PART II AND PART III - OFFERING CIRCULAR DATED April 22, 2022

File No. 024-11855

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

FORM 1-A

Parts II & III

PART II - OFFERING CIRCULAR

ALLIED CORP.

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

Telephone: 877-255-4337

www.allied.health

With a copy to:

M. Richard Cutler, Esq.

Cutler Law Group

6575 West Loop South, Suite 500

Bellaire, TX 77401

Telephone: (713) 888-0040

Facsimile: (713) 583-7150

$10,000,000 Total Offering

Up to 5,714,286 Shares of Common Stock

Minimum Purchase 200 Shares of Common Stock ($350)

Allied Corp., a Nevada corporation (the “Company” or “Allied”), is offering up to 5,714,286 Units (“Units”), each Unit consisting of one share (“Shares”) of its common stock, par value $0.0001 per share (“Common Stock”) and one warrant to purchase  a share of common stock at $3.50 per year for two years, with an aggregate amount of $10,000,000 (“Maximum Offering”), in a “Tier 2 Offering” under Regulation A (the “Offering”). The initial public offering price is $1.75 per Unit. There is no minimum number of Units that needs to be sold in order for funds to be released to the Company and for this Offering to close. The minimum investment amount per investor is $350 (200 Units); however, we can waive the minimum purchase requirement on a case to case basis in our sole discretion. The subscriptions, once received, are irrevocable.

This Offering is being conducted on a “best efforts” basis pursuant to Regulation A of Section 3(6) of the Securities Act of 1933, as amended (the “Securities Act”), for Tier 2 Offerings. Until we complete a closing or closings on the Units, the proceeds for this Offering will be kept in an escrow account. At a closing, the proceeds will be distributed to us after payment of any brokerage commissions and expenses, and the associated shares will be issued to the investors. If there are no closings or if funds remain in the escrow account upon termination of this Offering without any corresponding closing, the investments for this Offering will be promptly returned to investors, without deduction and without interest. See “Underwriting” in this Offering Circular.

We expect to commence the offer and sale of the Units as of the date on which the Offering Statement of which this Offering Circular is a part is qualified by the SEC. The Offering is expected to expire on the first of: (i) all of the Units offered are sold; or (ii) the close of business 90 days after the date that this Offering is deemed qualified by the SEC, unless sooner terminated or extended for additional 90 day-incremental periods in the sole discretion of the Company (“Termination Date”). The initial 90-day offering period and any additional 90 day-incremental offering periods will, in the aggregate, not exceed 24 months from the date of this Offering Circular, pursuant to Rule 251(d)(3) of Regulation A.

Our common stock is currently quoted on the OTCQB tier of the OTC Market Group, Inc. under the symbol “ALID.” On April 22, 2022, the last reported sale price of our common stock was $0.91.

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

	Units		Price to public		Underwriting discount and commissions(1)		Proceeds to issuer (before expenses)(2)		Proceeds to other persons
To the Public:
Per Unit		5,714,286	$	1.75	$	.1225	$	1.6275		N/A
Total		10,000,000	$	10,000,000	$	700,000	$	9,300,000		N/A

__________________

1.	The table depicts potential broker-dealer commissions of 7% of the gross offering proceeds.
2.	This does not include deductions for expenses of the Offering, which are estimated to be approximately $100,000. This amount represents the proceeds of the offering to the Company, which will be used as set out in “Use of Proceeds to Issuer.”

The United States Securities and Exchange Commission does not pass upon the merits of or give its approval to any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered pursuant to an exemption from registration with the Commission; however, the Commission has not made an independent determination that the securities offered are exempt from registration.

An investment in our common stock is subject to certain risks and should be made only by persons or entities able to bear the risk of and to withstand the total loss of their investment. Prospective investors should carefully consider and review the RISK FACTORS beginning on page 12. 

This Offering Circular follows the disclosure format of Part I of Form S-1 pursuant to the general instructions of Part II(a)(1)(ii) of Form 1-A.

The date of this Offering Circular is April 22, 2022

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TABLE OF CONTENTS

Offering Circular Summary	4
Selected Historical and Consolidated Financial Data	9
Forward Looking Statements	10
Risk Factors	11
Market Price for Common Equity and Related Stockholder Matters	35
Dilution	36
Use of Proceeds	37
Capitalization	38
Description of Securities	39
Our Business	40
Description of Property	58
Management’s Discussion and Analysis of Financial Condition and Results of Operations	59
Directors and Executive Officers	75
Compensation of Directors and Executive Officers	80
Security Ownership of Management and Certain Beneficial Owners	83
Certain Relationships and Related Transactions	84
Share Eligible for Future Sale	84
Certain Tax Considerations	86
Plan of Distribution	89
Expenses Related to the Offering	93
Additional Requirements and Restrictions	93
ERISA Considerations	94
Legal Matters	95
Experts	95
Where You Can Find More Information	95
Part F/S - Financial Statements	97
Part III - Exhibits	98
Signatures	101

You should rely only on the information contained in this Offering Circular. We have not authorized anyone to provide you with information that is different, and we do not any responsibility for, and provide any assurance as to the reliability of, any information, other than the information in this Offering Circular. We are offering to sell our securities, and seeking offers to buy our securities, only in jurisdictions where such offers and sales are permitted. This Offering Circular is not an offer to sell, or a solicitation of an offer to buy, our securities in any jurisdictions where, or under any circumstances under which, the offer, sale, or solicitation is not permitted. In particular, our securities have not been qualified for distribution by prospectus in Canada and may not be offered or sold in Canada during the course of their distribution hereunder except pursuant to a Canadian offering document or exemption. The information in this Offering Circular is accurate only as of the date on its respective cover, regardless of the time of delivery of this Offering Circular or the time of any sale of our securities. Our business, results of operations, financial condition, or prospects may have changed since those dates.

For investors outside of the United States: We have not done anything that would permit this offering, or the possession or distribution of this Offering Circular, in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about, and observe any restrictions relating to, this offering and the distribution of this Offering Circular.

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OFFERING CIRCULAR SUMMARY

The following summary highlights information contained elsewhere in this Offering Circular. It may not contain all of the information that is important to you. You should read the entire Offering Circular carefully, especially the discussion regarding the risks of investing in Allied Corp Common Stock under the heading "Risk Factors" before investing and our historical financial statements and the notes thereto, included elsewhere in this Offering Circular.

OUR COMPANY

Allied Corp. (“Allied” or the “Company”) is a Nevada corporation, based in Kelowna, British Columbia, Canada.  Allied Corp. (“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 Corp. 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 Offering Circular to “Allied” or the “Company” may include references to the operations of our subsidiaries AM (Advanced Micro) Biosciences, Inc., SECFAC Corp, Allied Corp Colombia S.A.S., Allied US Products LLC and Tactical Relief, LLC. Each of these corporations is a 100% wholly owned subsidiary of Allied and consequentially reports quarterly financials up to a consolidated quarterly submission. 

The Company’s principal corporate office is located at 1405 St. Paul St., Suite 201, Kelowna, BC Canada V1Y 9N2.  Our telephone number is (877) 255-4337.  Our email is ir@allied.health.   Allied is a public company, subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and trades on the OTCQB tier of the OTC Markets under the ticker symbol “ALID.”

Our Opportunity

We focus 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)1.

Our 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 Canada being approximately $1.26 ($1.52 CDN) per gram, we believe our significantly lower anticipated cost per gram of cannabis production 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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We intend for our clients to access superior cannabis-related products developed with a high level of quality control.  The Company believes that is fortunate to have assembled a team of industry veterans and management professionals with the background and experience to enable the Company to build, manage and grow such systems. Key Strategic Objectives Scale cannabis production in Colombia We believe our Bucaramanga, Colombia development and cultivation facility gives us a significant competitive advantage in our production and sales of cannabis
	·	We are licensed to produce, extract, as well as both import and export psychoactive and non-psychoactive strains of cannabis.
	·	We were approved to export cannabis by the Colombian government in April 2021.
	·	We have constructed a one-hectare greenhouse, with another three to five additional hectares are anticipated in 2021, and ten to twenty hectares more planned for 2022.
	·	We are now deriving monthly revenue from our Colombian cannabis harvests.
	·	We completed our first harvest in July 2020 for the Colombian Ministry of Agriculture (“ICA”).
	·	We obtained commercial approval for production of non-psychoactive cannabis in October 2020, and commercial approval for production of psychoactive cannabis in February 2021.
	·	Each of our ten non-psychoactive CBD seed strains, and our ten THC seed strains submitted to ICA have been approved over a course of a process that began in October 2019.
	·	Anticipated lower production cost than North American competitors
	·	Access to scalable land holdings in what we consider to be one of Colombia’s best suited climates for cannabis production in the order of 200 acres. Our Vice President of Colombia operations holds 8000 hectares of production land available to us upon the satisfaction of certain conditions.
	·	We have all Colombian commercial production approvals and has applied for psychoactive quota for the equivalent of 10,000 kgs of psychoactive flower for 2021 and 85,000 kgs of flower production in 2022, as applied for on April 29, 2021. Non psychoactive production and sales are limitless under current Colombian law.
	·	We have engaged what we consider to be one of Colombia’s leading agricultural genetics teams for cannabis production.
Since we received cultivation approval from ICA, we have developed what we consider to be competitive advantages of Yield, Cannabinoid Potency, Quality, Cost, Frequency of Harvests, and, notably have:
	·	Yield-Continually increased our yields per hectare.
	·	Potency-Increased and replicated the THC and CBD yields of our plant/seed strains.
	·	Quality-Met or Exceeded European Pharmacopeia Standards.
	·	Frequency of Harvest-We currently harvest six to seven times per year in order maximize our production footprint. Consequently, each hectare at our Colombian cultivation site has produced the equivalent of six to seven hectares of cannabis on a mono-crop yearly cycle. (See-Cannabis Production-Colombia).

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Establish United States Production of Cannabis if Federally legalized

Our wholly owned subsidiary, Allied US Products LLC, a Nevada limited liability company, entered into a contingent asset purchase agreement (the “ Contingent Asset Purchase Agreement”) which allows for the purchase of a Nevada State US-based cannabis license from a subsidiary of Fiore Cannabis, Ltd. 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”). We 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. While we have 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 us in any activities in the United States respecting cannabis.  (See- Our Business - Potential United States Production in the Event of Federal Cannabis Legalization).

