relate, at which time the costs will be charged against the related share capital or charged to operations if the shares are not issued.
i)	Research and development costs
	Research and development costs are expensed as incurred.
j)	Revenue recognition
	The Company’s revenue is comprised of sales of cannabis products. The Company’s revenue-generating activities have a single performance obligation and revenue is recognized at the point in time when control of the product transfers and the Company’s obligations have been fulfilled. This generally occurs when the product is shipped or delivered to the customer, depending upon the method of distribution and shipping terms set forth in the customer contract. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of the Company’s product. Certain of the Company’s customer contracts may provide the customer with a right of return. In certain circumstances the Company may also provide a retrospective price adjustment to a customer. These items give rise to variable consideration, which is recognized as a reduction of the transaction price based upon the expected amounts of the product returns and price adjustments at the time revenue for the corresponding product sale is recognized. The determination of the reduction of the transaction price for variable consideration requires that the Company make certain estimates and assumptions that affect the timing and amounts of revenue recognized.

	Sales of products are for cash or otherwise agreed-upon credit terms. The Company’s payment terms vary by location and customer; however, the time period between when revenue is recognized and when payment is due is not significant. The Company estimates and reserves for its bad debt exposure based on its experience with past due accounts and collectability, write-off history, the aging of accounts receivable and an analysis of customer data.
k)	Net income (loss) per common share
	Net income (loss) per share is calculated in accordance with ASC 260, Earnings per Share. The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding to the extent the effect would not be antidilutive. Dilutive potential common shares are additional common shares assumed to be exercised. Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding.
l)	Income taxes
	The Company accounts for income taxes under ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
m)	Related party transactions
	Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. The Company discloses related party transactions that are outside of normal compensatory agreements, such as salaries. Related party transactions are measured at the exchange amounts.
n)	Significant accounting estimates and judgments
	The preparation of the financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Although management uses historical experience and its best knowledge of the amount, events or actions to for the basis for judgments and estimates, actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods. Significant estimates and assumptions included in these financial statements relate to the valuation assumptions related to the estimated useful lives and recoverability of long-lived assets, stock-based compensation, and deferred income tax assets and liabilities. Judgments are required in the assessment of the Company’s ability to continue to as going concern as described in Note 1.

o)	Financial instruments
	ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The financial instruments consist principally of cash, due from related parties, accounts payable, note payable, and convertible notes payable. The fair value of cash when applicable is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all other financial instruments which are categorized as loans and receivables approximate their current fair values because of their nature and respective relatively short maturity dates or current market rates of interest for similar instruments. For certain of the Company’s financial instruments, including accounts payable, due from related parties, notes and loans payable, the carrying amounts approximate their fair values due to the short maturities. The Company does not have any assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet as of November 30, 2021 and August 31, 2021 other than cash. Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions.
p)	Leases
	In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The standard states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. The Company adopted ASU 2016-02 on September 1, 2019, using the transition relief to the modified retrospective approach, presenting prior year information based on the previous standard. The Company did not have any leases until the acquisition of its wholly owned subsidiary, Allied Colombia S.A.S. on February 18, 2020.

	The Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease payments arising from the lease. All leases with terms greater than twelve months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. Unless a lease provides all of the information required to determine the implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. The Company uses the implicit interest rate in the lease when readily determinable. Our lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that we will exercise that option. Leases with terms of twelve months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of an asset or liability. See Note 7 – Leases.
q)	Reverse Acquisitions
	Identification of the accounting acquirer The Company considers factors in ASC 805-10-55-10 through 55-15 in identifying the accounting acquirer. The Company uses the existence of a controlling financial interest to identify the acquirer - the entity that obtains control of the acquiree. Other pertinent facts and circumstances also shall be considered in identifying the acquirer in a business combination effected by exchanging equity interests, including the following: (a) The relative voting rights in the combined entity after the business combination, where the acquirer usually is the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity taking into consideration the existence of any unusual or special voting arrangements and options, warrants, or convertible securities; (b) the existence of a large minority voting interest in the combined entity if no other owner or organized group of owners has a significant voting interest, and where the acquirer usually is the combining entity whose single owner or organized group of owners holds the largest minority voting interest in the combined entity; (c) the composition of the governing body of the combined entity, where the acquirer usually is the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity; (d) the composition of the senior management of the combined entity, where the acquirer usually is the combining entity whose former management dominates the management of the combined entity; and (e) the terms of the exchange of equity interests, where the acquirer usually is the combining entity that pays a premium over the pre-combination fair value of the equity interests of the other combining entity or entities, where the acquirer usually is the combining entity whose relative size (measured in, for example, assets, revenues, or earnings) is significantly larger than that of the other combining entity or entities. Pursuant to ASC Paragraph 805-40-05-2, as one example of a reverse acquisition, a private operating entity may arrange for a public entity to acquire its equity interests in exchange for the equity interests of the public entity. In this situation, the public entity is the legal acquirer because it issued its equity interests, and the private entity is the legal acquiree because its equity interests were acquired. However, application of the guidance in ASC 805-10-55-11 through 55-15 results in identifying: (a) The public entity as the acquire for accounting purposes (the accounting acquiree); and (b) the private entity as the acquirer for accounting purposes (the accounting acquirer).

Measuring the consideration transferred

Pursuant to ASC 805-40-30-2 and 30-3 in a reverse acquisition, the accounting acquirer usually issues no consideration for the acquiree. Instead, the accounting acquiree usually issues its equity shares to the owners of the accounting acquirer. Accordingly, the acquisition-date fair value of the consideration transferred by the accounting acquirer for its interest in the accounting acquiree is based on the number of equity interests the legal subsidiary would have had to issue to give the owners of the legal parent the same percentage equity interest in the combined entity that results from the reverse acquisition. The fair value of the number of equity interests calculated in that way can be used as the fair value of consideration transferred in exchange for the acquiree. The assets and liabilities of the legal acquiree are measured and recognized in the consolidated financial statements at their pre-combination carrying amounts (see ASC 805-40-45-2(a)).

Presentation of consolidated financial statements post reverse acquisition

Pursuant to ASC 805-40-45-1 and 45-2, consolidated financial statements following a reverse acquisition are issued under the name of the legal parent (accounting acquiree) but described in the notes as a continuation of the financial statements of the legal subsidiary (accounting acquirer), with one adjustment, which is to retroactively adjust the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree. That adjustment is required to reflect the capital of the legal parent (the accounting acquiree). Comparative information presented in those consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent (accounting acquiree). The consolidated financial statements reflect all of the following: (a) The assets and liabilities of the legal subsidiary (the accounting acquirer) recognized and measured at their pre-combination carrying amounts; (b) the assets and liabilities of the legal parent (the accounting acquiree) recognized and measured in accordance with the guidance in Topic 805 “Business Combinations”; (c) the retained earnings and other equity balances of the legal subsidiary (accounting acquirer) before the business combination; (d) the amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of the legal subsidiary (the accounting acquirer) outstanding immediately before the business combination to the fair value of the legal parent (accounting acquiree) determined in accordance with the guidance in this topic applicable to business combinations. However, the equity structure (that is, the number and type of equity interests issued) reflects the equity structure of the legal parent (the accounting acquiree), including the equity interests the legal parent issued to effect the combination.

Accordingly, the equity structure of the legal subsidiary (the accounting acquirer) is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent (the accounting acquiree) issued in the reverse acquisition; and (e) the non-controlling interest’s proportionate share of the legal subsidiary’s (accounting acquirer’s) pre-combination carrying amounts of retained earnings and other equity interests as discussed in ASC 805-40-25-2 and 805-40-30-3.

Pursuant to ASC 805-40-45-4 and 45-5, in calculating the weighted-average number of common shares outstanding (the denominator of the earnings-per-share (“EPS”) calculation) during the period in which the reverse acquisition occurs: (a) The number of common shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted-average number of common shares of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the acquisition agreement; and (b) the number of common shares outstanding from the acquisition date to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period.

	The basic EPS for each comparative period before the acquisition date presented in the consolidated financial statements following a reverse acquisition shall be calculated by dividing (a) by (b): (a) The income of the legal acquiree attributable to common shareholders in each of those periods; and (b) the legal acquiree’s historical weighted average number of common shares outstanding multiplied by the exchange ratio established in the acquisition agreement. As a result of the controlling financial interest of the former stockholders of AMBI, for financial statement reporting purposes, the asset acquisition has been treated as a reverse acquisition with AMBI deemed the accounting acquirer and the Company deemed the accounting acquire under the acquisition method of accounting in accordance with ASC 805-10-55 of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The reverse acquisition is deemed a capital transaction and the net assets of AMBI (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the acquisition. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of AMBI which are recorded at their historical cost. The equity of the Company is the historical equity of AMBI. These consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries, AM Biosciences effective from the date of the reverse take—over transaction on September 10, 2019 and Allied Colombia (from the date of acquisition, February 18, 2020). All intercompany balances and transactions have been eliminated upon consolidation.
r)	Recent accounting pronouncements
	The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the three months ended November 30, 2021, are of significance or potential significance to the Company.

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Inventory

3 Months Ended

Nov. 30, 2021

Inventory

3. Inventory

3.	Inventory
	Inventory is comprised of the following items:

	November 30, 2021		August 31, 2021
Work in progress	$	37,425	$	51,831
Finished goods		118,056		84,430
Total inventory	$	155,481	$	136,261

The costs of inventory include but are not limited to labor, utilities, nutrition and irrigation, overhead and the depreciation of manufacturing equipment and production facilities, and amortization of licenses determined at normal capacity. Manufacturing overhead and related expenses include salaries, wages, employee benefits, utilities, maintenance and rent of grow facility. The Company began productions in Colombia in late 2020, when the Company obtained approval for its strains of products. During the current period, certain costs were determined based on the actual usage of production space as compared to the normal predetermined operational production of the facility based on capacity as the Company gradually started to grow products and prepared the facility ready. Management determined that during the current period, the Company was operating at 24% of predesigned capacity and as a result 24% of rent, amortization expenses, and certain overhead costs are included in costs of inventory.

During the current period, the Company recorded a write-down of inventory costs which include labor, utilities, nutrition, and irrigation, overhead and depreciation to net realizable value of $252,639.

The Company’s sales were generated from cannabis products purchased from certain third-party supplier during the three month periods ended November 30, 2021 and November 30, 2020.

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Deposits and advances

3 Months Ended

Nov. 30, 2021

Deposits and advances

4. Deposits and advances

4. Deposits and advances

	November 30, 2021		August 31, 2021
a) Towards the purchase of prefabricated buildings	$	2,656,695	$	2,656,695
b) Vitalis equipment deposit		233,496		233,496
c) Deposit towards a license acquisition		150,000		150,000
d) Prepayments for construction facility in Colombia		77,829		115,972
e) Eteros equipment deposit		115,700		-
Total deposits and advances	$	3,233,720	$	3,156,163

a)	In 2019, the Company entered to a separate modular building purchase agreement to acquire and construct an 8,700 square foot facility to be used as a certified Cannabis Cultivation and extraction facility. At November 30, 2021, Company had deposits of $2,656,695 (August 31, 2021 - $2,656,695) to purchase prefabricated buildings. As of November 30, 2021, the Company had not yet received the buildings and the amounts have been recorded as deposits.
b)	At November 30, 2021 and August 31, 2021, the Company had paid $233,496 to purchase equipment as described in Note 14(c). At November 30, 2021, the Company had not yet received the equipment and the amount paid has been recorded as a deposit.
c)	At November 30, 2021 and August 31, 2021, the Company had paid $150,000 to acquire a license through an asset purchase agreement as described in Note 19(a). At November 30, 2021, the asset purchase has not closed and the amount paid has been recorded as a deposit.
d)	The Company paid certain vendors for the construction of farm facilities in Colombia in advance. As at November 30, 2021, the prepayments totaled $77,829.
e)	At November 30, 2021, the Company had paid $115,700 to purchase equipment. At November 30, 2021, the Company had not yet received the equipment and the amount paid has been recorded as a deposit.

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Property plant and equipment

3 Months Ended

Nov. 30, 2021

Property plant and equipment

5. Property plant and equipment

5.	Property, plant and equipment
	At November 30, 2021, property, plant and equipment (“PPE”) consisted of:

	Construction in process			Farm facility and equipment			Office and computer equipment			Land equipment			Total
August 31, 2021	$	27,469		$	274,776		$	10,653		$	16,310		$	329,208
Additions		334,383			93,657			5,815			9,329			443,184
Foreign exchange		(15,143	)		(19,329	)		(838	)		(1,300	)		(36,610	)
November 30, 2021	$	346,709		$	349,104		$	15,629		$	24,339		$	735,782
Accumulated depreciation
August 31, 2021	$	-		$	58,519		$	1,935		$	919		$	61,373
Additions		-			12,374			490			435			13,299
Foreign exchange		-			(3,810	)		(130	)		(69	)		(4,009	)
November 30, 2021	$	-		$	67,083		$	2,295		$	1,285		$	70,663
Net book value
August 31, 2021	$	27,469		$	216,257		$	8,718		$	15,391		$	267,835
November 30, 2021	$	346,709		$	282,021		$	13,335		$	23,054		$	665,119

As of November 30, 2021 and August 31, 2021, the construction in process has not been in use.

