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.