               Generate Revenues from Natural Health Products containing Hemp-based CBD.

With the launch of our health hemp-based CBD brands in the United States, we expect from product rollout and expanded distribution. We have conducted focus groups, brand creation and test marketing over the past year. We have now commercially launched three brands in the US: Tactical Relief™, Equilibrium Bio™, MaXXa ©. The Buds Pure Naturals brand is intended to be licensed to a Canadian License holder to sell into the Canadian market.  (See-Our Business – Our CBD Brands and Products).

Complete trials of ALID 11, 11 and Psilonex™ Prescription Medications.

We expect to complete our clinical Phase 1 pharma trials in early 2022, eventually leading to a drug indication for PTSD. We then plan to pursue a licensing deal with a larger developer, producer, and distributor of pharmaceuticals. (See-Our Business - Pharmacologic Products).

Distribution

Our goal is to become a market leader in the cultivation and processing of medicinal-grade cannabis oil and high quality cannabis derived medical and well-being products for large channel distributors, including pharmacies, medical clinics, and cosmetic companies, by expanding our production capacity, creating sustainable and natural products, expanding our geographic footprint, continuing to explore strategic partnerships and pursuing accretive acquisitions to supplement our organic growth as set forth below.

Explore strategic partnerships.

Because we offer a variety of cannabis related products, including beauty and skincare products, foods and beverages, we believe that we can create a competitive advantage by partnering with national and multinational companies, across various product categories to jointly develop and market branded cannabis offerings.

Pursue accretive acquisitions.

We believe that our deal-making capabilities and experience will allow us to successfully identify, consummate and integrate acquisitions. The cannabis industry is highly fragmented and as it continues to evolve, we expect significant industry consolidation in existing and new markets. Our deal-making capabilities and experience may allow us to successfully identify, consummate and integrate acquisitions. As a public company, we could have greater ability to finance acquisitions, including through using our equity as consideration and accessing the capital markets.

Due to the competitive and dynamic nature of the emerging cannabis products market and rapid changes in the regulatory environment, we recognize the need to remain flexible, so we can react to opportunities and risks as they develop. We will continue to re-evaluate and re-prioritize our strategies to respond to these developments. We are actively fostering a culture of continued agility and exploration since the ability to pivot depending on market dynamics will deliver competitive advantage.

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Risk Factors Our business is subject to numerous risks and uncertainties, including those described in “Risk Factors” immediately following this offering circular summary and elsewhere in this offering circular. These risks represent challenges to the successful implementation of our strategy and to the growth and future profitability of our business. These risks include, but are not limited to, the following:
	·	We have a history of operating losses;
	·	Public health epidemics or outbreaks (such as the novel strain of coronavirus (COVID-19)) could adversely impact our business;
	·	We may not be able to obtain sufficient additional capital to continue our operations;
	·	We recently launched our cannabis products and have limited sales and marketing experience;
	·	The cannabis industry is heavily regulated in the United States, Canada and Colombia, and if we fail to comply with these laws and governmental regulations, we could incur penalties or be required to make significant changes to our operations or even face criminal or civil sanctions;
	·	There are conflicts in the United States between Federal and State regulations related to marijuana;
	·	There are also provincial variations in cannabis regulation in Canada that could restrict certain of our operations;
	·	Past and future cannabis reform legislation and other changes in the health care industry could adversely affect our business, financial condition and results of operations;
	·	We are subject to the Canada Health Act, Canada’s National Health Insurance Program and Food and Drugs Act and analogous provisions of applicable federal, provincial, state and local laws and could face substantial penalties if we fail to comply with such laws;
	·	Our products may not be accepted in the marketplace or achieve sales sufficient to provide sufficient profitability;
	·	In the United States in particular and also elsewhere we are required to rely on third parties to perform many necessary services for our products, including services related to cultivation, distribution, invoicing, storage and transportation of our products;
	·	We may be unable to consistently retain or hire third-party manufacturers, suppliers or other service providers to produce our products;
	·	We will depend on a limited number of customers for the majority of our revenue;
	·	There may be unanticipated delays in the development and introduction of our current and future products and/or our inability to control costs;
	·	Significant competition;
	·	Potential third party infringement claims;
	·	Risks associated with our current and potential acquisitions related to costs and integration into our product line;
	·	We are subject to significant regulatory requirements in the United States, Canada and Colombia;
	·	Our stock is subject to dilution through future sale of shares or conversion of existing convertible securities;
	·	A significant portion of our stock is held by our officers and directors;
	·	We depend on our management and key personnel for our success;
	·	The market price for our common stock has and may continue to be volatile;
	·	Adequate protection of confidential information;
	·	Potential litigation from competitors and claims from customers;
	·	Our ability to adequately protect the intellectual property used to produce our products; and
	·	Our ability to stay abreast of modified or new laws and regulations applying to our business.

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THE OFFERING
Issuer	Allied Corp.
Securities offered by us	Units consisting of 5,714,286 shares of Common Stock, par value $0.0001 per share, and 5,714,286 warrants exercisable at $3.50 per share, at an offering price of $1.75 per share.
Common stock outstanding before this offering	93,042,928 shares of common stock.
Common Stock outstanding after this offering	97,587,646, assuming all shares of common stock offered in this offering are sold.
Warrants	The warrants will have an exercise price of $3.50, will be exercisable upon issuance, will have a cashless exercise provision and will terminate on the second anniversary of issuance.
Use of proceeds	We estimate that the net proceeds to us from this offering will be approximately $9,200,000 if this offering is sold in full, after deducting the possible underwriting discounts and commissions (estimated at 7% of gross proceeds of the offering) and estimated offering expenses payable by us, estimated at $100,000. We intend to use the net proceeds from this offering (i) for our operations in Colombia and the United States; (ii) for development of our natural health products; (iii) for pharmaceutical product clinical trials and licensing agreements and (iv) for general working capital purposes. See “Use of Proceeds” on page 37 of this Offering Circular.
Risk Factors		Investing in our securities is highly speculative and involves a high degree of risk. See “Risk Factors” and other information appearing elsewhere in this Offering Circular for a discussion of factors you should carefully consider before deciding whether to invest in our common stock.
Escrow		All subscription proceeds will be held in an escrow account. Upon each closing as determined by us, funds will be disbursed to us after deduction of any sales commissions and expenses.
Market for the common stock		Our common stock is currently quoted on the OTCQB tier of the OTC Market Group, Inc. under the symbol “ALID.” On April 20, 2022, the last reported sale price of our common stock was $0.91.
Unless we indicate otherwise, all information in this Offering Circular is based on 93,042,928 shares of common stock issued and outstanding as of March 31, 2022

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following table presents our selected historical consolidated financial data for the periods indicated. The selected historical consolidated financial data for the years ended August 31, 2021 and 2020 are derived from the audited financial statements. The summary historical financial data for the six months ended February 28, 2022 and 2021 and the balance sheet data as of February 28, 2022 and 2021 are derived from our unaudited financial statements.

Historical results are included for illustrative and informational purposes only and are not necessarily indicative of results we expect in future periods, and results of interim periods are not necessarily indicative of results for the entire year. The data presented below should be read in conjunction with, and are qualified in their entirety by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto included elsewhere in this Offering Circular.

	Year Ended						Six Months Ended
	August 31, 2021			August 31, 2020			February 2 8, 2022			February 28, 2021
							(unaudited)			(unaudited)
Total revenues	$	12,518		$	-		$	42,556		$	5,260
Total operating expenses		7,656,465			3,593,246			12,191,667			3,446,152
Total other expense		(3,841,299	)		3,014,517			(244,115	)		(454,406	)
Net loss		(11,485,246	)		(6,607,763	)		(12,393,226	)		(3,895,298	)
Basic and diluted net loss per share		(0.14	)		(0.08	)		(0.14	)		(0.05	)
Balance Sheet Data (at period end)
Cash and cash equivalents		419,825			94,047			618,612			148,984
Working deficit		(4,465,792	)		(2,869,026	)		(4,884,084	)		(3,676,198	)
Total assets		4,633,775			7,104,577			5,608,032			6,539,953
Total liabilities		5,604,556			3,400,413			6,040,816			4,035,712
Stockholders’ equity (deficit)		(970,781	)		3,704,164			(432,784	)		2,504,241

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FORWARD-LOOKING STATEMENTS

This Offering Circular contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements regarding, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for working capital. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Our Business,” as well as in this Offering Circular generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this Offering Circular generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.

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RISK FACTORS

An investment in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks described below. Our business, financial condition, results of operations and cash flows could be materially adversely affected by any of these risks, and the market or trading price of our securities could decline due to any of these risks. In addition, please read “Disclosure Regarding Forward-Looking Statements” in this Offering Circular, where we describe additional uncertainties associated with our business and the forward-looking statements included or incorporated by reference in this Offering Circular. Please note that additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations. In this Section, the terms the “Company,” “we”, “our” and “us” refer to Allied Corp. as well as its subsidiaries AM (Advanced Micro) Biosciences, Inc., Allied Colombia S.A.S., Allied U.S., Products, LLC and Tactical Relief LLC.

Below is a summary of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:

· We have a history of operating losses;

· Public health epidemics or outbreaks (such as the novel strain of coronavirus (COVID-19)) could adversely impact our business;

· We may not be able to obtain sufficient additional capital to continue our operations;

· We recently launched our cannabis products and have limited sales and marketing experience;

· The cannabis industry is heavily regulated in the United States, Canada and Colombia, and if we fail to comply with these laws and governmental regulations, we could incur penalties or be required to make significant changes to our operations or even face criminal or civil sanctions;

· There are conflicts in the United States between Federal and State regulations related to marijuana;

· There are also provincial variations in cannabis regulation in Canada that could restrict certain of our operations;

· Past and future cannabis reform legislation and other changes in the health care industry could adversely affect our business, financial condition and results of operations;

· We are subject to the Canada Health Act, Canada’s National Health Insurance Program and Food and Drugs Act and analogous provisions of applicable federal, provincial, state and local laws and could face substantial penalties if we fail to comply with such laws;

· Our products may not be accepted in the marketplace or achieve sales sufficient to provide sufficient profitability;

· In the United States in particular and also elsewhere we are required to rely on third parties to perform many necessary services for our products, including services related to cultivation, distribution, invoicing, storage and transportation of our products;

· We may be unable to consistently retain or hire third-party manufacturers, suppliers or other service providers to produce our products;

· We will depend on a limited number of customers for the majority of our revenue;

· There may be unanticipated delays in the development and introduction of our current and future products and/or our inability to control costs;

· Significant competition;

· Potential third-party infringement claims;

· Risks associated with our current and potential acquisitions related to costs and integration into our product line;

· We are subject to significant regulatory requirements in the United States, Canada and Colombia;

· The existence of Federal interdictions on marijuana has made obtaining banking relationships difficult to maintain in the United States.