During the period ended November 30, 2021, the Company included depreciation of PPE of $9,100 in cost of inventory.

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Intangible assets

3 Months Ended

Nov. 30, 2021

Intangible assets

6. Intangible assets

6.	Intangible assets
	At November 30, 2021, intangible assets consisted of:

	Cost $		Foreign exchange $			Accumulated amortization $			Accumulated impairment $			November 30, 2021 Net carrying value $		August 31, 2021 Net carrying value $
Cannabis licenses		5,435,334		(464,973	)		(1,122,694	)		(3,801,667	)		46,000		46,000
		5,435,334		(464,973	)		(1,122,694	)		(3,801,667	)		46,000		46,000

On February 17, 2020, the Company acquired $5,435,334 of licenses as part of the acquisition of Allied Colombia. The licenses acquired are issued by the Republic of Colombia and include the use of seeds for growing Cannabis, production of derivatives from Cannabis for medicinal and scientific use, cultivation of Cannabis plants, and producer of seeds. The Company recorded amortization of these licenses of $658,836 for the year ended August 31, 2021, of which $158,121 was included in cost of inventory.

Management acquired the licenses with a plan to operate in Colombia and believed the amounts paid for the licenses would be recovered from future operations. The Company has only recently started its operations in Colombia and has limited history on which to base future outcomes from operations including cash flows. Cannabis and hemp are considered to be an emerging industry and Colombia does not yet have a sufficiently established observable legal market in which the Company could sell its Cannabis or hemp flower and CBD or THC extracts. Laws and regulations in Colombia are evolving and there is uncertainty in what will be legally permissible in a future market and what prices and demand there would be in Colombia for the Company’s products. At the present, the Company’s export activities are regulated and restricted by Colombian law and it is uncertain whether future changes in law would favorably impact the Company’s operations. Due to the uncertainty in the timing and amount of future cash flows from operations the Company has written down its licenses to the estimated recoverable amount of $46,000. During the year ended August 31, 2021, the Company recorded impairment of intangible assets in the amount of $2,687,695.

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Leases

3 Months Ended

Nov. 30, 2021

Leases

7. Leases

7.

Leases

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability, measured on a discounted basis, on the balance sheet for all leases with terms longer than 12 months. The Company also elected to keep all leases with an initial term of 12 months or less off the balance sheet. The Company did not have any leases until the acquisition of Allied Colombia during the year ended August 31, 2020. The acquisition resulted in the addition of $82,398 of operating lease assets and liabilities. During the year ended August 31, 2021, the Company re-measured its lease liabilities under this lease as the criteria has met for additional monthly payment when the Company started production as outlined in the lease agreement, resulting in additional lease liabilities of $70,705. On August 10, 2021, the Company entered into another lease for additional land in Colombia with monthly payment of $2,647 (COP9,970,675) for 12.5 hectares which is intended for use of outdoor cultivation, resulting in addition of lease liabilities of $104,902. The lease is for 5 years, and expires in July 2026. The management has assessed the lease as an operating lease.

The Company entered into an agreement to lease the land described in 14(a) with a commencement date of June 1, 2020. The lease requires the Company to make monthly payments of $4,501 (CAD$5,870) per month. The lease is for a 10-year term, expiring on May 31, 2030, with one 10-year renewal option and an option for the Company to purchase the land for approximately $920,000 (CAD$1,200,000). Effective November 1, 2020, the Company terminated the lease. Pursuant to ASC 842-20 upon the termination of the lease, the Company derecognized the lease related asset and liability and included any consideration paid or received upon termination that was not already included in the lease payments in the gain or loss on termination of the lease. After recording the proceeds from the landlord and derecognizing the capitalized building costs as well as the right of use asset and liability, the Company recorded a loss of $65,565 on the termination of the lease.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the ROU asset results in front-loaded expense over the lease term. ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. At November 30, 2021, the Company did not have any finance leases.

At November 30, 2021, the weighted average remaining operating lease term was 6.68 years and the weighted average discount rate associated with operating leases was 15%.

The components of lease expenses were as follows:

	$
Operating lease cost:
Amortization of right-of-use assets		5,810
Interest on lease liabilities		9,050
Total operating lease cost		14,860

The following table provides supplemental cash flow and other information related to leases for three months ended November 30, 2021:

	$
Lease payments	14,860

Supplemental balance sheet information related to leases as of November 30, 2021 are as below:

	$
Cost	282,273
Accumulated amortization	(13,240	)
Foreign exchange	(41,253	)
Net carrying value at November 30, 2021	227,780

Future minimum lease payments related to lease obligations are as follows:

	$
2022	42,767
2023	57,023
2024	57,023
Thereafter	206,234
Total minimum lease payments	363,047
Less: amount of lease payments representing effects of discounting	(135,267	)
Present value of future minimum lease payments	227,780
Less: current obligations under leases	(24,495	)
Lease liabilities, net of current portion	203,285

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Loans payable

3 Months Ended

Nov. 30, 2021

Loans payable

8. Loans payable

8.	Loans payable
	a)	In June 2020, the Company entered into a financing agreement to finance the buildings described in Note 4(a). Pursuant to the agreement, the Company financed $1,253,772 of the purchase price. The Company paid $71,023 at commencement date on May 29, 2020, and would make six monthly interest payments of $37,613 commencing June 20, 2020 and repay the principal of $1,253,772 on November 20, 2020. The loan was extended after the initial maturity date. During the three months ended November 30, 2021, the Company further amended the loan agreement to extend the repayment due date to December 20, 2021. During the three months ended November 30, 2021, the Company paid interest in the amount of $112,839 (2020 - $112,840). Subsequent to November 30, 2021, the Company amended the financing agreement as described in Note 19(e)).
	b)	On January 24, 2021, the Company entered into an acquisition agreement to acquire all common shares of Pacific Sun Fungi Inc. (“PSF”) in consideration for the issuance of a promissory note of $85,500 and 200,000 common shares of the Company with a fair value of $74,000. The note is non-interest bearing and is due 10 days after demand. During the three months ended November 30, 2021, the Company made the final $42,750 payment towards the promissory note.
	c)	On March 1, 2021, the Company entered into a $300,000 promissory note with simple interest of 10% per annum and maturity date of June 1, 2021. As additional compensation the Company issued 100,000 shares of the Company with a fair value of $90,000, which was treated as discount on the promissory note. During the year ended August 31, 2021, the accretion on the promissory note totalled $90,000. During the three months ended November 30, 2021, the Company made the final payment of $315,000 which included interest payment of $15,000.

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Secured convertible notes payable

3 Months Ended

Nov. 30, 2021

Secured convertible notes payable

9. Secured convertible notes payable

9.	Secured convertible notes payable
	The Company has granted each and every of the secured convertible note holders a continuing security interest in, a general lien upon, and a right of set-off against all existing and future assets and property under the terms of a security agreement.
	a)	On January 23, 2020, the Company issued two convertible notes with principal amounts of $400,000 and $200,000, respectively, with a total face value of $600,000 (the “Notes”) and warrants to purchase 240,000 shares of the Company’s common stock at $1.25 per share for 1 year. The Notes were issued with an original discount of $12,000, and bear interest at 10% per annum compounded monthly. The notes mature on July 20, 2020 and are convertible into shares of the Company’s common stock at any time prior to maturity at a conversion price of $1.25 per share.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants would not meet derivative classification. The relative fair values of the convertible notes and the warrants were $470,467 and $117,533 respectively. The effective conversion price was then determined to be $0.98. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $115,383 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $108,100 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $364,517. The beneficial conversion feature of $115,383, the original issue discount of $12,000 and the relative fair value of the warrants of $108,100discounted the carrying value of the convertible debt on the date of issue. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. On June 30, 2020, the Company repaid $200,000 of the $600,000 note which left $200,000 outstanding on each note.
i.	First Modification:
	On July 1, 2020, the Company entered into amendments to the convertible notes. Pursuant to the amendments, beginning on July 1, 2020, the convertible notes bear simple interest at 5% per annum. The maturity date of the convertible notes was amended to due on demand on or before October 31, 2020. In consideration for extending the maturity date, the Company issued to the convertible note holders 16,000 common shares of the Company and warrants to purchase additional 320,000 common shares of the Company at $1.25 per share expiring October 31, 2021. Each note holder received 8,000 common shares and 160,000 warrants. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting. The extended convertible notes had a total carrying value of $400,000. As the common shares and warrants were issued as consideration for extending the convertible notes, the fair value of the common share and warrants of $218,397 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $220,065.
ii.	Second Modification:
	On November 1, 2020, the Company entered into amendments to the convertible notes. Pursuant to the amendments, the maturity date of the convertible notes was amended to due on demand on or before March 31, 2021. In consideration for extending the maturity date, the Company agreed to issue to the convertible note holders 100,000 common shares of the Company. Each note holder received 50,000 common shares.

	The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting. The extended convertible notes had a total carrying value of $400,000. As the common shares were issued as consideration for extending the convertible notes, the fair value of the common share of $110,000 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $110,000.
iii.	Third Modification:
	On March 31, 2021, the Company entered into amendments to the convertible notes. Pursuant to the amendments, beginning on April 1, 2021, the convertible notes bear simple interest at 10% per annum. Pursuant to the amendments, the maturity date of the convertible notes was amended to due on demand on or before September 30, 2021. In consideration for extending the maturity date, the Company agreed to issue to the convertible note holders 20,000 common shares of the Company. Each note holder received 10,000 common shares. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting. The extended convertible notes had a total carrying value of $400,000. As the common shares were issued as consideration for extending the convertible notes, the fair value of the common share of $20,000 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $20,000.
iv.	Fourth Modification:
	On October 1, 2021, the Company entered into amendments to the convertible notes. Pursuant to the amendments, beginning on April 1, 2021, the convertible notes bear simple interest at 10% per annum. Pursuant to the amendments, the maturity date of the convertible notes was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.

	During the three months ended November 30, 2021, the Company made interest payments of 20,000. As at November 30, 2021, the Company has recorded accrued interest of $26,630, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.
b)	On September 29, 2020, the Company issued a convertible note with a fair value of $163,341 (the “Note”) and warrants to purchase 130,673 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note was due on demand after March 27, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to March 27, 2021 at a conversion price of $1.25 per share.
	The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $85,330 and $78,011 respectively. The effective conversion price was then determined to be $0.65. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $85,330 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $78,011 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.

i.

First Modification:

On March 31, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the convertible note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before September 30, 2021. In consideration for extending the maturity date, the Company issued to the convertible note holder 8,268 common shares of the Company. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting. The extended convertible note had a total carrying value of $163,341. As the common shares were issued as consideration for extending the convertible note, the fair value of the common share of $8,268 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $8,268.

	ii.	Second Modification:
		On June 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on June 1, 2021, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before November 30, 2021 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.
	iii.	Third Modification:
		On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.
	As at November 30, 2021, the Company has recorded accrued interest of $19,109, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.
c)	On October 26, 2020, the Company issued a convertible note with a face value of $37,613 (the “Note”) and warrants to purchase 30,090 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note was due on demand after April 23, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $20,176 and $17,437 respectively. The effective conversion price was then determined to be $0.65. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $20,176 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $17,437 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.
i.	First Modification:
	On June 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on June 1, 2021, the convertible note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before November 30, 2021 for no additional consideration The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.
ii.	Second Modification:
	On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied.

As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.

As at November 30, 2021, the Company has recorded accrued interest of $4,122, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

d)

On November 11, 2020, the Company issued a convertible note with a face value of $85,937 (the “Note”) and warrants to purchase 68,750 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note was due on demand after May 9, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $48,258 and $37,679 respectively. The effective conversion price was then determined to be $0.70. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $48,258 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $37,679 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.

i.

First Modification:

On June 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on June 1, 2021, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before November 30, 2021 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method.

ii.

Second Modification:

On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $9,041, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

e)

On December 2, 2020, the Company issued a convertible note with a face value of $600,000 (the “Note”) and warrants to purchase 240,000 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note was due on demand after November 27, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to November 27, 2021 at a conversion price of $1.25 per share.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $457,436 and $142,564 respectively. The effective conversion price was then determined to be $0.95. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $457,436 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $22,564 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On October 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before March 31, 2022 for no additional consideration.