· Our stock is subject to dilution through future sale of shares or conversion of existing convertible securities;

· A significant portion of our stock is held by our officers and directors;

· We depend on our management and key personnel for our success;

· The market price for our common stock has and may continue to be volatile;

· Adequate protection of confidential information;

· Potential litigation from competitors and claims from customers;

· Our ability to adequately protect the intellectual property used to produce our products; and

· Our ability to stay abreast of modified or new laws and regulations applying to our business.

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Risks Related to Our Operations

We have a history of operating losses and our management has concluded that factors raise substantial doubt about our ability to continue as a going concern and our auditor has included an explanatory paragraph relating to its ability to continue as a going concern in their audit report for the years ended August 31, 2021 and 2020.

We are a relatively newly formed company focused on cultivating, processing and supplying natural, medicinal-grade cannabis products to large channel distributors, and have limited operating history. We have limited financial resources and minimal operating cash flow. In addition, we have yet to generate significant revenue, and for the year ended August 31, 2021 or the six months ended February 28, 2022, had losses of $11,485,246 and $12,393,226, respectively, and at February 28, 2022 had an accumulated deficit of $31,787,038. There is no guarantee that we will ever become profitable. The costs for research, product development, machinery adaptation to create our product candidates and cannabis products and/or technologies, along with marketing and selling expenses, and the general and administrative expenses, will be principal causes of our costs and/or potential losses. We may never become profitable and if we do not become profitable your investment could be harmed or lost completely.

We anticipate that we will continue to report losses and negative cash flow for the foreseeable future. We have concluded that our historical recurring losses from operations and negative cash flows from operations as well as our dependence on private equity and other financings raise substantial doubt about our ability to continue as a going concern and our auditor has included an explanatory paragraph relating to our ability to continue as a going concern in its audit report for the years ended August 31, 2021 and 2020.

The consolidated financial statements of the Company do not include any adjustments that might result from the outcome of this uncertainty. These adjustments would likely include substantial impairment of the carrying amount of our assets and potential contingent liabilities that may arise if we are unable to fulfill various operational commitments. In addition, the value of our securities, including common stock issued in this offering, would be greatly impaired. Our ability to continue as a going concern is dependent upon generating sufficient cash flow from operations and obtaining additional capital and financing, including funds to be raised in this offering. If our ability to generate cash flow from operations is delayed or reduced and we are unable to raise additional funding from other sources, we may be unable to continue in business even if this offering is successful. For further discussion about our ability to continue as a going concern and our plan for future liquidity, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Going Concern.”

We may need additional capital in the future in order to continue our operations.

We conducted a private placement of units which terminated on November 5, 2021, consisting of shares of common stock and warrants to fund acquisitions and operations in a transaction that is exempt from the registration requirements of the Securities Act pursuant to Regulation 506(c) of common stock. We raised approximately $3,178,572 in that offering. However, if in the future we do not turn profitable or generate cash from operations and additional capital is needed to support operations, economic and market conditions may make it difficult or impossible to raise additional funds through debt or equity financings. If funds are not sufficient to support operations, we may need to pursue a financing or reduce expenditures to meet our cash requirements. If we do obtain such financing, we cannot assure that the amount or the terms of such financing will be as attractive as we may desire, and your equity interest in the company may be diluted considerably. If we are unable to obtain such financing when needed, or if the amount of such financing is not sufficient, it may be necessary for us to take significant cost saving measures or generate funding in ways that may negatively affect our business in the future. To reduce expenses, we may be forced to make personnel reductions or curtail or discontinue development programs. To generate funds, it may be necessary to monetize future royalty streams, sell intellectual property, divest of technology platforms or liquidate assets. However, there is no assurance that, if required, we will be able to generate sufficient funds or reduce spending to provide the required liquidity. Long-term capital requirements will depend on numerous factors, including, but not limited to, the status of collaborative arrangements, the progress of research and development programs and the receipt of revenues from sales of products. Our ability to achieve and/or sustain profitable operations depends on a number of factors, many of which are beyond our control, including:

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· our ability to successfully sell our cannabis products;

· Government legislation changes

· our ability to successfully develop and obtain necessary national, federal, provincial, and/or state regulatory approval(s) for our own product candidates such as hemp cigarettes;

· the success of our partners and distributors in selling our products;

· our ability to successfully sell future products if we choose not to partner the product;

· our ability to manufacture, or have manufactured, products efficiently, at the appropriate commercial scale, and with the required quality, and our ability to source and purchase from third party hemp cultivators that supplies required to produce our products;

· timing of our partners’ development, regulatory and commercialization plans;

· the demand for our products from current and future distribution and/or wholesale and/or retails partners;

· our ability to increase and continue to outsource our raw materials, quality cannabis, and our manufacturing capacity to allow for new product introductions;

· the level of product competition and of price competition;

· consumer acceptance of our current and future products;

· our ability to obtain reimbursement for our products from third-party payers;

· our ability to develop additional commercial applications for our products;

· our ability to attract the right personnel to execute our plans;

· our ability to develop, maintain or acquire patent positions;

· our ability to procure quality industrial hemp flowers and control these costs; and

· general economic conditions in the USA and the hemp industry.

The Coronavirus (“COVID-19”) outbreak or similar pandemics could adversely affect our operations.

The Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of a contagious disease and other unforeseen events, including the outbreak a of respiratory illness caused by COVID-19 and the related economic repercussions. We cannot accurately predict the effects COVID-19 will have on our operations and the ability of others to meet their obligations with the Company, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. We were required to postpone distribution of our MaXXa© product as a direct result of COVID-19. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could further affect the Company’s operations and ability to finance its operations. Agricultural activity has been declared as an essential activity in Colombia. We take safety precautions include the use of masks and gloves at our affiliated company in Colombia for the cultivation of our product.

We launched our cannabis products in 2019 in an initially limited fashion and as a company, we have limited sales and marketing experience.

We launched marketing for our cannabis products in 2019, and although we have hired highly qualified personnel with specialized expertise, as a company, we have limited experience commercializing cannabis products on our own. In order to commercialize the cannabis products business, we have to build our sales, marketing, distribution, managerial and other non-technical capabilities and make arrangements with third parties to perform these services when needed. We may have to hire sales representatives and district managers to fill sales territories. To the extent we are relying on third parties to commercialize our business, we may receive less revenues or incur more expenses than if we had commercialized the products ourselves. In addition, we may have limited control over the sales efforts of any third parties involved in our commercialization efforts. If we are unable to successfully implement our commercial plans and drive adoption by patients and physicians of our products through our sales, marketing and commercialization efforts, or if our partners fail to successfully commercialize our products, then we may not be able to generate sustainable revenues from product sales which will have a material adverse effect on our business and future product opportunities. Similarly, we may not be successful in establishing the necessary commercial infrastructure, including sales representatives, wholesale distributors, legal and regulatory affairs teams. The establishment and development of commercialization capabilities to market our products has been and will continue to be expensive and time-consuming. As we continue to develop these capabilities, we will have to compete with other hemp companies to recruit, hire, train and retain sales and marketing personnel. If we have underestimated the necessary sales and marketing capabilities or have not established the necessary infrastructure to support successful commercialization, or if our efforts to do so take more time and expense than anticipated, our ability to market and sell our products may be adversely affected.

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Recent and future acquisitions and strategic investments could be difficult to integrate, divert the attention of key management personnel, disrupt our business, dilute shareholder value, and harm our results of operations and financial condition.

We acquired Medicolombia S.A.S. (renamed Allied Colombia S.A.S.), and we may in the future seek to acquire or invest in, businesses, products, or technologies that we believe could complement our operations or expand our breadth, enhance our capabilities, or otherwise offer growth opportunities. Our diversity of product offerings may not be successful. While our growth strategy includes broadening our service and product offerings, implementing an aggressive marketing plan and employing product diversification, there can be no assurance that our systems, procedures and controls will be adequate to support our operations as they expand. We cannot assure you that our existing personnel, systems, procedures or controls will be adequate to support our operations in the future or that we will be able to successfully implement appropriate measures consistent with our growth strategy. As part of our planned growth and diversified product offerings, we may have to implement new operational and financial systems, procedures and controls to expand, train and manage our employee base, and maintain close coordination among our staff. We cannot guarantee that we will be able to do so, or that if we are able to do so, we will be able to effectively integrate them into our existing staff and systems. Additionally, the integration of our acquisitions and pursuit of potential future acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are consummated. Any acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In addition, we have limited experience in acquiring other businesses. Specifically, we may not successfully evaluate or utilize the acquired products, assets or personnel, or accurately forecast the financial impact of an acquisition transaction, including accounting charges. Moreover, the anticipated benefits of any acquisition, investment, or business relationship may not be realized, or we may be exposed to unknown risks or liabilities of our acquisitions.

We may not be able to find and identify desirable acquisition targets or we may not be successful in entering into an agreement with any one target. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could harm our results of operations. In addition, if an acquired business fails to meet our expectations, our business, results of operations, and financial condition may suffer. In some cases, minority shareholders may exist in certain of our non-wholly-owned acquisitions (for businesses we do not purchase as an 100% owned subsidiary) and may retain minority shareholder rights which could make a future change of control or corporate approvals for actions more difficult to achieve and/or more costly.

We also make strategic investments in early-stage companies developing products or technologies that we believe could complement our business or expand our breadth, enhance our technical capabilities, or otherwise offer growth opportunities. These investments may be in early-stage private companies for restricted stock. Such investments are generally illiquid and may never generate value. Further, the companies in which we invest may not succeed, and our investments would lose their value.

Certain conditions or events could disrupt the Company’s supply chains, disrupt operations, and increase operating expenses.

Conditions or events including, but not limited to, the following could disrupt the Company’s supply chains and in particular its ability to deliver its products, interrupt operations at its facilities, increase operating expenses, resulting in loss of sales, delayed performance of contractual obligations or require additional expenditures to be incurred: (i) extraordinary weather conditions or natural disasters such as hurricanes, tornadoes, floods, fires, extreme heat, earthquakes, etc.; (ii) a local, regional, national or international outbreak of a contagious disease, including the COVID-19 coronavirus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, or any other similar illness could result in a general or acute decline in economic activity; (iii) political instability, social and labor unrest, war or terrorism; or (iv) interruptions in the availability of basic commercial and social services and infrastructure including power and water shortages, and shipping and freight forwarding services including via air, sea, rail and road.

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We will depend on a limited number of customers for the majority of our revenue, and the loss of any one of these customers could substantially reduce our revenue and impact our liquidity.

The loss of any significant customers or partners or reduction in our business activities could cause our revenues to decrease significantly and increase our continuing losses from operations. If our cannabis products are not successful and we cannot broaden our customer base, we will continue to depend on a few customers for the majority of our revenue. Additionally, if we are unable to negotiate favorable business terms with these customers in the future, our revenue and gross profits may be insufficient to allow us to achieve and/or sustain profitability or continue operations.

Demand for cannabis and derivative products could be adversely affected and significantly influenced by scientific research or findings, regulatory proceedings, litigation, media attention or other research findings.

Consumer perceptions regarding legality, morality, consumption, safety, efficacy and quality of medicinal cannabis are mixed and evolving and can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the consumption of medicinal cannabis products. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the medicinal cannabis market or any particular product, or consistent with earlier publicity. Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or publicity, could have a material adverse effect on the demand for medicinal cannabis and on our business, results of operations, financial condition and cash flows. Further, adverse publicity reports or other media attention regarding cannabis in general or associating the consumption of medicinal cannabis with illness or other negative effects or events, could have such a material adverse effect. Public opinion and support for medicinal cannabis use has traditionally been inconsistent and varies from jurisdiction to jurisdiction. Our ability to gain and increase market acceptance of our business may require substantial expenditures on investor relations, strategic relationships and marketing initiatives. There can be no assurance that such initiatives will be successful and their failure to materialize into significant demand may have an adverse effect on our financial condition.

Damage to the Company’s reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity, whether such publicity is accurate or not.

The increased usage of social media and other web-based tools used to generate, publish and discuss user-generated content and to connect with other users has made it increasingly easier for individuals and groups to communicate and share opinions and views regarding the Company and its activities, whether true or not. Although the Company believes that it operates in a manner that is respectful to all stakeholders and that it takes pride in protecting its image and reputation, it does not ultimately have direct control over how it is perceived by others. Reputational loss may result in decreased ability to enter into new customer, distributor or supplier relationships, retain existing customers, distributors or suppliers, reduced investor confidence and access to capital, increased challenges in developing and maintaining community relations and an impediment to our overall ability to advance our projects, thereby having a material adverse effect on our financial performance, financial condition, cash flows and growth prospects.

We are subject to the inherent risks involved with product recalls.

Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labelling disclosure. If any of our products are recalled due to an alleged product defect or for any other reason, we could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. We may lose a significant amount of revenue and may not be able to replace that revenue at an acceptable margin, or at all. In addition, a product recall may require significant management attention. There can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. Additionally, if our products are subject to recall, our reputation could be harmed. A recall for any of the foregoing reasons could lead to decreased demand for our products and could have a material adverse effect on our results of operations and financial condition. Additionally, product recalls may lead to increased scrutiny of our operations by regulatory agencies, requiring further management attention, potential loss of applicable licenses, and potential legal fees and other expenses.

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The Company’s products could have unknown side effects.

If the Company’s products are not perceived to have the effects intended by the end user, its business may suffer and the business may be subject to products liability or other legal actions. Many of the Company’s products contain innovative ingredients or combinations of ingredients. There is little long-term data available with respect to efficacy, unknown side effects and/or interaction with individual human biochemistry, or interaction with other drugs. Moreover, there is little long-term data available with respect to efficacy, unknown side effects and/or its interaction with individual animal biochemistry. As a result, the Company’s products could have certain side effects if not taken as directed or if taken by an end user that has certain known or unknown medical conditions.

The Company may be unable to anticipate changes in its potential client requirements that could make the Company’s existing products and services obsolete. The Company’s success will depend, in part, on its ability to continue to enhance its product and service offerings so as to address the increasing sophistication and varied needs of the market and respond to technological and regulatory changes and emerging industry standards and practices on a timely and cost-effective basis.

Research regarding the medical benefits, viability, safety, efficacy, use and social acceptance of cannabis remains in early stages.

There have been relatively few clinical trials on the benefits of cannabis. Although the Company believes that the articles, reports and studies support its beliefs regarding the medical benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, future research and clinical trials may prove such statements to be incorrect, or could raise concerns regarding, and perceptions relating to, cannabis. Given these risks, uncertainties and assumptions, investors should not place undue reliance on such articles and reports. Future research studies and clinical trials may draw opposing conclusions to those stated herein or reach negative conclusions related to medical cannabis, which could have a material adverse effect on the demand for the Company’s products, which could result in a material adverse effect on our business, financial condition and results of operations or prospects.

The seasonal trends in our business create variability in our financial and operating results.

Our financial and operating results are subject to seasonal and quarterly variations in our net revenue and operating income and, as a result, our quarterly results may fluctuate and could be below expectations.

We anticipate that our business will realize a disproportionate amount of net revenue and earnings in the third and fourth quarter as a result of the holiday season. If we experience lower than expected net revenue during any third or fourth quarter, it may have disproportionately large effects on our operating results and financial condition for that year. Any factors that harm our third or fourth quarter operating results, including disruptions in our brands or our supply chains or unfavorable economic conditions, could have a disproportionate effect on our results of operations and our financial condition for our entire fiscal year.

The Company may not be able to maintain effective quality control systems.

The Company may not be able to maintain an effective quality control system. The Company ascribes its early successes, in part, on its commitment to product quality and its effective quality control system. The effectiveness of the Company’s quality control system and its ability to obtain or maintain regulatory certification with respect to its manufacturing, processing and testing facilities depend on a number of factors, including the design of its quality control procedures, training programs, and its ability to ensure that its employees adhere to the Company’s policies and procedures. The Company also depends on service providers such as toll manufacturers and contract laboratories to manufacture, process or test its products, that are subject to regulatory certification requirements.

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We expect that regulatory agencies will periodically inspect our and our service providers’ facilities to evaluate compliance with applicable requirements. Failure to comply with these requirements may subject us or our service providers to possible regulatory enforcement actions. Any failure or deterioration of the Company’s or its service providers’ quality control systems, including loss of any required certification, may have a material adverse effect on the Company’s business, results of operations and financial condition.

Energy prices and supply may be subject to change or curtailment due to new laws or regulations, imposition of new taxes or tariffs, interruptions in production by suppliers, imposition of restrictions on energy supply by government, worldwide price levels and market conditions.

The Company requires diesel and electric energy and other resources for its cultivation and harvest activities and for transportation of cannabis. the Company relies upon third parties for its supply of energy resources used in its operations. The prices for and availability of energy resources may be subject to change or curtailment, respectively, due to, among other things, new laws or regulations, imposition of new taxes or tariffs, interruptions in production by suppliers, imposition of restrictions on energy supply by government, worldwide price levels and market conditions. Although the Company attempts to mitigate the effects of fuel shortages, electricity outages and cost increases, the Company’s operations will continue to depend on external suppliers of fuel and electricity. If energy supply is cut for an extended period and the Company is unable to find replacement sources at comparable prices, or at all, the Company’s business, financial condition and results of operations could be materially and adversely affected.

There are risks associated with the regulatory regime and permitting requirements of our operations.

Achievement of our business objectives is contingent, in part, upon compliance with regulatory requirements enacted by governmental authorities and obtaining all regulatory approvals, where necessary, for the sale of our products. We may not be able to obtain or maintain the necessary licenses, permits, quotas, authorizations or accreditations to operate our business, or may only be able to do so at great cost. We cannot predict the time required to secure all appropriate regulatory approvals for our products, or the extent of testing and documentation that may be required by local governmental authorities.

Our officers and directors must rely, to a great extent, on Colombian legal counsel and local consultants retained in order to keep abreast of material legal, regulatory and governmental developments as they pertain to and affect our business operations, and to assist us with governmental relations. We must rely, to some extent, on those members of management and the Board who have previous experience working and conducting business in Colombia in order to enhance our understanding of and appreciation for the local business culture and practices in Colombia.

We also rely on the advice of local experts and professionals in connection with any current and new regulations that develop in respect of banking, financing and tax matters in Colombia. Any developments or changes in such legal, regulatory or governmental requirements or in local business practices in Colombia are beyond our control and may adversely affect our business.

We will incur ongoing costs and obligations related to regulatory compliance. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. We may be required to compensate those suffering loss or damage by reason of our operations and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. In addition, changes in regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to our operations, increased compliance costs or give rise to material liabilities, which could have a material adverse effect on our business, results of operations and financial condition.

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The cannabinoid industry faces strong opposition and may face similar opposition in other jurisdictions in which we operate.

Many political and social organizations oppose hemp and cannabis and their legalization, and many people, even those who support legalization, oppose the sale of hemp and cannabis in their geographies. Our business will need support from local governments, industry participants, consumers and residents to be successful. Additionally, there are large, well-funded businesses that may have a strong opposition to the cannabis industry. For example, the pharmaceutical and alcohol industries have traditionally opposed cannabis legalization. Any efforts by these or other industries opposed to cannabis would make in halting or impeding the cannabis industry could have detrimental effects on our business.

We are subject to the risks inherent in an agricultural business.