	The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $59,671, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.
f)	On January 7, 2021, the Company issued a convertible note with a face value of $300,000 (the “Note). The Note bears interest at 10% per annum and was due on demand after November 27, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to April 23, 2021 at a conversion price of $1.25 per share.
	The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features do not meet derivative classification. As the stock price at the issuance date was less than the conversion price, it was determined that there was no beneficial conversion feature (“BCF”). Modification: On October 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, the note bears simple interest at 10% per annum. The maturity date of the convertible note was amended to due on demand on or before March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $30,247, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

g)	On March 26, 2021, the Company issued a convertible note with a face value of $18,000 (the “Note”) and warrants to purchase 18,000 shares of the Company’s common stock at $0.50 per share for 1 year. The Note bears interest at 10% per annum. The Note was due on demand after September 26, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share.
	The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $10,096 and $7,904 respectively. The effective conversion price was then determined to be $0.70. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $4,016 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $7,904 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $6,080. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $1,228, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.
h)	On March 26, 2021, the Company issued a convertible note with a face value of $100,000 (the “Note”) and warrants to purchase 100,000 shares of the Company’s common stock at $0.50 per share for 1 year. The Note bears interest at 10% per annum. The Note was due on demand after September 26, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $56,086 and $43,914 respectively. The effective conversion price was then determined to be $0.70. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $22,314 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $43,914 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $33,772. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $6,822, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

i)

On April 30, 2021, the Company issued a convertible note with a face value of $100,000 (the “Note”) and warrants to purchase 100,000 shares of the Company’s common stock at $1.00 per share for 1 year. The Note bears interest at 10% per annum. The Note was due on demand after October 31, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to October 31, 2021 at a conversion price of $1.00 per share.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $61,493 and $38,507 respectively. The effective conversion price was then determined to be $0.61. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $27,272 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $38,507 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $34,221. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $5,863, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

j)

On April 29, 2021, the Company issued a convertible note with a face value of $180,000 (the “Note”) and warrants to purchase 180,000 shares of the Company’s common stock at $1.00 per share for 1 year. The Note bears interest at 10% per annum. The Note was due on demand after October 29, 2021. The Note was convertible into shares of the Company’s common stock at any time prior to October 29, 2021 at a conversion price of $1.00 per share.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $111,422 and $68,578 respectively. The effective conversion price was then determined to be $0.62. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $46,078 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $68,578 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $65,344. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied. As the future undiscounted cash flows are greater than or equal to the net carrying value of the original debt, the carrying amount of the debt at the time of the restructuring was not changed and a new effective interest rate was calculated as the discount rate that equates the present value of the future cash payments specified by the new terms with the carrying amount of the debt. Interest expense will be recognized prospectively such that a constant effective interest rate is applied to the carrying amount of the debt at the beginning of each period between restructuring and maturity, consistent with the interest method. As at November 30, 2021, the Company has recorded accrued interest of $10,603, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

k)

On July 25, 2021, the Company issued a convertible note with a face value of $35,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after January 25, 2022. The Note was convertible into shares of the Company’s common stock at any time prior to January 25, 2022 at a conversion price of $1.25 per share.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features do not meet derivative classification. As the stock price at the issuance date was less than the conversion price, it was determined that there was no beneficial conversion feature (“BCF”).

Modification:

On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration.

The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-50 was applied. As present value of the cash flows under the new debt instrument differed by less than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was not substantially different

which resulted in modification accounting.

If a convertible debt instrument is modified or exchanged in a transaction that is not accounted for as an extinguishment, an increase in the fair value of the embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) shall reduce the carrying amount of the debt instrument (increasing a debt discount or reducing a debt premium) with a corresponding increase in additional paid-in capital.

The Company recognized the increase in the fair value of the embedded beneficial conversion feature of $1,090 as additional-paid-in capital and an equivalent discount that reduced the carrying value of the convertible debt to $33,910 at November 1, 2021.

As at November 30, 2021, the Company has recorded accrued interest of $1,208, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

l) On July 25, 2021, the Company issued a convertible note with a face value of $15,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after January 25, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to January 25, 2022 at a conversion price of $1.25 per share.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features do not meet derivative classification. As the stock price at the issuance date was less than the conversion price, it was determined that there was no beneficial conversion feature (“BCF”). Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the note bears simple interest at 10% per annum. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-50 was applied. As present value of the cash flows under the new debt instrument differed by less than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was not substantially different which resulted in modification accounting. If a convertible debt instrument is modified or exchanged in a transaction that is not accounted for as an extinguishment, an increase in the fair value of the embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) shall reduce the carrying amount of the debt instrument (increasing a debt discount or reducing a debt premium) with a corresponding increase in additional paid-in capital. The Company recognized the increase in the fair value of the embedded beneficial conversion feature of $467 as additional-paid-in capital and an equivalent discount that reduced the carrying value of the convertible debt to $14,533 at November 1, 2021. As at November 30, 2021, the Company has recorded accrued interest of $518, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

m)

On October 1, 2021, the Company issued a convertible note with a face value of $100,000 (the “Note”) and warrants to purchase 100,000 shares of the Company’s common stock at $1.25 per share for 1 year. The Note bears interest at 10% per annum. The Note is due on demand after April 1, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to April 1, 2022 at a conversion price of $1.25 per share.

The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. Per ASC 815-10-15-74(a), contracts that are both indexed to its own stock and classified in stockholders’ equity in its statement of financial position are not considered to be derivative instruments. The conversion feature is indexed to the Company’s own stock and is classified in stockholders’ equity in the Company’s statement of financial position. As the conversion features would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the convertible note and the warrants were $40,117 and $59,883 respectively. The effective conversion price was then determined to be $0.40. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $40,117 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $59,883 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. Modification: On November 1, 2021, the Company entered into an amendment to the convertible note. note bearsPursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-50 was applied. As present value of the cash flows under the new debt instrument differed by less than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was not substantially different which resulted in modification accounting. If a convertible debt instrument is modified or exchanged in a transaction that is not accounted for as an extinguishment, an increase in the fair value of the embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) shall reduce the carrying amount of the debt instrument (increasing a debt discount or reducing a debt premium) with a corresponding increase in additional paid-in capital. There was no change in the fair value of the embedded beneficial conversion feature immediately before and after the modification. As a result, the Company did not adjust the carrying amount of $1,546 of the convertible debt at November 1, 2021. As at November 30, 2021, the Company has recorded accrued interest of $1,644, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

n)

On October 25, 2021, the Company issued a convertible note with a face value of $100,000 (the “Note”) and warrants to purchase 100,000 shares of the Company’s common stock at $1.25 per share for 1 year. The Note bears interest at 10% per annum. The Note is due on demand after March 31, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to March 31, 2022 at a conversion price of $1.25 per share.

The Company determined that there was no derivative liability associated with the debenture or warrants under ASC 815-15 Derivatives and Hedging. Per ASC 815-10-15-74(a), contracts that are both indexed to its own stock and classified in stockholders’ equity in its statement of financial position are not considered to be derivative instruments. The conversion feature is indexed to the Company’s own stock and is classified in stockholders’ equity in the Company’s statement of financial position. As the conversion features would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at November 30, 2021, the conversion features and warrants do not meet derivative classification.

The relative fair values of the convertible note and the warrants were $39,573 and $60,427 respectively. The effective conversion price was then determined to be $0.40. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $39,573 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $60,427 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.

As at November 30, 2021, the Company has recorded accrued interest of $986, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

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Equity

3 Months Ended

Nov. 30, 2021

Equity

10. Equity

10.

Equity

During the three months ended November 30, 2020: On September 30, 2020, the Company issued 120,000 shares of common stock at $1.25 per share for gross cash proceeds of $150,000. In connection with the extension of convertible notes payable, as of November 30, 2020, the Company has common stock issuable of $129,952 (August 31, 2020 - $19,952). During the three months ended November 30, 2021: On September 2, 2021, the Company issued 2,175,933 common shares at fair value of $2,447,925 on issuance date from treasury to the CFO and COO (Note 11) and 1,900,000 common shares at fair value of $2,137,500 to certain employees of the Company as bonuses for past services, which is recorded as stock-based compensation. On September 2, 2021, the Company issued 2,997,237 common shares measured at fair value on issuance date of $3,371,892 from treasury for consulting services related to business development for a 12-month period from the issuance date. As the future benefit of the consulting services to be performed cannot be determined, the entire amount was expensed during the three months ended November 30, 2021. During the year ended August 31, 2021, the Company re-issued 750,000 shares of common stock with total fair value of $637,500 for consulting services, out of which, $425,000 was expensed as consulting fees during the prior year and $159,374 was expensed during the three months ended November 30, 2021. As at November 30, 2021, $53,126 was deferred compensation included in prepaid expenses on the consolidated balance sheet. On October 20, 2021, the Company issued 3,753,094 units at $0.75 per unit for proceeds of $2,814,821, of which $790,467 was received during the year ended August 31, 2021, and $250,000 was receivable at November 30, 2021. Each unit consists of one common share of the Company and one warrant to purchase the Company’s one common shares at $1.25 for a period of two years. During the three months ended November 30, 2021, the Company received an additional $85,146 in cash for units subscribed at $0.75 per unit. In connection with the financing, the Company incurred brokerage commission fees of $205,735. On November 5, 2021, the Company issued 705,000 units at $0.75 per unit for proceeds of $528,750. Each unit consists of one common share of the Company and one warrant to purchase the Company’s one common shares at $1.25 for a period of two years. In connection with the financing, the Company issued 8,000 shares of common stock with a fair value of $6,000 as a finder’s fee and incurred other finders’ fees of $41,654. During the three months ended November 30, 2021, the Company issued 268,000 common shares to certain investors for no consideration by error. The Company is in the process of retracting the shares.

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Related party transactions and balances

3 Months Ended

Nov. 30, 2021

Related party transactions and balances

11. Related party transactions and balances

11.	Related party transactions and balances
	All transactions with related parties have occurred in the normal course of operations and are recorded at the exchange amount which is the amount agreed to by the Company and the related party.

a)	Key management compensation and related party transactions
	The Company has identified its directors and certain senior officers as its key management personnel. The compensation costs for key management personnel were as follows:

	November 30, 2021		November 30, 2020
Consulting fees and benefits	$	91,986	$	88,865

b)

Amounts due to/from related parties

In the normal course of operations, the company shares certain administrative resources with companies related by common management and directors. The administrative resources and services, which were provided in the normal course of operations, were measured at the exchange. All amounts payable and receivable are non-interest bearing, unsecured and due on demand. The following table summarizes the amounts were due from related parties:

	November 30,  2021			August 31, 2021
CEO and Director	$	(61,796	)	$	(65,254	)
COO and Director		(76,960	)		(76,574	)
An entity controlled by the CFO		(37,961	)		(34,655	)
	$	(176,717	)	$	(176,483	)

	As of November 30, 2021, the Company had $176,717 (August 31, 2021 - $176,483) payable to related parties for expenses incurred or expensed paid on behalf of the Company by the parties which has been presented in accounts payable and accrued liabilities.
c)	Stock-based compensation
	On September 2, 2021, the Company issued 400,000 common shares from treasury at fair value of $450,000 to an entity controlled by the CFO as a bonus for past services provided. On September 2, 2021, the Company issued 1,775,933 common shares from treasury at fair value of $1,997,925 to entities controlled by the COO and Director for as a bonus for past services provided.

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Financial risk factors

3 Months Ended

Nov. 30, 2021

Financial risk factors

12. Financial risk factors

12.	Financial risk factors
	The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

a)	Credit risk:
	Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash account. Cash accounts are held with major banks in Canada. The Company has deposited its cash with a bank from which management believes the risk of loss is low.

b)	Liquidity risk:
	Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to meet liabilities when due. Accounts payable are due within the current operating period. The Company has a working capital deficit and requires additional financing to meet its current obligations (see Note 1).
c)	Market risk:
	Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The Company is not exposed to market risk.
d)	Interest rate risk:
	Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk, from time to time, on its cash balances. Surplus cash, if any, is placed on call with financial institutions and management actively negotiates favorable market related interest rates.
e)	Foreign exchange risk:
	Foreign currency risk is limited to the portion of the Company’s business transactions denominated in currencies other than the Canadian dollar. The Company has not entered into any foreign currency contracts to mitigate risk, but manages the risk my minimizing the value of financial instruments denominated in foreign currency. The Company is exposed to foreign currency risk to the extent that the following monetary assets and liabilities are denominated in Canadian dollars:

	November 30, 2021
Balance in Canadian dollars:
Cash and cash equivalents	$	70,163
Accounts payable		(454,262	)
Net exposure
Balance in US dollars:	$	(384,099	)

A 10% change in the US dollar to the Canadian dollar exchange rate would impact the Company’s net loss by approximately $38,410 for the three months ended November 30, 2021 (November 30, 2020 – $35,296).