Our business involves the growing of cannabis, which is an agricultural product. The occurrence of severe adverse weather conditions, especially droughts, fires, storms or floods is unpredictable and may have a potentially devastating impact on agricultural production and may otherwise adversely affect the supply of cannabis. Adverse weather conditions may be exacerbated by the effects of climate change and may result in the introduction and increased frequency of pests and diseases. The effects of severe adverse weather conditions may reduce our yields or require us to increase our level of investment to maintain yields. Additionally, higher than average temperatures and rainfall can contribute to an increased presence of insects and pests, which could negatively affect cannabis crops. Future droughts could reduce the yield and quality of our cannabis production, which could materially and adversely affect our business, financial condition and results of operations.

The occurrence and effects of plant disease, insects and pests can be unpredictable and devastating to agricultural production, potentially rendering all or a substantial portion of the affected harvests unsuitable for sale. Even when only a portion of the production is damaged, our results of operations could be adversely affected because all or a substantial portion of the production costs may have been incurred. Although some plant diseases are treatable, the cost of treatment can be high and such events could adversely affect our operating results and financial condition. Furthermore, if we fail to control a given plant disease and the production is threatened, we may be unable to adequately supply our customers, which could adversely affect our business, financial condition and results of operations. There can be no assurance that natural elements will not have a material adverse effect on production.

Our operations could be materially and adversely affected if the supply of cannabis seeds is ceased or delayed and we do not find replacement suppliers and obtain all necessary authorizations.

If for any reason the supply of cannabis seeds is ceased or delayed, we would have to seek alternate suppliers and obtain all necessary authorization for the new seeds. If replacement seeds cannot be obtained at comparable prices, or at all, or if the necessary authorizations are not obtained, our business, financial condition and results of operations would be materially and adversely affected.

Many of our competitors have greater resources that may enable them to compete more effectively than us in the cannabis industry.

The industry in which we operate is subject to intense and increasing competition. Some of our competitors have a longer operating history and greater capital resources and facilities, which may enable them to compete more effectively in this market. We expect to face additional competition from existing licensees and new market entrants who are granted licenses in Colombia, who are not yet active in the industry. If a significant number of new licenses are granted in the near term, we may experience increased competition for market share and may experience downward pricing pressure on our products as new entrants increase production. Such competition may cause us to encounter difficulties in generating revenues and market share, and in positioning our products in the market. If we are unable to successfully compete with existing companies and new entrants to the market, our lack of competitive advantage will have a negative effect on our business and financial condition.

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The legalization of adult-use, recreational cannabis may reduce sales of medical cannabis.

Legalization of the sale to adults of recreational, non-medical cannabis in any country may increase competition in the medical cannabis market. We may not be able to achieve our business plan in a highly competitive market where recreational, adult-use cannabis is legal, or the market may experience a drop in the price of cannabis and cannabis products over time, decreasing our profit margins.

The Company is reliant on third party transportation services and importation services to deliver its products to customers.

The Company relies on third party transportation services and importation services to deliver its products to its customers. The Company is exposed to the inherent risks associated with relying on third party transportation service-providers, including logistical problems, delays, loss or theft of product and increased shipping and insurance costs. Any delay in transporting the product, breach of security or loss of product, could have a material adverse effect on the Company’s business, financial performance and results of operations. Further, any breach of security and loss of product during transport could affect the Company’s status as a licensed producer in Colombia.

The Company is dependent on suppliers to supply equipment, parts and components for the operation of its business.

The Company’s ability to compete and grow will be dependent upon having access, at a reasonable cost and in a timely manner, to equipment, parts and components. No assurances can be given that the Company will be successful in maintaining the required supply of equipment, parts and components. It is also possible that the final costs of the major equipment contemplated by capital expenditure programs may be significantly greater than anticipated or available, in which circumstance there could be a materially adverse effect on the Company’s financial results.

We may not be able to establish and maintain bank accounts in certain countries.

There is a risk that banking institutions in countries where we operate will not open accounts for us or will not accept payments or deposits from proceeds related to the cannabis industry. Such risks could increase our costs or prevent us from expanding into certain jurisdictions.

The Company may be subject to cyber-security and privacy risks that could disrupt its operations and expose the Company to financial losses, contractual losses, liability, reputational damage and additional expense.

The Company may be subject to risks related to our information technology systems, including cyber-attacks, malware, ransomware and phishing attacks that could target our intellectual property, trade secrets, financial information, personal information of our employees, customers and patients, including sensitive personal health information. The occurrence of such an attack could disrupt our operations and expose the Company to financial losses, contractual damages, liability under labor and privacy laws, reputational damage and additional expenses. We have implemented security measures to protect our data and information technology systems; however, such measures may not be effective in preventing cyber-attacks. We may be required to allocate additional resources to implement additional preventative measures including significant investments in information technology systems. A serious cyber-security breach could have a material adverse effect on our business, financial condition and results of operations.

The Company may collect and store certain personal information about customers and is responsible for protecting such information from privacy breaches. A privacy breach may occur through procedural or process failure, information technology malfunction, or deliberate unauthorized intrusions. In addition, theft of data is an ongoing risk whether perpetrated via employee collusion or negligence or through deliberate cyber-attack. Any such privacy breach or theft could have a material adverse effect on the Company’s business, financial condition and results of operations. If the Company were found to be in violation of privacy or security rules or other laws protecting the confidentiality of information, the Company could be subject to sanctions and civil or criminal penalties, which could increase its liabilities, harm its reputation and have a material adverse effect on the Company’s business, financial condition and results of operations.

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The Company may incur significant costs to defend its intellectual property and other proprietary rights.

The ownership and protection of trademarks, patents, trade secrets and intellectual property rights are significant aspects of the Company’s future success. Unauthorized parties may attempt to replicate or otherwise obtain and use the Company’s products and technology. Policing the unauthorized use of the Company’s current or future trademarks, patents, trade secrets or intellectual property rights could be difficult, expensive, time-consuming and unpredictable, as may be enforcing these rights against unauthorized use by others.

In addition, other parties may claim that the Company’s products infringe on their proprietary and perhaps patent protected rights. Such claims, regardless of their merit, may result in the expenditure of significant financial and managerial resources, legal fees, injunctions, temporary restraining orders and/or require the payment of damages. As well, the Company may need to obtain licenses from third parties who allege that the Company has infringed on their lawful rights. Such licenses may not be available on terms acceptable to the Company or at all. In addition, the Company may not be able to obtain or utilize on terms that are favorable to it, or at all, licenses or other rights with respect to intellectual property that it does not own.

Risks Related to Operations in Colombia

We are reliant on certain licenses and authorizations to operate in Colombia.

Our ability to grow, store and sell cannabis in Colombia is dependent on our ability to sustain and/or obtain the necessary licenses and authorizations by certain authorities in Colombia. To date, we have received the licenses we need to operate our facilities in Colombia. The effects of the compliance regime, any delays in obtaining, or failure to obtain or keep the regulatory approvals may significantly delay or impair the development of markets, products and sales initiatives and could have a material adverse effect on our business, results of operations and financial condition.

The licenses and authorizations are subject to ongoing compliance and reporting requirements and our ability to obtain, sustain or renew any such licenses and authorizations on acceptable terms is subject to changes in regulations and policies and to the discretion of the applicable authorities or other governmental agencies in Colombia and potentially in other foreign jurisdictions. Failure to comply with the requirements of the licenses or authorizations or any failure to maintain the licenses or authorizations would have a material adverse effect on our business, financial condition and operating results.

Although we believe that we will meet the requirements to obtain, sustain or renew the necessary licenses and authorizations, there can be no guarantee that the applicable authorities will issue these licenses or authorizations. Should the authorities fail to issue the necessary licenses or authorizations, we may be curtailed or prohibited from the production and/or distribution of cannabis or from proceeding with the development of our operations as currently proposed and our business, results of operations and financial condition may be materially adversely affected.

Restrictions or regulations concerning changes in corporate structure may discourage transactions that otherwise could involve payment of a premium over prevailing market process for our securities.

Colombian cannabis licenses are granted on a non-transferable, non-exchangeable and non-assignable basis. Any breach of this restriction may result in the revocation of the license. While there are no specific regulations or restrictions regarding the effects of a change in control, modification of the corporate structure, issuance of shares, or any changes in holders or final beneficiaries on the cannabis licenses, these restrictions may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

Our cultivation operations are located in Colombia, which may make it more difficult for investors to understand and predict how changing market and economic conditions will affect our financial results.

Our cultivation operations are located in Colombia and, consequently, are subject to the economic, political and tax conditions prevalent in that country. The economic conditions in Colombia are subject to different growth expectations, market weaknesses and business practices than economic conditions in other markets. We may not be able to predict how changing market conditions in Colombia will affect our financial results.

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As of the date of this Prospectus, Colombia’s long-term foreign currency sovereign credit ratings were affirmed “Baa2” by Moody’s, “BBB-” by S&P and “BBB” by Fitch, three of the main rating agencies worldwide. The Colombian economy is experienced a modest recovery in growth in 2019, but declined because of COVID in 2020 and 2021, along with a decrease in the current account deficit and a marginal increase in debt in the coming three years. The stable outlook reflects their expectation that Colombia’s established political institutions and track record of consensus on key economic policies will contribute to economic stability and continuity over the coming two to three years.

Colombia’s economy, like most Latin-American countries, continues to suffer from the effects of lower commodity prices, mainly oil, reflected in its elevated level of external debt. Even though the country has taken measures to stabilize the economy, it is uncertain how these measures will be perceived and if the intended goal of increasing investor’s confidence will be achieved.

Economic and political conditions in Colombia may have an adverse effect on our financial condition and results of operations.

Our cultivation operations are located in Colombia. Consequently, our financial condition and results of operations depend significantly on macroeconomic and political conditions prevailing in Colombia. Decreases in the growth rate, periods of negative growth, increases in inflation, changes in law, regulation, policy, or future judicial rulings and interpretations of policies involving exchange controls and other matters such as (but not limited to) currency depreciation, inflation, interest rates, taxation, banking laws and regulations and other political or economic developments in or affecting Colombia may affect the overall business environment and may, in turn, adversely affect our financial condition and results of operations in the future. The Colombian government frequently intervenes in Colombia’s economy and from time to time makes significant changes in monetary, fiscal and regulatory policy. Our business and results of operations or financial condition may be adversely affected by changes in government or fiscal policies, and other political, diplomatic, social and economic developments that may affect Colombia. We cannot predict what policies the Colombian government will adopt and whether those policies would have a negative effect on the Colombian economy or on our business and financial performance in the future.

We cannot assure you whether current stability in the Colombian economy will be sustained. If the condition of the Colombian economy were to deteriorate, we would likely be adversely affected.

Colombia could experience substantial inflation in the future resulting in the Company’s costs in the Colombian peso increasing significantly.

Colombia has in the past experienced double-digit rates of inflation. If Colombia experiences substantial inflation in the future, the Company’s costs in Colombian peso terms will increase significantly, subject to movements in applicable exchange rates. Inflationary pressures may also curtail the Company’s ability to access global financial markets in the longer term and its ability to fund planned capital expenditures, and could materially adversely affect the Company’s business, financial condition and results of operations. The Colombian government’s response to inflation or other significant macro-economic pressures may include the introduction of policies or other measures that could increase the Company’s costs, reduce operating margins and materially adversely affect its business, financial condition and results of operations.

Colombia has experienced and continues to experience internal security issues that have had or could have a negative effect on the Colombian economy and our financial condition.

Colombia is subject to sustained internal security issues, primarily due to the activities of guerrilla groups, such as dissidents from the former Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia), or “FARC,” the National Liberation Army (Ejército de Liberación Nacional), or “ELN,” paramilitary groups, drug cartels and criminal gangs (Bacrim). In remote regions of the country with minimal governmental presence, these groups have exerted influence over the local population and funded their activities by protecting and rendering services to drug traffickers and participating in drug trafficking activities. Even though the Colombian government’s policies have reduced guerilla presence and criminal activity, particularly in the form of terrorist attacks, homicides, kidnappings and extortion, such activity persists in Colombia, and possible escalation of such activity and the effects associated with them have had and may have in the future a negative effect on the Colombian economy and on us, including on our employees, results of operations and financial condition. The Colombian government commenced peace talks with the FARC in August 2012, and peace negotiations with the ELN began in November 2016. The Colombian government and the FARC signed a peace deal on September 26, 2016, which was amended after voters rejected it in the referendum held on October 2, 2016. The new agreement was signed on November 24, 2016 and was ratified by the Colombian Congress on November 30, 2016 and is being implemented after four years of negotiations. Pursuant to the peace agreements negotiated between the FARC and the Colombian government in 2016, the FARC occupies five seats in the Colombian Senate and five seats in the Colombian House of Representatives. The new deal clarifies protection to private property, is expected to increase the government’s presence in rural areas and bans former rebels from running for office in certain newly created congressional districts in post-conflict zones. As a result, during the transition process, Colombia may experience an increase in internal security issues, drug-related crime and guerilla and paramilitary activities, which may have a negative effect on the Colombian economy. Our business or financial condition could be adversely affected by rapidly changing economic or social conditions, including the Colombian government’s response to implementation of the agreement with FARC and ongoing peace negotiations, if any, which may result in legislation that increases the tax burden of Colombian companies.

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Despite efforts by the Colombian government, drug-related crime, guerrilla paramilitary activity and criminal bands continue to exist in Colombia, and allegations have surfaced regarding members of the Colombian congress and other government officials having ties to guerilla and paramilitary groups. Although the Colombian government and ELN had been in talks since February 2017 to end a five-decade war, the Colombian government has suspended the negotiations after a series of rebel attacks. Any possible escalation in the violence associated with this terrorist attack and/or these activities may have a negative effect on the Colombian economy. In addition, the current administration has not honored the peace protocols to be applied in the event of a suspension of peace negotiations entered into by the prior administration, on the grounds that these protocols are only binding to the administration that agreed to them. This situation could result in escalated violence by the ELN and may have a negative effect on the credibility of the Colombian government which could in turn have a negative effect on the Colombian economy. Any terrorist activity in Colombia generally may disrupt supply chains and discourage qualified individuals from being involved with our operations.

Political and economic instability in the region may affect the Colombian economy and, consequently, our results of operations and financial condition.

Some of Colombia’s neighboring countries, particularly Venezuela, have experienced and continue to experience periods of political and economic instability. According to figures from the United Nations, more than two million Venezuelans have emigrated amid food and medicine shortages and profound political divisions in their country. Approximately half of those migrants have opted to live in Colombia, and many have arrived with only what they could carry. Providing migrants with access to healthcare, utilities and education may have a negative effect on Colombia’s economy if the Colombian government is not able to respond adequately to legalize migrants, generate programs to help them find formal jobs, and increase tax revenue and consumption.

Moreover, diplomatic relations with Venezuela and Ecuador have from time to time been tense and affected by events surrounding the Colombian military forces’ confrontations with guerilla groups, particularly on Colombia’s borders with each of Venezuela and Ecuador. More recently, the Colombian government joined an international campaign against Nicolás Maduro asking him to relinquish power, which has further increased diplomatic tensions with Venezuela.

On November 19, 2012, the International Court of Justice placed a sizeable area of the Caribbean Sea within Nicaragua’s exclusive economic zone, which until then had been deemed by Colombia as part of its own exclusive economic zone. A worsening of diplomatic relations between Colombia and Nicaragua involving the disputed waters could result in the Nicaraguan government taking measures, or a reaction among the Nicaraguan public, which would be detrimental to Colombian-owned interests in that country.

Further economic and political instability in Colombia’s neighboring countries or any future deterioration in relations with Venezuela, Ecuador, Nicaragua and other countries in the region may result in the closing of borders, the imposition of trade barriers and a breakdown of diplomatic ties, or a negative effect on Colombia’s trade balance, economy and general security situation, which may adversely affect our results of operations and financial condition.

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Finally, political conditions such as changes in the United States policies related to immigration and remittances could affect the regions in which we operate. Economic conditions in the United States and the region generally may be affected by the new United States-Mexico-Canada Agreement. This could have an indirect effect on the Colombian economy and other countries in which we may operate.

Any additional taxes resulting from changes to tax regulations or the interpretation thereof in Colombia or other countries where we operate, could adversely affect our consolidated results.

Uncertainty relating to tax legislation poses a constant risk to us. Colombian national authorities have levied new taxes in recent years. Changes in legislation, regulation and jurisprudence can affect tax burdens by increasing tax rates and fees, creating new taxes, limiting stated expenses and deductions, and eliminating incentives and non-taxed income.

Additional tax regulations could be implemented that could require us to make additional tax payments, negatively affecting our financial condition, results of operation, and cash flow. In addition, either national or local taxing authorities may not interpret tax regulations in the same way that we do. Differing interpretations could result in future tax litigation and associated costs.

Risks Related to Our Regulatory Framework

United States Federal regulation and enforcement may adversely affect the implementation of medical Cannabis and/or Cannabis adult use laws and regulations may negatively impact our revenues and profits.

Legislation in the United States continues to evolve relative to laws regulating marijuana. Subsequent to the 2020 elections, there are currently 37 states in the United States, plus the District of Columbia that have laws and/or regulations that recognize in one form or another legitimate medical uses for cannabis and consumer use of cannabis in connection with medical treatment. An additional 16 states have laws and/or regulations that allow cannabis use by adults for non-medical purposes. More states are considering permitting cannabis use. Congress recently presented legislation which would decriminalize marijuana use federally and relegate legalization to state law.

Around the world there are countries who are enacting medical and/or adult use cannabis regulations almost weekly. Conversely, currently under the Controlled Substance Act (the “CSA”), the policy and regulations of the Federal government and its agencies is that cannabis has no medical benefit and a range of activities including cultivation and use of cannabis for personal use is prohibited. Until Congress amends the CSA with respect to medical marijuana or there is an outcome of the current lawsuit against the un-constitutional application of cannabis in the CSA, there is a risk that federal authorities may enforce current federal law, and we may be deemed to be facilitating the selling or distribution of drug paraphernalia in violation of federal law. Active enforcement of the current federal regulatory position on cannabis may thus indirectly and adversely affect revenues and profits of the Company. The risk of strict enforcement of the CSA in light of congressional activity, judicial holdings and stated federal policy remains uncertain.

The DOJ (Department of Justice) has not historically devoted resources to prosecuting individuals whose conduct is limited to possession of small amounts of marijuana for use on private property but relied on state and local law enforcement to address marijuana activity. In the event the DOJ reverses stated policy and begins strict enforcement of the CSA in states that have laws legalizing medical marijuana and recreational marijuana in small amounts, there may be a direct and adverse impact to our revenue and profits.

There are conflicts in the United States between Federal and State regulations related to marijuana.

Federal regulation and enforcement may adversely affect the implementation of adult use/medical Cannabis laws and regulations may negatively impact our revenues and profits. As of the date of this Annual Report, 37 states and the District of Columbia allow its citizens to use medical marijuana. The state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level. Both the Obama and Trump administrations effectively stated that it is not an efficient use of resources to direct law federal law enforcement agencies to prosecute those lawfully abiding by state designated laws allowing the use and distribution of medical cannabis. The Biden administration has followed the same principles. In May 2017, Congress unveiled their new budget bill and as such, lawmakers included a provision, known as the Rohrabacher-Farr amendment, that allows states to carry on with crafting their own medical marijuana policies without fear of federal intervention. This bill was passed and as a result, no federal monies have been approved or appropriated to be used to enforce federal law in these cannabis program participating states.

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Investors should understand that there is no guarantee that current or future administrations will not attempt to change this again in the future. Additionally, any new administration that follows could change this policy and decide to enforce the federal laws strongly. Any such change in the federal government’s enforcement of current federal laws could cause significant financial damage to the Company and its shareholders. While we will not harvest, distribute, or sell cannabis directly, we may be irreparably harmed by a change in enforcement by the Federal or state governments.

Cannabis remains illegal under United States federal law. It is a schedule-I controlled substance. Even in those jurisdictions in which the use of medical marijuana has been legalized at the state level, its prescription is a violation of federal law. The United States Supreme Court has ruled in United States v. Oakland Cannabis Buyers’ Coop. and Gonzales v. Raich that it is the federal government that has the right to regulate and criminalize cannabis, even for medical purposes. Therefore, federal law criminalizing the use of marijuana trumps state laws that legalize its use for medicinal purposes. At present, the states are standing tall against the federal government, maintaining existing laws and passing new ones in this area. A change in the federal attitude towards enforcement could have a negative effect on the industry, potentially ending it entirely. While we are not insulated from economic risk if such a change were to occur, we believe that by virtue of the fact that we do not sell, or produce Cannabis or Cannabis related products in the United States, our shareholders and we should be insulated from federal prosecution or harassment. However, the growers and sellers of adult use and medical cannabis are our primary customers, and if this industry were unable to operate, we would lose substantially all of our potential clients, which would have a negative impact on our business, operations, and financial condition.