The Company is exposed to foreign currency risk to the extent that the following monetary assets and liabilities are denominated in Colombian Pesos:

	November 30, 2021
Balance in Colombian Pesos dollars:
Cash and cash equivalents	$	281,751,039
Other receivables		83,072,204
Accounts payable		(3,170,820,800	)
Net exposure		(2,805,997,557	)
Balance in US dollars:	$	(702,870	)

A 10% change in the US dollar to the Colombian Peso exchange rate would impact the Company’s net loss by approximately $70,287 for the three months ended November 30, 2021 (November 30, 2020 - $74,408).

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Capital management

3 Months Ended

Nov. 30, 2021

Capital management

13. Capital management

13.

Capital management

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the business and continue as a going concern. The Company considers capital to be all accounts in equity. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The Company has a working capital deficit and requires additional capital to finance is future business plans. The Company is not subject to any externally imposed capital requirements.

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Commitments

3 Months Ended

Nov. 30, 2021

Commitments

14. Commitments

14. Commitments

a)	In August 2019, the Company entered into an agreement for the construction and installation of equipment (Note 4a), as of August 31, 2021, $208,279 remained payable upon completion of the construction.
b)	On August 30, 2019, the Company entered into sales agreement to purchase an extraction system to be use in future at its operation in Colombia. The equipment has a value of CAD$658,260. The terms of the agreement require the Company to pay the full amount in monthly installments starting September 1, 2019 and will continue to February 2020. The equipment will be paid in full before the equipment is shipped to Colombia and title transfers to the Company. At November 30, 2021, the $233,496 (Note 4(b)) has been recorded as a deposit until the remaining purchase price is paid and the equipment is received.
c)	On June 30, 2021, the Company entered into certain construction agreements for building an energy network and transformer and a water treatment system with an aggregated cost of $437,673 (COP$1,747,279,680). As at November 30, 2021, the weighted average percentage of completion is 73% or $319,240 (COP$1,280,665,381), of the work related to the construction agreement, which has been capitalized as construction in process. As at November 30, 2021, the Company held deposits of $77,829 (COP$298,175,238) and is obligated to pay the remaining $111,032 (COP$443,261,101) prior to completion of the construction.
d)	As of November 30, 2021, the Company recorded a contingent liability of $547,190 (CAD$700,000) for expenses in connection with Allied Colombia acquisition, which is included in the balance of accounts payable and accrued liabilities on the consolidated balance sheets.
e)	During the year ended August 31, 2021, the Company settled amounts owed to certain previous management of $108,500, which was presented as settlement payments in the consolidated statement of operations and comprehensive loss. As at November 30, 2021, $90,000 remained outstanding and was included in accounts payable and accrued liabilities in the consolidated balance sheet.
f)	The Company has entered into leases for farm land in Colombia. See Note 7 for details.

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Share purchase warrants

3 Months Ended

Nov. 30, 2021

Share purchase warrants

15. Share purchase warrants

15.	Share purchase warrants
	The following table summarizes the continuity of share purchase warrants:

	Number of warrants			Weighted average exercise price $
Balance, August 31, 2021		3,663,135			1.21
Issued		3,717,666			1.25
Expired		(320,000	)		1.25
Balance, November 30, 2021		7,060,801			1.23

As at November 30, 2021, the following share purchase warrants were outstanding:

Number of warrants		Exercise price $		Expiry date
	130,673		1.25	September 29, 2022
	30,090		1.25	October 16, 2022
	68,750		1.25	November 11, 2022
	240,000		1.25	November 28, 2022
	118,000		0.50	March 26, 2022
	180,000		1.00	April 29, 2022
	1,446,666		1.25	June 11, 2023
	50,000		1.25	July 17, 2023
	103,956		1.25	July 26, 2023
	200,000		1.25	August 18, 2023
	775,000		1.25	August 28, 2023
	100,000		1.25	October 1, 2023
	2,812,666		1.25	October 20, 2023
	100,000		1.25	October 25, 2023
	705,000		1.25	November 6, 2023

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Stock Options

3 Months Ended

Nov. 30, 2021

Stock Options

16. Stock Options

16.	Stock options
	A summary of the Company’s stock option activity is as follows:

	Number of Options		Weighted Average Exercise Price $		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value $
Balance, August 31, 2021		4,450,000		0.77		4.42		1,334,000
Granted		100,000		1.125		4.76
Outstanding, November 30, 2021		4,550,000		0.78		4.19		5,014,000
Exercisable, November 30, 2021		1,583,333		0.79		4.21		1,721,667

During the three months ended November 30, 2021, the Company recorded stock-based compensation of $531,255 for options granted on the consolidated statement of operations. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	Three Months Ended November 30, 2021			Three Months Ended November 30, 2020
Expected dividend yield		0	%	-%
Expected volatility		166	%	-%
Expected life (in years)		5			-
Risk-free interest rate		0.78	%	-%

At November 30, 2021, there was $765,815 of unrecognized compensation costs related to non-vested stock-based compensation arrangements granted under the Plan.

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Noncash activities

3 Months Ended

Nov. 30, 2021

Noncash activities

17. Non-cash activities

17. Non-cash activities

	For the Three Months Ended November 30, 2021		For the Three Months Ended November 30, 2020
Non-cash activities:
Shares issued from treasury for services and bonuses		7,957,316		-
Beneficial conversion feature		80,247		153,764
Relative fair value of warrants issuable with convertible note		120,310		133,127
Relative fair value of shares issued on modification of convertible notes		-		110,000

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Segment disclosure

3 Months Ended

Nov. 30, 2021

Segment disclosure

18. Segment disclosure

18.	Segment disclosure
	The Company has two operating segments including:

a)	Allied Colombia, a Colombian based company through which the Company intends to commence commercial production in Colombia. (Allied Colombia)
b)	Allied Corp. which consists of the rest of the Company’s operations. (Allied)
Factors used to identify the Company’s reportable segments include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance. The Company’s operating segments have been broken out based on similar economic and other qualitative criteria. The Company operates the Allied reporting segment in one geographical area (Canada), and the Allied Colombia reporting segment in one geographical area (Colombia). Financial statement information by operating segment for the three month period ended November 30, 2021 is presented below:

	Allied $			Allied Colombia $			Total $
Net sales		(4,679	)		14,761			10,082
Net loss		(9,662,598	)		(405,483	)		(10,068,081	)
Accretion		132,033			-			132,033
Depreciation and amortization		-			13,299			13,299
Total assets as of November 30, 2021		3,617,195			1,230,389			4,847,584

Geographic information for the three-month  period ended and as at November 30, 2021 is presented below:

	Revenues $		Total Assets $
Canada				3,617,195
Colombia		10,081		1,230,389
Total		10,081		4,847,584

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Subsequent events

3 Months Ended

Nov. 30, 2021

Subsequent events

19. Subsequent events

19. Subsequent events

a)

On March 30, 2021, the Company entered into an asset purchase agreement (“APA”) to acquire two privileged licenses issued by the Nevada Department of Taxation purposed for the cultivation of cannabis (the “Licenses”). In consideration for the licenses, the Company agreed to pay $150,000, issue a $1,350,000 promissory note and assume certain liabilities. At November 30, 2021, the asset purchase has not been closed and the amount paid has been recorded as a deposit (Note 4 (c)).

The promissory note bears interest at the Short Term Applicable Federal Rate of 0.11% per annum and shall be repaid through quarterly payments of a minimum of 50% of the net operating income received in connection with the Nevada cannabis operation associated with the acquired Licenses. All outstanding principal and accrued interest is due two years after issuance of the note. As of November 30, 2021, the Company has not issued any considerations under the APA. The Company has not received any assets outlined in the APA. The asset purchase has not been closed. Concurrent with the APA, the Company entered into a services agreement (the “Services Agreement”) and a land lease agreement (the “Lease Agreement”) with the seller of the Licenses. Pursuant to the Services agreement the seller of the licenses will provide consulting services to the Company in exchange for the reimbursement of expenses incurred. Pursuant to the Lease Agreement, the Company leased land in North Las Vegas to accommodate an approximately 9,000 square foot building to be used for the cultivation, marketing or sale of cannabis for a period of 25 years. Lease payments shall commence on the date which the first cannabis plant is planted, and monthly lease payments are as follows:

· $1,500 per month for the first five years.

· $1,800 per month for years 6 to 10 of the lease.

· $2,025 per month for years 11 to 15 of the lease.

· $2,280 per month for years 16 to 20 of the lease.

· $2,565 per month for years 21 to 25 of the lease.

	In addition, for the term of the lease, the Company shall pay the landlord 50% of the net operating income derived from the cannabis cultivation operation located at the leased premises.
The Company is currently negotiating to significantly revise this agreement and structure.  Effectively the APA, the Lease Agreement and the Service Agreement will be terminated and replaced by an Option to Purchase Agreement. Our wholly owned subsidiary, Allied US Products LLC, a Nevada limited liability company, intends to revise the structure to enter into an Option to Purchase Agreement (the “ Option Purchase Agreement”) which allows for the purchase of a Nevada State US-based cannabis license from a subsidiary of Fiore Cannabis, Ltd. only upon on the occurrence or waiver of the changes in U.S. federal law to permit the general cultivation, distribution and possession of marijuana or to remove the regulation of such activities from the federal laws of the United States (the “Triggering Event”). While the Company has begun to enter into arrangements with United States based companies that may themselves participate in the United States cannabis market, we do not hold any US assets, but rather have a call option to purchase that can be exercisable or exchangeable upon cannabis becoming legal or permissible in the United States under Federal law. The Company will only conduct business activities related to growing or processing cannabis in jurisdictions, including the United States, when it is federally permissible to do so. The Company is not considered a United States Marijuana Issuer (as defined in the Canadian Securities Administrators Staff Notice 51-352 – Issuers with United States Marijuana-Related Activities (the “Staff Notice”)) nor does it have material ancillary involvement in the United States. cannabis industry in accordance with the Staff Notice. While the Company has several arrangements with United States based companies that may themselves participate in the United States cannabis market, these relationships do not violate the federal laws of the United States respecting cannabis and in no manner involve the Company in any activities in the United States respecting cannabis.
b)	On December 23, 2021, the Company issued two secured convertible notes with a face value of $200,000. The note bears interest at 10% per annum and is due on demand on or after June 23, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to June 23, 2022 at a conversion price of $1.25 per share.
c)	On January 11, 2022, the Company issued a secured convertible note with a face value of $150,000. The note bears interest at 10% per annum and is due on demand on or after July 10, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to July 10, 2022 at a conversion price of $1.25 per share.
d)	Subsequent to November 30, 2021, the Company received $27,000 for subscription to 36,000 units at $0.75 per unit. Each unit consists of one common share of the Company and one warrant to purchase the Company’s one common share at $1.25 for a period of two years.
e)	Subsequent to November 30, 2021, the Company entered into an amendment agreement for the financing agreement as described in Note 8 a). Pursuant to the amendment, the Company will make monthly payments of $37,613. For the remaining 24 months, the Company will make monthly payments of $66,288. If the first 6 monthly payments are made on time, the Company may prepay the unamortized loan balance with a 2% penalty of the remaining balance.

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Significant accounting policies (Policies)

3 Months Ended

Nov. 30, 2021

Significant accounting policies

Principles of consolidation

The consolidated financial statements include accounts of Allied Corp. and its wholly-owned subsidiaries, including AM Biosciences, Allied US Products LLC, Tactical Relief LLC, Baleno Ltd. and Allied Colombia. Subsidiaries are consolidated from the date of acquisition and control and continue to be consolidated until the date that such control ceases. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect these returns through its power over the investee. All intercompany balances, income, expenses, and unrealized gains and losses resulting from intercompany transactions are eliminated on consolidation.

Cash and cash equivalents

Cash is comprised of cash on hand, cash held in trust accounts and demand deposits. Cash equivalents are short-term, highly liquid investments with maturities within three months when acquired. The Company did not have any cash equivalents as of November 30, 2021 and August 31, 2021.

Property and Equipment

Property, plant and equipment are stated at cost. The Company depreciates the cost of property, plant and equipment over their estimated useful lives at the following annual rates and methods:

Farm facility and equipment	1 - 10 years straight-line basis
Office and computer equipment	5 - 10 years straight-line basis
Land equipment	10 years straight-line basis

Inventory

Inventory is comprised of raw materials, supplies, vegetative and flowering plants, dried flower, diluted crude and CBD isolates available for sale, and purchased cannabis products.