Laws and regulations affecting the Cannabis industry are constantly changing, which could detrimentally affect our proposed operations. Local, state, and federal Cannabis laws and regulations are broad in scope and subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or alter our business plan. In addition, violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our operations. In addition, it is possible that regulations may be enacted in the future that will be directly applicable to our business. We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.

Any failure on our part to comply with applicable regulations could prevent us from being able to carry on our business, and there may be additional costs associated with any such failure.

Our business activities are heavily regulated in all jurisdictions where we do business. Our operations are subject to various laws, regulations and guidelines by governmental authorities relating to the cultivation, processing, manufacture, marketing, management, distribution, transportation, storage, sale, packaging, labelling, pricing and disposal of cannabis and cannabis products. In addition, we are subject to laws and regulations relating to employee health and safety, insurance coverage and the environment. Laws and regulations, applied generally, grant government agencies and self-regulatory bodies broad administrative discretion over our activities, including the power to limit or restrict business activities as well as impose additional disclosure requirements on our products and services.

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Any failure by us to comply with the applicable regulatory requirements could

· require extensive changes to our operations;

· result in regulatory or agency proceedings or investigations;

· result in the revocation of our licenses and permits, increased compliance costs;

· result in damage awards, civil or criminal fines or penalties;

· result in restrictions on our operations;

· harm our reputation; or

· give rise to material liabilities.

There can be no assurance that any future regulatory or agency proceedings, investigations or audits will not result in substantial costs, a diversion of management’s attention and resources or other adverse consequences to our business.

Achievement of our business objectives is contingent, in part, upon compliance with regulatory requirements enacted by governmental authorities and obtaining all necessary regulatory approvals for the cultivation, processing, production, storage, distribution, transportation, sale, import and export, as applicable, of our products. Any failure to comply with the regulatory requirements applicable to our operations may lead to possible sanctions, including:

· the revocation or imposition of additional conditions on licenses to operate our business;

· the suspension or expulsion from a particular market or jurisdiction or of our key personnel;

· the imposition of additional or more stringent inspection, testing and reporting requirements;

· product recalls or seizures; and

· the imposition of fines and censures.

In addition, changes in regulations, government or judicial interpretation of regulations, or more vigorous enforcement thereof or other unanticipated events could require extensive changes to our operations, increase compliance costs or give rise to material liabilities or a revocation of our licenses and other permits. Furthermore, governmental authorities may change their administration, application or enforcement procedures at any time, which may adversely affect our ongoing regulatory compliance costs. There is no assurance that we will be able to comply or continue to comply with applicable regulations.

The legal cannabis market is a relatively new industry. As a result, the size of our target market is difficult to quantify, and investors will be reliant on their own estimates on the accuracy of market data.

Because the cannabis industry is in a nascent stage, there is a lack of information about comparable companies available for potential investors to review in deciding about whether to invest in us and, few, if any, established companies whose business model we can follow or upon whose success we can build. Accordingly, investors should rely on their own estimates regarding the potential size, economics and risks of the cannabis market in deciding whether to invest in our Common Shares. We are an early-stage company that has not generated net income. There can be no assurance that our growth estimates are accurate or that the cannabis market will be large enough for our business to grow as projected.

Although we are committed to researching and developing new markets and products and improving existing products, there can be no assurances that such research and market development activities will prove profitable or that the resulting markets or products, if any, will be commercially viable or successfully produced and marketed. We must rely largely on our own market research to forecast sales and design products as detailed forecasts and consumer research are not generally obtainable from reliable third-party sources in Canada and in other international jurisdictions.

In addition, there is no assurance that the industry and market will continue to exist and grow as currently estimated or anticipated or function and evolve in the manner consistent with management’s expectations and assumptions. We could also be subject to other events or circumstances that that adversely affect the cannabis industry, such as the imposition of further restrictions on sales and marketing or further restrictions on sales in certain areas and markets.

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We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar international anti-bribery and anti-kickback laws with respect to our activities outside the United States.

We anticipate distributing some of our products to locations in Canada and United States as well as operate our business in Canada and United States. The U.S. Foreign Corrupt Practices Act, and other similar anti-bribery and anti-kickback laws and regulations, generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. We cannot assure you that we will be successful in preventing our agents from taking actions in violation of these laws or regulations. Such violations, or allegations of such violations, could disrupt our business and result in a material adverse effect on our financial condition, results of operations and cash flows.

Risks Related to Financials and Accounting

Assumptions, estimates and judgments related to critical accounting matters could significantly affect our reported financial results or financial condition.

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the notes to our financial statements, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. Our operating results may be adversely affected if the assumptions change or if actual circumstances differ from those in the assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the price of our Common Shares. Significant assumptions and estimates used in preparing the financial statements include those related to the credit quality of accounts receivable, income tax credits receivable, share based payments, impairment of non-financial assets, fair value of biological assets, as well as revenue and cost recognition. As one example out auditors have from time to time impaired the value of certain of our assets, including license rights.

There are tax risks the Company may be subject to in carrying on business in multiple jurisdictions.

We and our subsidiaries will operate and, accordingly, will be subject to income tax and other forms of taxation in multiple jurisdictions. We may be subject to income taxes and non-income taxes in a variety of jurisdictions and our tax structure may be subject to review by both domestic and foreign taxation authorities. Those tax authorities may disagree with our interpretation and/or application of relevant tax rules. A challenge by a tax authority in these circumstances might require us to incur costs in connection with litigation against the relevant tax authority or reaching a settlement with the tax authority and, if the tax authority’s challenge is successful, could result in additional taxes (perhaps together with interest and penalties) being assessed on us, and as a result an increase in the amount of tax payable by us. In addition, we may be subject to different taxes imposed by the Colombian government, and changes within such tax, legal and regulatory framework may have an adverse effect on our financial results.

Taxation laws and rates which determine taxation expenses may vary significantly in different jurisdictions, and legislation governing taxation laws and rates are also subject to change. Therefore, our earnings may be affected by changes in the proportion of earnings taxed in different jurisdictions, changes in taxation rates, changes in estimates of liabilities and changes in the amount of other forms of taxation. The determination of our provision for income taxes and other tax liabilities will require significant judgment (including based on external advice) as to the interpretation and application of these rules. We may have exposure to greater than anticipated tax liabilities or expenses.

Additionally, dividends and other intra-group payments made by our subsidiaries or international branches may expose the recipients of such payments to taxes in their jurisdictions of organization and operation and such dividends and other intra-group payments may also be subject to withholding taxes imposed by the jurisdiction in which the entity making the payment is organized or tax resident. Unless such withholding taxes are fully creditable or refundable, dividends and other intra-group payments may increase the amount of tax paid by us. Although the Company and its subsidiaries arrange themselves and their affairs with a view to minimizing the incurrence of such taxes, there can be no assurance that we will succeed.

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Restrictions on Deduction of Certain Expenses for U.S. Federal Income Tax Purposes

Section 280E of the Internal Revenue Code of 1986, as amended (the “Code”), prohibits businesses from deducting certain expenses associated with trafficking controlled substances for United States federal income tax purposes. The IRS has invoked Code Section 280E in tax audits against various cannabis businesses in the U.S. that are permitted under applicable state laws. Section 280E of the Code prohibits cannabis businesses that are deemed to be trafficking in controlled substances from deducting certain ordinary and necessary business expenses, forcing them to pay higher effective federal tax rates than similar companies in other industries. The effective tax rate on a cannabis business depends on how large its ratio of non-deductible expenses is to its total revenues. Therefore, businesses in the legal cannabis industry may be less profitable than they would otherwise be.

Although the IRS issued a clarification allowing the deduction of certain expenses, the scope of such items is interpreted very narrowly and the bulk of operating costs and general administrative costs are not permitted to be deducted. While there are currently several pending cases before various administrative bodies and federal courts challenging these restrictions, there is no guarantee that these authorities will issue an interpretation of Code Section 280E favorable to cannabis businesses.

Failure to develop our internal controls over financial reporting as we grow could have an adverse effect on our operations.

As our Company matures we will need to continue to develop and improve our current internal control systems and procedures to manage our growth. We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish appropriate controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, financial condition or results of operations. In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse effect on the price of our Common Shares.

Risks Related to Our Common Shares and this Offering

Our common stock is listed on OTCQB Market, there can be no assurance that we will be able to comply with OTCQB Market’s continued listing standards.

Our common stock offered in this offering circular is listed on the OTCQB Market under the symbol “ALID.” There can be no assurance any broker will be interested in trading our stock. Therefore, it may be difficult to sell your shares of common stock if you desire or need to sell them. We cannot provide any assurance that an active and liquid trading market in our securities will develop or, if developed, that such market will continue.

There is no guarantee that we will be able to maintain such listing for any period of time by perpetually satisfying OTCQB Market’s continued listing requirements. Our failure to continue to meet these requirements may result in our securities being delisted from OTCQB Market.

The market price of our common stock is likely to be highly volatile because of several factors, including a limited public float.

The market price of our common stock has been volatile in the past and the market price of our common stock is likely to be highly volatile in the future. You may not be able to resell shares of our common stock following periods of volatility because of the market’s adverse reaction to volatility.

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Other factors that could cause such volatility may include, among other things:

· actual or anticipated fluctuations in our operating results;

· the absence of securities analysts covering us and distributing research and recommendations about us;

· we may have a low trading volume for a number of reasons, including that a large portion of our stock is closely held;

· overall stock market fluctuations;

· announcements concerning our business or those of our competitors;

· actual or perceived limitations on our ability to raise capital when we require it, and to raise such capital on favorable terms;

· conditions or trends in the industry;

· litigation;

· changes in market valuations of other similar companies;

· future sales of common stock;

· departure of key personnel or failure to hire key personnel; and

· general market conditions.

Any of these factors could have a significant and adverse impact on the market price of our common stock. In addition, the stock market in general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock, regardless of our actual operating performance.