Inventory is stated at the lower of cost or net realizable value, determined using weighted average cost. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. At the end of each reporting period, the Company performs an assessment of inventory and records write-downs for excess and obsolete inventories based on the Company’s estimated forecast of product demand, production requirements, market conditions, regulatory environment, and spoilage. Actual inventory losses may differ from management’s estimates and such differences could be material to the Company’s consolidated balance sheets, statements of net loss and comprehensive loss and statements of cash flows.

Intangible assets

Intangible assets include licenses which are being amortized over their estimated useful lives of 10 years. The Company’s licenses are amortized over their economic or legal life on a straight-line basis, whichever is shorter. The licenses have been amortized from the date of acquisition.

The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.

For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value.

Long-lived assets

In accordance with ASC 360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

Foreign currency translation and functional currency conversion

Items included in these consolidated financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entities operate (the “functional currency”).

Prior to September 10, 2019, the Company’s functional currency was the Canadian dollar. Translation gains and losses from the application of the U.S. dollar as the reporting currency during the period that the Canadian dollar was the functional currency are included as part of cumulative currency translation adjustment, which is reported as a component of shareholders’ equity under accumulated other comprehensive loss.

The Company re-assessed its functional currency and determined as at September 10, 2019, its functional currency changed from the Canadian dollar to the U.S. dollar based on management’s analysis of changes in our organization. The change in functional currency was accounted for prospectively from September 10, 2019 and prior period financial statements were not restated for the change in functional currency.

For periods commencing September 10, 2019, monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates in effect at the balance sheet date. Opening balances related to non-monetary assets and liabilities are based on prior period translated amounts, and non-monetary assets and non-monetary liabilities incurred after September 10, 2019 are translated at the approximate exchange rate prevailing at the date of the transaction. Revenue and expense transactions are translated at the approximate exchange rate in effect at the time of the transactions. Foreign exchange gains and losses are included in the statement of operations and comprehensive loss as foreign exchange gains.

The Company assessed the functional currency for Allied Colombia to be the Colombian peso. The functional currency for all other subsidiaries is the U.S. dollar.

Share issuance costs

Costs directly attributable to the raising of capital are charged against the related share capital. Costs related to shares not yet issued are recorded as deferred share issuance costs. These costs are deferred until the issuance of the shares to which the costs relate, at which time the costs will be charged against the related share capital or charged to operations if the shares are not issued.

Research and development costs

Research and development costs are expensed as incurred.

Revenue Recognition

The Company’s revenue is comprised of sales of cannabis products.

The Company’s revenue-generating activities have a single performance obligation and revenue is recognized at the point in time when control of the product transfers and the Company’s obligations have been fulfilled. This generally occurs when the product is shipped or delivered to the customer, depending upon the method of distribution and shipping terms set forth in the customer contract. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of the Company’s product. Certain of the Company’s customer contracts may provide the customer with a right of return. In certain circumstances the Company may also provide a retrospective price adjustment to a customer. These items give rise to variable consideration, which is recognized as a reduction of the transaction price based upon the expected amounts of the product returns and price adjustments at the time revenue for the corresponding product sale is recognized. The determination of the reduction of the transaction price for variable consideration requires that the Company make certain estimates and assumptions that affect the timing and amounts of revenue recognized.

Sales of products are for cash or otherwise agreed-upon credit terms. The Company’s payment terms vary by location and customer; however, the time period between when revenue is recognized and when payment is due is not significant. The Company estimates and reserves for its bad debt exposure based on its experience with past due accounts and collectability, write-off history, the aging of accounts receivable and an analysis of customer data.

Net income (loss) per common share

Net income (loss) per share is calculated in accordance with ASC 260, Earnings per Share. The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding to the extent the effect would not be antidilutive. Dilutive potential common shares are additional common shares assumed to be exercised.

Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding.

Income taxes

The Company accounts for income taxes under ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

Related party transactions

Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. The Company discloses related party transactions that are outside of normal compensatory agreements, such as salaries. Related party transactions are measured at the exchange amounts.

Significant accounting estimates and judgments

The preparation of the financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Although management uses historical experience and its best knowledge of the amount, events or actions to for the basis for judgments and estimates, actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods.

Significant estimates and assumptions included in these financial statements relate to the valuation assumptions related to the estimated useful lives and recoverability of long-lived assets, stock-based compensation, and deferred income tax assets and liabilities. Judgments are required in the assessment of the Company’s ability to continue to as going concern as described in Note 1.

Financial instruments

ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The financial instruments consist principally of cash, due from related parties, accounts payable, note payable, and convertible notes payable. The fair value of cash when applicable is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all other financial instruments which are categorized as loans and receivables approximate their current fair values because of their nature and respective relatively short maturity dates or current market rates of interest for similar instruments.

For certain of the Company’s financial instruments, including accounts payable, due from related parties, notes and loans payable, the carrying amounts approximate their fair values due to the short maturities.

The Company does not have any assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet as of November 30, 2021 and August 31, 2021 other than cash.

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions.

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The standard states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. The Company adopted ASU 2016-02 on September 1, 2019, using the transition relief to the modified retrospective approach, presenting prior year information based on the previous standard. The Company did not have any leases until the acquisition of its wholly owned subsidiary, Allied Colombia S.A.S. on February 18, 2020.

The Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease payments arising from the lease. All leases with terms greater than twelve months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. Unless a lease provides all of the information required to determine the implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. The Company uses the implicit interest rate in the lease when readily determinable.

Our lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that we will exercise that option. Leases with terms of twelve months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of an asset or liability. See Note 7 – Leases.

Reverse Acquisitions

Identification of the accounting acquirer

The Company considers factors in ASC 805-10-55-10 through 55-15 in identifying the accounting acquirer. The Company uses the existence of a controlling financial interest to identify the acquirer - the entity that obtains control of the acquiree. Other pertinent facts and circumstances also shall be considered in identifying the acquirer in a business combination effected by exchanging equity interests, including the following: (a) The relative voting rights in the combined entity after the business combination, where the acquirer usually is the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity taking into consideration the existence of any unusual or special voting arrangements and options, warrants, or convertible securities; (b) the existence of a large minority voting interest in the combined entity if no other owner or organized group of owners has a significant voting interest, and where the acquirer usually is the combining entity whose single owner or organized group of owners holds the largest minority voting interest in the combined entity; (c) the composition of the governing body of the combined entity, where the acquirer usually is the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity; (d) the composition of the senior management of the combined entity, where the acquirer usually is the combining entity whose former management dominates the management of the combined entity; and (e) the terms of the exchange of equity interests, where the acquirer usually is the combining entity that pays a premium over the pre-combination fair value of the equity interests of the other combining entity or entities, where the acquirer usually is the combining entity whose relative size (measured in, for example, assets, revenues, or earnings) is significantly larger than that of the other combining entity or entities.

Pursuant to ASC Paragraph 805-40-05-2, as one example of a reverse acquisition, a private operating entity may arrange for a public entity to acquire its equity interests in exchange for the equity interests of the public entity. In this situation, the public entity is the legal acquirer because it issued its equity interests, and the private entity is the legal acquiree because its equity interests were acquired. However, application of the guidance in ASC 805-10-55-11 through 55-15 results in identifying: (a) The public entity as the acquire for accounting purposes (the accounting acquiree); and (b) the private entity as the acquirer for accounting purposes (the accounting acquirer).

Measuring the consideration transferred

Pursuant to ASC 805-40-30-2 and 30-3 in a reverse acquisition, the accounting acquirer usually issues no consideration for the acquiree. Instead, the accounting acquiree usually issues its equity shares to the owners of the accounting acquirer. Accordingly, the acquisition-date fair value of the consideration transferred by the accounting acquirer for its interest in the accounting acquiree is based on the number of equity interests the legal subsidiary would have had to issue to give the owners of the legal parent the same percentage equity interest in the combined entity that results from the reverse acquisition. The fair value of the number of equity interests calculated in that way can be used as the fair value of consideration transferred in exchange for the acquiree. The assets and liabilities of the legal acquiree are measured and recognized in the consolidated financial statements at their pre-combination carrying amounts (see ASC 805-40-45-2(a)).

Presentation of consolidated financial statements post reverse acquisition

Pursuant to ASC 805-40-45-1 and 45-2, consolidated financial statements following a reverse acquisition are issued under the name of the legal parent (accounting acquiree) but described in the notes as a continuation of the financial statements of the legal subsidiary (accounting acquirer), with one adjustment, which is to retroactively adjust the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree. That adjustment is required to reflect the capital of the legal parent (the accounting acquiree). Comparative information presented in those consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent (accounting acquiree). The consolidated financial statements reflect all of the following: (a) The assets and liabilities of the legal subsidiary (the accounting acquirer) recognized and measured at their pre-combination carrying amounts; (b) the assets and liabilities of the legal parent (the accounting acquiree) recognized and measured in accordance with the guidance in Topic 805 “Business Combinations”; (c) the retained earnings and other equity balances of the legal subsidiary (accounting acquirer) before the business combination; (d) the amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of the legal subsidiary (the accounting acquirer) outstanding immediately before the business combination to the fair value of the legal parent (accounting acquiree) determined in accordance with the guidance in this topic applicable to business combinations. However, the equity structure (that is, the number and type of equity interests issued) reflects the equity structure of the legal parent (the accounting acquiree), including the equity interests the legal parent issued to effect the combination.

Accordingly, the equity structure of the legal subsidiary (the accounting acquirer) is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent (the accounting acquiree) issued in the reverse acquisition; and (e) the non-controlling interest’s proportionate share of the legal subsidiary’s (accounting acquirer’s) pre-combination carrying amounts of retained earnings and other equity interests as discussed in ASC 805-40-25-2 and 805-40-30-3.

Pursuant to ASC 805-40-45-4 and 45-5, in calculating the weighted-average number of common shares outstanding (the denominator of the earnings-per-share (“EPS”) calculation) during the period in which the reverse acquisition occurs: (a) The number of common shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted-average number of common shares of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the acquisition agreement; and (b) the number of common shares outstanding from the acquisition date to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period.

The basic EPS for each comparative period before the acquisition date presented in the consolidated financial statements following a reverse acquisition shall be calculated by dividing (a) by (b): (a) The income of the legal acquiree attributable to common shareholders in each of those periods; and (b) the legal acquiree’s historical weighted average number of common shares outstanding multiplied by the exchange ratio established in the acquisition agreement.

As a result of the controlling financial interest of the former stockholders of AMBI, for financial statement reporting purposes, the asset acquisition has been treated as a reverse acquisition with AMBI deemed the accounting acquirer and the Company deemed the accounting acquire under the acquisition method of accounting in accordance with ASC 805-10-55 of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The reverse acquisition is deemed a capital transaction and the net assets of AMBI (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the acquisition. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of AMBI which are recorded at their historical cost. The equity of the Company is the historical equity of AMBI.

These consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries, AM Biosciences effective from the date of the reverse take—over transaction on September 10, 2019 and Allied Colombia (from the date of acquisition, February 18, 2020). All intercompany balances and transactions have been eliminated upon consolidation.

Recent accounting pronouncements

The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the three months ended November 30, 2021, are of significance or potential significance to the Company.

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Significant accounting policies (Tables)

3 Months Ended

Nov. 30, 2021

Significant accounting policies

Schedule of property and equipment

Farm facility and equipment	1 - 10 years straight-line basis
Office and computer equipment	5 - 10 years straight-line basis
Land equipment	10 years straight-line basis

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Inventory (Tables)

3 Months Ended

Nov. 30, 2021

Inventory (Tables)

Schedule of Inventory

	November 30, 2021		August 31, 2021
Work in progress	$	37,425	$	51,831
Finished goods		118,056		84,430
Total inventory	$	155,481	$	136,261

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Deposits and advances (Tables)

3 Months Ended

Nov. 30, 2021

Deposits and advances

Schedule of deposits and advances

	November 30, 2021		August 31, 2021
a) Towards the purchase of prefabricated buildings	$	2,656,695	$	2,656,695
b) Vitalis equipment deposit		233,496		233,496
c) Deposit towards a license acquisition		150,000		150,000
d) Prepayments for construction facility in Colombia		77,829		115,972
e) Eteros equipment deposit		115,700		-
Total deposits and advances	$	3,233,720	$	3,156,163

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Property plant and equipment (Tables)

3 Months Ended

Nov. 30, 2021

Property plant and equipment

Schedule of property plant and equipment

	Construction in process			Farm facility and equipment			Office and computer equipment			Land equipment			Total
August 31, 2021	$	27,469		$	274,776		$	10,653		$	16,310		$	329,208
Additions		334,383			93,657			5,815			9,329			443,184
Foreign exchange		(15,143	)		(19,329	)		(838	)		(1,300	)		(36,610	)
November 30, 2021	$	346,709		$	349,104		$	15,629		$	24,339		$	735,782
Accumulated depreciation
August 31, 2021	$	-		$	58,519		$	1,935		$	919		$	61,373
Additions		-			12,374			490			435			13,299
Foreign exchange		-			(3,810	)		(130	)		(69	)		(4,009	)
November 30, 2021	$	-		$	67,083		$	2,295		$	1,285		$	70,663
Net book value
August 31, 2021	$	27,469		$	216,257		$	8,718		$	15,391		$	267,835
November 30, 2021	$	346,709		$	282,021		$	13,335		$	23,054		$	665,119

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Intangible assets (Tables)

3 Months Ended

Nov. 30, 2021

Intangible assets

Schedule of intangible assets

	Cost $		Foreign exchange $			Accumulated amortization $			Accumulated impairment $			November 30, 2021 Net carrying value $		August 31, 2021 Net carrying value $
Cannabis licenses		5,435,334		(464,973	)		(1,122,694	)		(3,801,667	)		46,000		46,000
		5,435,334		(464,973	)		(1,122,694	)		(3,801,667	)		46,000		46,000

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Leases (Tables)

3 Months Ended

Nov. 30, 2021

Leases

Schedule of components of lease expenses

	$
Operating lease cost:
Amortization of right-of-use assets		5,810
Interest on lease liabilities		9,050
Total operating lease cost		14,860

Schedule of supplemental cash flow and other information related to leases

	$
Lease payments	14,860

Schedule of supplemental balance sheet information related to leases

	$
Cost	282,273
Accumulated amortization	(13,240	)
Foreign exchange	(41,253	)
Net carrying value at November 30, 2021	227,780

Schedule of future minimum lease payments

	$
2022	42,767
2023	57,023
2024	57,023
Thereafter	206,234
Total minimum lease payments	363,047
Less: amount of lease payments representing effects of discounting	(135,267	)
Present value of future minimum lease payments	227,780
Less: current obligations under leases	(24,495	)
Lease liabilities, net of current portion	203,285

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Related party transactions and balances (Tables)

3 Months Ended

Nov. 30, 2021

Related party transactions and balances

Schedule of related party compensation costs

	November 30, 2021		November 30, 2020
Consulting fees and benefits	$	91,986	$	88,865

Schedule of due from related party

	November 30,  2021			August 31, 2021
CEO and Director	$	(61,796	)	$	(65,254	)
COO and Director		(76,960	)		(76,574	)
An entity controlled by the CFO		(37,961	)		(34,655	)
	$	(176,717	)	$	(176,483	)

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Financial risk factors (Tables)

3 Months Ended

Nov. 30, 2021

Financial risk factors

Schedule of foreign currency translation

	November 30, 2021
Balance in Canadian dollars:
Cash and cash equivalents	$	70,163
Accounts payable		(454,262	)
Net exposure
Balance in US dollars:	$	(384,099	)

	November 30, 2021
Balance in Colombian Pesos dollars:
Cash and cash equivalents	$	281,751,039
Other receivables		83,072,204
Accounts payable		(3,170,820,800	)
Net exposure		(2,805,997,557	)
Balance in US dollars:	$	(702,870	)

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Share purchase warrants (Tables)

3 Months Ended

Nov. 30, 2021

Share purchase warrants

Schedule of share purchase warrants

	Number of warrants			Weighted average exercise price $
Balance, August 31, 2021		3,663,135			1.21
Issued		3,717,666			1.25
Expired		(320,000	)		1.25
Balance, November 30, 2021		7,060,801			1.23

Schedule of warrants outstanding

Number of warrants		Exercise price $		Expiry date
	130,673		1.25	September 29, 2022
	30,090		1.25	October 16, 2022
	68,750		1.25	November 11, 2022
	240,000		1.25	November 28, 2022
	118,000		0.50	March 26, 2022
	180,000		1.00	April 29, 2022
	1,446,666		1.25	June 11, 2023
	50,000		1.25	July 17, 2023
	103,956		1.25	July 26, 2023
	200,000		1.25	August 18, 2023
	775,000		1.25	August 28, 2023
	100,000		1.25	October 1, 2023
	2,812,666		1.25	October 20, 2023
	100,000		1.25	October 25, 2023
	705,000		1.25	November 6, 2023

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Stock Options (Tables)

3 Months Ended

Nov. 30, 2021

Stock Options

Schedule of Stock Options activity

	Number of Options		Weighted Average Exercise Price $		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value $
Balance, August 31, 2021		4,450,000		0.77		4.42		1,334,000
Granted		100,000		1.125		4.76
Outstanding, November 30, 2021		4,550,000		0.78		4.19		5,014,000
Exercisable, November 30, 2021		1,583,333		0.79		4.21		1,721,667

Schedule of weighted average assumptions

	Three Months Ended November 30, 2021			Three Months Ended November 30, 2020
Expected dividend yield		0	%	-%
Expected volatility		166	%	-%
Expected life (in years)		5			-
Risk-free interest rate		0.78	%	-%

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Noncash activities (Tables)

3 Months Ended

Nov. 30, 2021

Schedule of Non-cash activities

	For the Three Months Ended November 30, 2021		For the Three Months Ended November 30, 2020
Non-cash activities:
Shares issued from treasury for services and bonuses		7,957,316		-
Beneficial conversion feature		80,247		153,764
Relative fair value of warrants issuable with convertible note		120,310		133,127
Relative fair value of shares issued on modification of convertible notes		-		110,000

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Segment disclosure (Tables)

3 Months Ended

Nov. 30, 2021

Segment disclosure

Schedule of operating segment

	Allied $			Allied Colombia $			Total $
Net sales		(4,679	)		14,761			10,082
Net loss		(9,662,598	)		(405,483	)		(10,068,081	)
Accretion		132,033			-			132,033
Depreciation and amortization		-			13,299			13,299
Total assets as of November 30, 2021		3,617,195			1,230,389			4,847,584

Schedule of geographic information

	Revenues $		Total Assets $
Canada				3,617,195
Colombia		10,081		1,230,389
Total		10,081		4,847,584

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Nature of operations reverse takeover transaction and going concern (Details Narrative) - USD ($)		3 Months Ended
	Sep. 10, 2019	Nov. 30, 2021	Nov. 30, 2020	Aug. 31, 2021	Jul. 25, 2019
Common stock, shares outstanding	78,268,780	91,666,131		79,858,867
Shares reacquired by treasury, shares	4,500,000
Cancellation of treasury stock	10,459,220
Net loss for the period		$ (10,068,081)	$ (1,195,862)
Working capital deficit		$ 4,229,248
Reorganization Agreement [Member] | Pacific Capital Investment Group, Inc. [Member]
Acquire percentage	100.00%				100.00%
Business aquisition, common stock issued by related party to SECFAC	51,200,014
Description of delivered as part of the transaction	representing approximately 65.42% of the outstanding equity of Allied Corp. to SECFAC Exchange Corp.

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Significant accounting policies (Details)	3 Months Ended
	Nov. 30, 2021
Farm facility and equipment [Member] | Minimum [Member]
Estimated useful lives	1 year
Farm facility and equipment [Member] | Maximum [Member]
Estimated useful lives	10 years
Office and Computer Equipment [Member] | Minimum [Member]
Estimated useful lives	5 years
Office and Computer Equipment [Member] | Maximum [Member]
Estimated useful lives	10 years
Land Equipment [Member]
Estimated useful lives	10 years

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Significant accounting policies (Details Narrative)	3 Months Ended
	Nov. 30, 2021
Significant accounting policies
Intangible asset estimated useful life	10 years

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Inventory (Details) - USD ($)	Nov. 30, 2021	Aug. 31, 2021
Inventory
Work-in-progress	$ 37,425	$ 51,831
Finished goods	118,056	84,430
Total inventory	$ 155,481	$ 136,261

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Inventory (Details Narrative)	3 Months Ended
	Nov. 30, 2021 USD ($)
Inventory
Write-down of inventory to net realizable value	$ 252,639

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Deposits and advances (Details) - USD ($)	Nov. 30, 2021	Aug. 31, 2021
Total deposits and advances	$ 3,233,720	$ 3,156,163
Towards the purchase of prefabricated buildings [Member]
Total deposits and advances	2,656,695	2,656,695
Vitalis equipment deposit [Member]
Total deposits and advances	233,496	233,496
Deposit towards a license acquisition [Member]
Total deposits and advances	150,000	150,000
Prepayments for construction facility in Colombia [Member]
Total deposits and advances	77,829	115,972
Refundable deposits towards future land acquisitions [Member]
Total deposits and advances	$ 115,700	$ 0

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Deposits and advances (Details Narrative)	Nov. 30, 2021 USD ($) ft²	Aug. 31, 2021 USD ($)
Total deposits and advances	$ 3,233,720	$ 3,156,163
Purchase Agreement [Member]
Area of land | ft²	8,700
Towards the purchase of prefabricated buildings [Member]
Total deposits and advances	$ 2,656,695	2,656,695
Vitalis equipment deposit [Member]
Total deposits and advances	233,496	233,496
Deposit towards a license acquisition [Member]
Total deposits and advances	150,000	150,000
Prepayments for construction facility in Colombia [Member]
Total deposits and advances	77,829	115,972
Two Purchase and Sale Agreement [Member]
Total deposits and advances	$ 115,700	$ 0

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Property plant and equipment (Details)	Nov. 30, 2021 USD ($)
Cost of asset, Begining balance	$ 329,208
Cost of asset, Additions	443,184
Cost of asset, Foreign exchange	(36,610)
Cost of asset, Ending balance	735,782
Accumulated depreciation
Accumulated depreciation, Begining balances	61,373
Accumulated depreciation, Additions	13,299
Accumulated depreciation, Foreign exchange	(4,009)
Accumulated depreciation, Ending balance	70,663
Net book value, Begining balance	267,835
Net book value, Ending balance	665,119
Land Equipment [Member]
Cost of asset, Begining balance	16,310
Cost of asset, Additions	9,329
Cost of asset, Foreign exchange	(1,300)
Cost of asset, Ending balance	24,339
Accumulated depreciation
Accumulated depreciation, Begining balances	919
Accumulated depreciation, Additions	435
Accumulated depreciation, Foreign exchange	(69)
Accumulated depreciation, Ending balance	1,285
Net book value, Begining balance	15,391
Net book value, Ending balance	23,054
Office and Computer Equipment [Member]
Cost of asset, Begining balance	10,653
Cost of asset, Additions	5,815
Cost of asset, Foreign exchange	(838)
Cost of asset, Ending balance	15,629
Accumulated depreciation
Accumulated depreciation, Begining balances	1,935
Accumulated depreciation, Additions	490
Accumulated depreciation, Foreign exchange	(130)
Accumulated depreciation, Ending balance	2,295
Net book value, Begining balance	8,718
Net book value, Ending balance	13,335
Farm facility and equipment [Member]
Cost of asset, Begining balance	274,776
Cost of asset, Additions	93,657
Cost of asset, Foreign exchange	(19,329)
Cost of asset, Ending balance	349,104
Accumulated depreciation
Accumulated depreciation, Begining balances	58,519
Accumulated depreciation, Additions	12,374
Accumulated depreciation, Foreign exchange	(3,810)
Accumulated depreciation, Ending balance	67,083
Net book value, Begining balance	216,257
Net book value, Ending balance	282,021
Construction in progress [Member]
Cost of asset, Begining balance	27,469
Cost of asset, Additions	334,383
Cost of asset, Foreign exchange	(15,143)
Cost of asset, Ending balance	346,709
Accumulated depreciation
Accumulated depreciation, Begining balances	0
Accumulated depreciation, Additions	0
Accumulated depreciation, Foreign exchange	0
Accumulated depreciation, Ending balance	0
Net book value, Begining balance	27,469
Net book value, Ending balance	$ 346,709

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Property plant and equipment (Details Narrative)	3 Months Ended
	Nov. 30, 2021 USD ($)
Property plant and equipment
Depreciation on property, plant and equipment	$ 9,100

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Intangible assets (Details) - USD ($)	3 Months Ended	12 Months Ended
	Nov. 30, 2021	Aug. 31, 2021
Cost	$ 5,435,334
Foreign exchange	(464,973)
Accumulated amortization	(1,122,694)
Accumulated impairment	(3,801,667)
Intangible assets net carrying value	46,000	$ 46,000
Cannabis Licenses [Member]
Cost	5,435,334
Foreign exchange	(464,973)
Accumulated amortization	(1,122,694)
Accumulated impairment	(3,801,667)
Intangible assets net carrying value	$ 46,000	$ 46,000

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Intangible assets (Details Narrative) - USD ($)	3 Months Ended	12 Months Ended
	Nov. 30, 2021	Aug. 31, 2021	Feb. 17, 2020
Impairment of intangible assets		$ 2,687,695
Licenses estimated recoverable amount	$ 46,000
Amortization of licenses	$ 1,122,694
Medicolumbia [Member]
Acquisition of licenses			$ 5,435,334
Amortization included in inventory		158,121
Amortization of licenses		$ 658,836

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Leases (Details)	3 Months Ended
	Nov. 30, 2021 USD ($)
Operating lease cost:
Amortization of right-of-use assets	$ 5,810
Interest on lease liabilities	9,050
Total operating lease cost	$ 14,860

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Leases (Details 1)	3 Months Ended
	Nov. 30, 2021 USD ($)
Leases
Lease payments	$ 14,860

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Leases (Details 2)	Nov. 30, 2021 USD ($)
Leases
Cost	$ 282,273
Accumulated amortization	(13,240)
Foreign exchange	(41,253)
Net carrying value	$ 227,780

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Leases (Details 3)	Nov. 30, 2021 USD ($)
Leases
2022	$ 42,767
2023	57,023
2024	57,023
Thereafter	206,234
Total minimum lease payments	363,047
Less: amount of lease payments representing effects of discounting	(135,267)
Present value of future minimum lease payments	227,780
Less current obligations under leases	(24,495)
Lease liabilities, net of current portion	$ 203,285

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Leases (Details Narrative) - USD ($)		3 Months Ended
	Aug. 10, 2021	Nov. 30, 2021	Nov. 30, 2020	Aug. 31, 2021
Leases
Operating lease assets and liabilities		$ 82,398
Land purchase		920,000
Monthly payments	$ 2,647	$ 4,501
Lease liabilities	$ 104,902			$ 70,705
Lease term	5 years	10 years
Weighted average discount rate operating leases		15.00%
Loss on lease termination		$ 0	$ 65,566
Weighted average remaining operating lease term		6 years 8 months 4 days

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Loans payable (Details Narrative) - USD ($)	1 Months Ended								3 Months Ended
	Jul. 25, 2021	Apr. 30, 2021	Apr. 29, 2021	Mar. 31, 2021	Mar. 26, 2021	Jan. 24, 2021	Nov. 20, 2020	Jun. 20, 2020	Nov. 30, 2021	Nov. 30, 2020	May 29, 2020
Initialy payment for building											$ 71,023
Monthly interest payments								$ 37,613
Repayment of Principal Amount							$ 1,253,772
Promissory note, description				As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument
Maturity date	Jan. 25, 2022	Oct. 31, 2021	Oct. 29, 2021		Sep. 26, 2021
SECFAC Exchange Corp [Member]
Debt instrument share issued upon additional compensation									100,000
Accertion on promissory notes									$ 90,000
Fair value of debt instrument									90,000
March 1, 2021 [Member]
Final payment on promissory notes						$ 42,750			$ 315,000
Interest rate									10.00%
Interest paid on promissory notes									$ 15,000
Maturity date									Jun. 01, 2021
June 2020 [Member]
Purchase price of Building									$ 1,253,772
Interest paid on loans for purchase of buildings									$ 112,839	$ 112,840
Acquisition Agreement [Member] | Promissory Note [Member]
Debt instrument share issued, shares						200,000
Debt instrument share issued, amount						$ 85,500
Fair value of common stock						$ 74,000
Promissory note, description						The note is non-interest bearing and is due 10 days after demand.
Final payment on promissory notes						$ 42,750

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Secured convertible notes payable (Details Narrative) - USD ($)					1 Months Ended												3 Months Ended	12 Months Ended
	Nov. 02, 2021	Oct. 02, 2021	Jan. 07, 2021	Nov. 11, 2020	Jul. 25, 2021	Apr. 30, 2021	Apr. 29, 2021	Mar. 31, 2021	Mar. 26, 2021	Mar. 22, 2021	Jan. 06, 2021	Dec. 02, 2020	Oct. 26, 2020	Sep. 29, 2020	Jun. 30, 2020	Jan. 23, 2020	Nov. 30, 2021	Aug. 31, 2020	Nov. 01, 2021	Oct. 25, 2021	Oct. 01, 2021
Fair value of warrants				$ 37,679					$ 43,914			$ 142,564	$ 17,437	$ 78,011			$ 117,533
Issued convertible note with face value		$ 100,000	$ 300,000				$ 180,000
Warrants to purchase common stock							180,000														100,000
Simple interest rate	10.00%				10.00%	10.00%	10.00%	10.00%			10.00%
Warrant exercise price						$ 1.00	$ 1.00		$ 0.50												$ 1.25
Conversion price				$ 0.70	$ 1.25	$ 1.00	$ 1.00		$ 1.25				$ 1.25	$ 0.65			$ 0.98			$ 0.40	$ 0.40
Common shares issued upon debt conversion								8,268
Description of debt instrument								As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument
Fair values of the convertible note																				$ 39,573	$ 40,117
Fair value of warrants																				60,427	59,883
Beneficial conversion feature					$ 1,090									$ 85,330			$ 115,383
Carrying value of the convertible debt	$ 1,546																364,517
Fair value of beneficial conversion feature																	$ 115,383
Shares issuable																	16,000
Purchase additional common shares																	320,000
Convertible debt					33,910												$ 364,517		$ 14,533
Fair value of debt amount extingushed								$ 8,268
Convertible debt discounted																	108,100
Accrued interest included in accounts payable and accrued liabilities					144												10,603				1,644
Fair value of embedded beneficial conversion feature	$ 467
Accrued interest					1,208				$ 6,822								5,863			986
Interest paid																	26,630
Face value of convertible note				$ 48,258	$ 15,000				56,086			457,436		85,330			470,467			100,000	40,117
Convertible note interest rate percentage					10.00%
Additional paid in capital, fair value of warrants				37,679					7,904			22,564	$ 17,437	$ 78,011			108,100			60,427	59,883
Repayment Convertible notes payable															$ 200,000		600,000
Convertible notes, principal amounts					$ 35,000	$ 100,000	$ 100,000		$ 100,000						600,000					$ 39,573	$ 0
Maturity date					Jan. 25, 2022	Oct. 31, 2021	Oct. 29, 2021		Sep. 26, 2021
Outstanding note payable								163,341							$ 200,000
Gain/Loss on extinguishment								$ 8,268		$ 2,500							(118,448)
Warrants issued to purchase common shares						100,000	100,000		100,000
Debt instrument, maturity term						1 year	1 year		1 year
Original issue discount on beneficial conversion feature				$ 48,258					$ 4,016			$ 457,436					$ 12,000
Shares received by each noteholder																	31,289,441
Accretion expenses																	$ 654,760	$ 227,313
On March 31, 2021 [Member]
Simple interest rate																	10.00%
Common shares issued upon debt conversion																	20,000
Accrued interest																	$ 1,578
Shares received by each noteholder																	10,000
On July 1, 2020 [Member]
Simple interest rate																	5.00%
Warrant exercise price																	$ 1.25
Common shares issued upon debt conversion																	8,000
Description of debt instrument																	As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument
Purchase additional common shares																	320,000
Debt instrument, maturity date																	Oct. 31, 2021
Warrants issued upon debt conversion																	160,000
On November 1, 2020 [Member]
Common shares issued upon debt conversion																	100,000
Description of debt instrument																	As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument
Fair value of debt amount extingushed																	$ 110,000
Outstanding note payable																	400,000
Gain/Loss on extinguishment																	$ 110,000
Shares received by each noteholder																	50,000
Debt instrument, maturity date																	Mar. 31, 2021
Nine Convertible Notes [Member]
Fair value of warrants							$ 68,578
Accrued interest																	$ 30,247
Face value of convertible note							111,422
Additional paid in capital, fair value of warrants							68,578
Original issue discount on beneficial conversion feature							$ 46,078
Ten Convertible Notes [Member]
Fair value of warrants						$ 38,507
Face value of convertible note						61,493
Additional paid in capital, fair value of warrants						$ 38,507
Original issue discount on beneficial conversion feature																	12,000
Eight Convertible Notes [Member]
Fair value of warrants									$ 7,904
Warrant exercise price									$ 0.50
Conversion price									$ 1.25
Face value of convertible note									$ 10,096
Additional paid in capital, fair value of warrants									43,914
Convertible notes, principal amounts									$ 18,000
Maturity date									Sep. 26, 2021
Warrants issued to purchase common shares									18,000
Debt instrument, maturity term									1 year
Original issue discount on beneficial conversion feature									$ 22,314
Interest rate									10.00%
Four Convertible Notes [Member]
Simple interest rate						0.10%	10.00%	10.00%			10.00%
Warrant exercise price													$ 1.25
Conversion price													$ 1.25
Accrued interest included in accounts payable and accrued liabilities																	3,184
Accrued interest																	15,036
Convertible notes, principal amounts													$ 37,613
Maturity date													Apr. 23, 2021
Warrants issued to purchase common shares													100,000
Debt instrument, maturity term													2 years
Accretion expenses													$ 6,411
Interest rate													10.00%
Six Convertible Notes [Member]
Warrant exercise price												$ 1.25
Conversion price												$ 1.25
Accrued interest																	59,671
Convertible notes, principal amounts												$ 600,000
Maturity date												Apr. 23, 2021
Debt instrument, maturity term												2 years
Interest rate												10.00%
Seven Convertible Notes [Member]
Conversion price			$ 1.25
Accrued interest																	19,398
Convertible notes, principal amounts			$ 300,000
Maturity date			Apr. 23, 2021
Interest rate			10.00%
Five Convertible Notes [Member]
Warrant exercise price				$ 1.25
Conversion price				$ 1.25
Accrued interest included in accounts payable and accrued liabilities				$ 9,041													4,122
Accrued interest																	2,236
Convertible notes, principal amounts				$ 85,937
Maturity date				May 09, 2021
Warrants issued to purchase common shares				68,750
Debt instrument, maturity term				2 years
Accretion expenses																	12,026
Interest rate				10.00%							10.00%
Three Convertible Notes [Member]
Warrant exercise price														$ 1.25
Conversion price														$ 1.25
Accrued interest																	19,109
Convertible notes, principal amounts														$ 163,341
Maturity date														Mar. 27, 2021
Warrants issued to purchase common shares														130,673
Debt instrument, maturity term														2 years
Accretion expenses																	$ 37,046
Interest rate														10.00%
Two Convertible Notes [Member]
Warrant exercise price																$ 1.25
Conversion price																$ 1.25
Repayment Convertible notes payable																$ 600,000
Convertible notes, principal amounts																$ 400,000
Maturity date																Jul. 20, 2020
Warrants issued to purchase common shares																240,000
Interest rate																10.00%
Convertible notes, principal amounts 1																$ 200,000
Debt discount																$ 12,000
Convertible Debt [Member]
Description of debt instrument																	As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument
Fair value of debt amount extingushed																	$ 20,000
Outstanding note payable																	400,000
Gain/Loss on extinguishment																	20,000
Consideration of extending the convertible notes																	400,000
Fair value of the common share and warrants																	$ 218,397
Eleven Convertible Notes [Member]
Warrant exercise price									$ 0.50
Conversion price									$ 1.25			$ 0.95
Accrued interest included in accounts payable and accrued liabilities												$ 59,671
Additional paid in capital, fair value of warrants									$ 18,000			$ 142,564
Convertible notes, principal amounts									$ 18,000
Interest rate									10.00%			10.00%
Debt discount												$ 0
Face value of convertible note												457,436
Original issue discount on beneficial conversion featuree												$ 457,436

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Equity (Detail Narrative) - USD ($)			1 Months Ended	3 Months Ended		12 Months Ended
	Nov. 05, 2021	Sep. 02, 2021	Oct. 20, 2021	Nov. 30, 2021	Nov. 30, 2020	Aug. 31, 2021	Aug. 31, 2020
Expense consulting fees				$ 159,374		$ 425,000
Common stock issued to investors				268,000
Subscription fee received				$ 224,664
Subscription receivable				$ 250,000
Common stock shares issued				91,666,131		79,858,867
Common stock shares reissued						750,000
fair value -consulting services						$ 637,500
Deferred compensation				$ 53,126
Proceed from issuance of common shares				2,140,861	$ 250,000
Finders fee				$ 206,043
On November 5, 2021 [Member]
Common stock shares issued	705,000			8,000
Proceed from issuance of common shares	$ 528,750
Price Per Shares	$ 0.75
Finders fee				$ 6,000
Other's finder fee				$ 41,654
September 30, 2020 [Member]
Common stock shares issued					120,000
Common stock issuable					129,952		19,952
Proceed from issuance of common shares					$ 150,000
Price Per Shares					$ 1.25
On October 20, 2021 [Member]
Common stock shares issued			3,753,094
Proceed from issuance of common shares			$ 2,814,821
Price Per Shares			$ 0.75	$ 0.75
Amount received for purchase of shares			$ 790,467	$ 85,146
Account receivable				250,000
Commission fees				$ 205,735
On September 2, 2021 [Member]
Common stock shares issued		2,997,237
Proceed from issuance of common shares		$ 3,371,892
On September 2, 2022 [Member]
Common stock shares issued		2,175,933
Proceed from issuance of common shares		$ 2,447,925
Fair value of common share		$ 2,137,500

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Related party transactions and balances (Details) - USD ($)	3 Months Ended
	Nov. 30, 2021	Nov. 30, 2020
Related party transactions and balances
Consulting fees and benefits	$ 91,986	$ 88,865

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Related party transactions and balances (Details 1) - USD ($)	Nov. 30, 2021	Aug. 31, 2021
Amounts due from related party	$ (176,717)	$ (176,483)
CEO and Director [Member]
Amounts due from related party	(61,796)	(65,254)
COO and Director [Member]
Amounts due from related party	(76,960)	(76,574)
CFO [Member]
Amounts due from related party	$ (37,961)	$ (34,655)

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Related party transactions and balances (Details Narrative) - USD ($)	Sep. 02, 2021	Nov. 30, 2021	Aug. 31, 2021
Due to related party		$ 176,717	$ 176,483
Common stock issued		91,666,131	79,858,867
CEO and Director [Member]
Fair value of common share	$ 1,997,925
Common stock issued	1,775,933
CFO [Member]
Fair value of common share	$ 450,000
Common stock issued	400,000

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Financial risk factors (Details) - USD ($)	Nov. 30, 2021	Aug. 31, 2021
Cash and cash equivalents	$ 275,529	$ 419,825
Canadian dollar exchange rate [Member]
Cash and cash equivalents	70,163
Accounts payable	(454,262)
Net exposure	0
Balance in US dollars	$ (384,099)

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Financial risk factors (Details 1) - Colombian Peso exchange rate [Member]	Nov. 30, 2021 USD ($)
Cash and cash equivalents	$ 281,751,039
Other receivables	83,072,204
Accounts payable	(3,170,820,800)
Net exposure	(2,805,997,557)
Balance in US dollars	$ (702,870)

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Financial risk factors (Details Narrative) - USD ($)	3 Months Ended
	Nov. 30, 2021	Nov. 30, 2020
Net losses	$ (11,485,246)	$ (6,607,763)
Canadian dollar exchange rate [Member]
Net losses	$ 38,410	35,296
Exchange rate	10.00%
Colombian Peso exchange rate [Member]
Net losses	$ 70,287	$ 74,408
Exchange rate	10.00%

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Commitments (Details Narrative)	1 Months Ended			3 Months Ended		12 Months Ended
	Jun. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Jun. 30, 2020 USD ($)	Nov. 30, 2021 USD ($)	Nov. 30, 2020 USD ($)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 USD ($)	Aug. 30, 2019 CAD ($)
Contingent liability				$ 547,190
Settlement payments					$ 105,000	$ 108,500	$ 0
Accounts payable and accrued liabilities						$ 90,000
Construction payable				208,279
Remaining balance		$ 163,341	$ 200,000
Construction agreement [Member]
Construction cost	$ 437,673			319,240
Remaining balance				111,032
Deposit				77,829
Sales Agreement [Member]
Deposits and advances				$ 233,496
Equipment								$ 658,260

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Share purchase warrants (Details)	3 Months Ended
	Nov. 30, 2021 $ / shares shares
Weighted average exercise price
Weighted average exercise price, Ending balance	$ 0.78
Warrants [Member]
Weighted average exercise price
Number of warrants, Beginning balance | shares	3,663,135
Number of warrants, issued | shares	3,717,666
Number of warrants, expired | shares	(320,000)
Ending balance | shares	7,060,801
Weighted average exercise price, Beginning balance	$ 1.21
Weighted average exercise price, issued	1.25
Weighted average exercise price, expired	1.25
Weighted average exercise price, Ending balance	$ 1.23

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Share purchase warrants (Details 1) - $ / shares	Nov. 30, 2021	Oct. 01, 2021	Apr. 30, 2021	Apr. 29, 2021	Mar. 26, 2021
Weighted average exercise price		$ 1.25	$ 1.00	$ 1.00	$ 0.50
Warrant 1 [Member]
Number of warrants	130,673
Weighted average exercise price	$ 1.25
Expiry date	Sep. 29, 2022
Warrant 2 [Member]
Number of warrants	30,090
Weighted average exercise price	$ 1.25
Expiry date	Oct. 16, 2022
Warrant 3 [Member]
Number of warrants	68,750
Weighted average exercise price	$ 1.25
Expiry date	Nov. 11, 2022
Warrant 4 [Member]
Number of warrants	240,000
Weighted average exercise price	$ 1.25
Expiry date	Nov. 28, 2022
Warrant 5 [Member]
Number of warrants	118,000
Weighted average exercise price	$ 0.50
Expiry date	Mar. 26, 2022
Warrant 6 [Member]
Number of warrants	180,000
Weighted average exercise price	$ 1.00
Expiry date	Apr. 29, 2022
Warrant 7 [Member]
Number of warrants	1,446,666
Weighted average exercise price	$ 1.25
Expiry date	Jun. 11, 2023
Warrant 8 [Member]
Number of warrants	50,000
Weighted average exercise price	$ 1.25
Expiry date	Jul. 17, 2023
Warrant 9 [Member]
Number of warrants	103,956
Weighted average exercise price	$ 1.25
Expiry date	Jul. 26, 2023
Warrant 10 [Member]
Number of warrants	200,000
Weighted average exercise price	$ 1.25
Expiry date	Aug. 18, 2023
Warrant 11 [Member]
Number of warrants	775,000
Weighted average exercise price	$ 1.25
Expiry date	Aug. 28, 2023
Warrant 12 [Member]
Number of warrants	100,000
Weighted average exercise price	$ 1.25
Expiry date	Oct. 01, 2023
Warrant 13 [Member]
Number of warrants	2,812,666
Weighted average exercise price	$ 1.25
Expiry date	Oct. 20, 2023
Warrant 14 [Member]
Number of warrants	100,000
Weighted average exercise price	$ 1.25
Expiry date	Oct. 25, 2023
Warrant 15 [Member]
Number of warrants	705,000
Weighted average exercise price	$ 1.25
Expiry date	Nov. 06, 2023

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Stock options (Details)	3 Months Ended
	Nov. 30, 2021 USD ($) $ / shares shares
Stock Options
Number of shares, Beginning balance	4,450,000
Number of options, granted	100,000
Number of shares, Ending balance	4,550,000
Number of options, Exercisable balance	1,583,333
Weighted Average exercise price, beginning | $ / shares	$ 0.77
Weighted Average exercise price, granted | $ / shares	1.125
Weighted Average exercise price, Ending balance | $ / shares	0.78
Weighted Average exercise price, exercisable balance | $ / shares	$ 0.79
Weighted average contractual term, beginning	4 years 5 months 1 day
Weighted average contractual term, granted	4 years 9 months 3 days
Weighted average contractual term, outstanding	4 years 2 months 8 days
Weighted average contractual term, exercisable	4 years 2 months 15 days
Aggregate Intrinsic value, beginning balance	1,334,000
Aggregate Intrinsic value, ending balance | $	$ 5,014,000
Aggregate Intrinsic value, exercisable balance	1,721,667

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Stock options (Details 1)	3 Months Ended
	Nov. 30, 2021	Nov. 30, 2020
Stock Options
Expected dividend yield	0.00%	0.00%
Expected volatility	166.00%	0.00%
Expected life (in years)	5 years
Risk-free interest rate	0.78%	0.00%

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Stock options (Details Narrative)	3 Months Ended
	Nov. 30, 2021 USD ($)
Unrecognized compensation costs	$ 765,815
Stock based compensation	531,255
Directors And Officers [Member] | February 1, 2021 [Member]
Stock based compensation	$ 531,255

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Noncash activities (Details) - USD ($)	1 Months Ended		3 Months Ended
	Jul. 25, 2021	Sep. 29, 2020	Nov. 30, 2021	Nov. 30, 2020
Beneficial conversion feature	$ 1,090	$ 85,330	$ 115,383
Non-Cash Activities [Member]
Shares issued from treasury for services and bonuses			7,957,316	$ 0
Beneficial conversion feature			80,247	153,764
Relative fair value of warrants issued with convertible note			120,310	133,127
Relative fair value of shares issued on modification of convertible note			$ 0	$ 110,000

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Segment disclosure (Details) - USD ($)	3 Months Ended
	Nov. 30, 2021	Nov. 30, 2020	Aug. 31, 2021
Net sales	$ 10,082
Net loss for the period	(10,068,081)	$ (1,195,862)
Accretion	132,033
Depreciation and amortization	13,299
Total assets	4,847,584		$ 4,633,775
Allied [Member]
Net sales	(4,679)
Net loss for the period	(9,662,598)
Accretion	132,033
Depreciation and amortization	0
Total assets	3,617,195
Allied Colombia [Member]
Net sales	14,761
Net loss for the period	(405,483)
Accretion	0
Depreciation and amortization	13,299
Total assets	$ 1,230,389

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Segment disclosure (Details 2)	3 Months Ended
	Nov. 30, 2021 USD ($)
Total long lived assets	$ 4,847,584
Revenue	10,081
Canada [Member]
Total long lived assets	3,617,195
Colombia [Member]
Total long lived assets	1,230,389
Revenue	$ 10,081

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Subsequent events (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended
	Aug. 10, 2021	Mar. 30, 2021	Nov. 30, 2021	Jan. 11, 2022	Dec. 31, 2021	Dec. 23, 2021	Oct. 25, 2021	Oct. 01, 2021	Aug. 31, 2021	Jul. 25, 2021	Jul. 02, 2021	Apr. 30, 2021	Apr. 29, 2021	Mar. 26, 2021	Nov. 11, 2020	Oct. 26, 2020	Sep. 29, 2020	Jun. 30, 2020
Monthly Payments			$ 37,613
Descripton Monthly Payments			For the remaining 24 months, the Company will make monthly payments of $66,288. If the first 6 monthly payments are made on time, the Company may prepay the unamortized loan balance with a 2% penalty of the remaining balance.
Common unit issued			3,517,666
Common unit per share			$ 0.75
Proceeds from issuance of common stock			$ 2,638,250
Finder's fee			$ 206,043
Subsequent description			Each unit consists of one common share of the Company and one warrant to purchase the Company’s one common share at $1.25 for a period of two years.
Lease term	5 years		10 years
Warrants exercised price								$ 1.25				$ 1.00	$ 1.00	$ 0.50
Conversion price			$ 0.98				$ 0.40	$ 0.40		$ 1.25		$ 1.00	$ 1.00	$ 1.25	$ 0.70	$ 1.25	$ 0.65
2022			$ 42,767
2023			57,023
2024			$ 57,023
Convertible notes, principal amounts							$ 39,573	$ 0		$ 35,000		$ 100,000	$ 100,000	$ 100,000				$ 600,000
Common stock issued			91,666,131						79,858,867
Subscription fee received			$ 224,664
Common stock share price			$ 0.0001						$ 0.0001
North Las Vegas [Member]
2022											$ 1,500
2023											1,800
2024											2,025
2025											2,280
2026											$ 2,565
October 25, 2021 [Member]
Warrants exercised price			1.25
Conversion price			$ 1
Convertible notes, principal amounts			$ 100,000
Warrant to purchase shares			100,000
Interest rate			1.00%
Asset Purchase Agreement [Member]
Promissory note issued		$ 150,000
Liabilities		$ 1,350,000
Short Term Applicable Federal Rate		0.11%
Amendment Agreements [Member] | October 1, 2021 [Member]
Lease term			1 year
Warrants exercised price			$ 1.25
Convertible notes, principal amounts			$ 10,000
Warrant to purchase shares			100,000
Interest rate			1.00%
Subsequent Event [Member]
Common stock issued						36,000
Subscription fee received					$ 27,000
Common stock share price						$ 0.75
Subsequent Event [Member] | Secured Debt [Member]
Conversion price				$ 1.25
Convertible notes, principal amounts				$ 150,000
Interest rate				10.00%
Convertible Debt [Member] | Subsequent Event [Member]
Conversion price						$ 1.25
Convertible notes, principal amounts						$ 200,000
Interest rate						10.00%