Our common stock has been a “penny stock” under SEC rules. It may be more difficult to resell securities classified as “penny stock.”

Our common stock is currently a “penny stock” under applicable SEC rules (generally defined as non-exchange traded stock with a per-share price below $5.00). These rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as “established customers” or “accredited investors.” For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing the market value of each penny stock held in the customer’s account, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction.

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Legal remedies available to an investor in “penny stocks” may include the following:

· If a “penny stock” is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.

· If a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages.

These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.

Many brokerage firms will discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest in penny stocks. In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial risk generally associated with these investments.

For these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance at what time, if ever, our common stock will not be classified as a “penny stock” in the future.

We will need, but may be unable to, obtain additional funding on satisfactory terms, which could dilute our shareholders or impose burdensome financial restrictions on our business.

In the future, we hope to rely on revenues generated from operations to fund all of the cash requirements of our activities. However, there can be no assurance that we will be able to generate any significant cash from our operating activities in the future. Future financings may not be available on a timely basis, in sufficient amounts or on terms acceptable to us, if at all. Any debt financing or other financing of securities senior to the Common Shares will likely include financial and other covenants that will restrict our flexibility. Any failure to comply with these covenants would have a material adverse effect on our business, prospects, financial condition and results of operations because we could lose our existing sources of funding and impair our ability to secure new sources of funding. There can be no assurance that we will be able to generate any investor interest in our securities. If we do not obtain additional financing, our business may never commence, in which case you would likely lose the entirety of your investment in the Company.

Even if this offering is successful, we may need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations.

We expect the net proceeds from this offering to be $9,200,000 if this offering is sold in full, after potential underwriting discounts and commissions and estimated offering expenses of approximately $100,000 payable by us. We expect that the net proceeds from this offering will be sufficient to fund our current operations for at least through 2022. However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances or a combination of these approaches. Raising funds in the current economic environment may present additional challenges. It is not certain that we have accounted for all costs and expenses of future development and regulatory compliance. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our products. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our shareholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity or convertible securities may dilute our existing shareholders. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely affect our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.

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If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product, or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.

If you purchase our Common Shares in this offering, you will incur immediate and substantial dilution in the book value of your Common Shares.

You will suffer immediate and substantial dilution in the net tangible book value of the Common Shares you purchase in this offering. Assuming an offering price of $1.75 per Common Share and assuming all 5,714,2866 Common Shares are sold purchasers of Common Shares in this offering will experience dilution of approximately $1.6994 per Common Share in net tangible book value of the Common Shares.

Holders of our Common Shares are subject to dilution resulting from the issuance of equity-based compensation by us.

We intend to award warrants or restricted stock units to management to incentivize their performance and retention. Any additional equity grants and any exercise of existing warrants or restricted stock units will cause our shareholders to be diluted and may negatively affect the price of the Common Shares.

Ownership of our Common Shares may be considered unlawful in some jurisdictions and holders of our Common Shares may consequently be subject to liability in such jurisdictions.

Cannabis-related financial transactions, including investment in the securities of cannabis companies and receipt of any associated benefits, such as dividends, are currently subject to anti-money laundering and a variety of other laws that vary by jurisdiction, many of which are unsettled and still developing. While the interpretation of these laws is unclear, in some jurisdictions, financial benefit directly or indirectly arising from conduct that would be considered unlawful in such jurisdiction may be viewed to be within the purview of these laws, and persons receiving any such benefit, including investors in an applicable jurisdiction, may be subject to liability under such laws. Each prospective investor should therefore contact his, her or its own legal advisor regarding the ownership of our Common Shares and any related potential liability.

Our executive officers and directors and their respective affiliates may continue to exercise significant control over our Company after this offering, which will limit your ability to influence corporate matters and could delay or prevent a change in corporate control.

As of the date of this prospectus, our executive officers and directors currently represent beneficial ownership, in the aggregate, of approximately 34.7% of our outstanding Common Shares. Immediately following the completion of this offering, the existing holdings of our executive officers and directors and their affiliates will represent beneficial ownership, in the aggregate, of approximately 32.6% of our outstanding Common Shares. As a result, these shareholders may be able to influence our management and affairs and control the outcome of matters submitted to our shareholders for approval, including the election of directors and any sale, merger, consolidation, or sale of all or substantially all of our assets. These shareholders may have interests, with respect to their Common Shares, that are different from those of investors in this offering, and the concentration of voting power among one or more of these shareholders may have an adverse effect on the price of our Common Shares. In addition, this concentration of ownership might adversely affect the market price of our Common Shares by:

· delaying, deferring or preventing a change of control of the Company;

· impeding a merger, consolidation, takeover or other business combination involving the Company; or

· discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company.

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The Company’s directors and officers may have conflicts of interest in conducting their duties.

We may be subject to various potential conflicts of interest because of the fact that some of our officers and directors may be engaged in a range of business activities. In addition, our executive officers and directors may devote time to their outside business interests, so long as such activities do not materially or adversely interfere with their duties to the Company. In some cases, our executive officers and directors may have fiduciary obligations associated with these business interests that interfere with their ability to devote time to our business and affairs and that could adversely affect our operations. These business interests could require significant time and attention of our executive officers and directors.

We have broad discretion in how we use the proceeds of this offering and may not use these proceeds effectively, which could affect our results of operations and cause the price of our Common Shares to decline.

We will have considerable discretion in the application of the net proceeds of this offering. We intend to use the net proceeds from this offering for operations in Colombia and Canada, development of our healthcare products, intellectual property, regulatory compliance, working capital and general corporate purposes. As a result, investors will be relying upon management’s judgment with only limited information about our specific intentions for the use of the balance of the net proceeds of this offering. We may use the net proceeds for purposes that do not yield a significant return or any return at all for our shareholders. In addition, pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

If our share price fluctuates after the offering, you could lose a significant part of your investment.

The market price of our Common Shares has been and could remain subject to wide fluctuations in response to, among other things, the risk factors described in this section of this prospectus, and other factors beyond our control, such as fluctuations in the valuation of companies perceived by investors to be comparable to us. Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political, and market conditions, such as recessions, interest rate changes or international currency fluctuations, may negatively affect the market price of our Common Shares. In the past, many companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

The public offering price of our Common Shares has been determined by negotiations between us and the underwriters based upon many factors and may not be indicative of prices that will prevail following the closing of this offering. Volatility in the market price of our Common Shares may prevent investors from being able to sell their shares at or above the initial public offering price. As a result, you may suffer a loss on your investment.

The regulated nature of our business may impede or discourage a takeover, which could reduce the market price of our Common Shares.

We require and hold various government licenses to operate our business. These licensing requirements could impede a merger, amalgamation, takeover or other business combination involving us or discourage a potential acquiror from making a tender offer for our Common Shares, which, under certain circumstances, could reduce the market price of our Common Shares.

We do not intend to pay dividends on our Common Shares in the near future, and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our Common Shares.

We have never declared or paid any cash dividend on our Common Shares and do not currently intend to do so in the foreseeable future. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends in the foreseeable future. Therefore, the success of an investment in the Common Shares will depend upon any future appreciation in their value. There is no guarantee that the Common Shares will appreciate in value or even maintain the price at which you purchased them.

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Future issuances of debt securities, which would rank senior to our Common Shares upon our bankruptcy or liquidation, and future issuances of preferred stock, which could rank senior to our Common Shares for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our Common Shares.

In the future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our Common Shares. Moreover, if we issue preferred stock, the holders of such preferred stock could be entitled to preferences over holders of Common Shares in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preferred stock in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings. Holders of our Common Shares must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our Common Shares.

General Risk Factors

The Company may become involved in legal proceedings from time to time, which could adversely affect the Company.

From time to time, we may be a party to legal and regulatory proceedings, including matters involving governmental agencies, entities with whom it does business and other proceedings arising in the ordinary course of business. We will evaluate our exposure to these legal and regulatory proceedings and establish reserves for the estimated liabilities in accordance with generally accepted accounting principles. Assessing and predicting the outcome of these matters involves substantial uncertainties. Unexpected outcomes in these legal proceedings, or changes in management’s evaluations or predictions and accompanying changes in established reserves, could have an adverse impact on our financial results.

Our participation in the cannabis industry may lead to litigation, formal or informal complaints, enforcement actions, and inquiries by third parties, other companies and/or various governmental authorities against us. Litigation, complaints, and enforcement actions involving us could consume considerable amounts of financial and other corporate resources, which could have an adverse effect on our future cash flows, earnings, results of operations and financial condition.

The Company’s success will depend, in part, on its ability to continue to enhance its product and service offerings to respond to technological and regulatory changes and emerging industry standards and practices.

Rapidly changing markets, technology, emerging industry and regulatory standards and frequent introduction of new products characterize the Company’s business. The introduction of new products embodying new technologies and regulatory developments may render the Company’s equipment obsolete and its products and services less competitive or less marketable. The process of developing the Company’s products and services is complex and requires significant continuing costs, development efforts, third-party commitments and regulatory approvals. The Company may not be successful in developing or effectively commercializing such new products and services, or obtaining any required regulatory approvals, which, together with any capital expenditures made in the course of developing such products and services, may have a material adverse effect on the Company’s business, financial condition and operating results.

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We are dependent upon our management and key employees, and the loss of any member of our management team or key employees could have a material adverse effect on our operations.

The Company’s success is dependent upon the ability, expertise, judgment, discretion and good faith of its senior management and key employees. The loss of any member of our management team or key employees could have a material adverse effect on our business and results of operations. While employment agreements and incentive programs are customarily used as primary methods of retaining the services of key employees, these agreements and incentive programs cannot assure the continued services of such employees. Any loss of the services of such individuals, or an inability to attract other suitably qualified persons when needed, could have a material adverse effect on the Company’s business, operating results or financial condition. We do not currently maintain key-person insurance on the lives of any of our key employees. Competition for qualified technical, sales and marketing staff, as well as officers and directors can be intense, and no assurance can be provided that the Company will be able to attract or retain key employees in the future, which may adversely affect the Company’s operations.

Our inability to retain and acquire skilled personnel could impair our business and operations.

The loss of any member of our management team could have a material adverse effect on our business and results of operations. In addition, the inability to hire or the increased costs of hiring new personnel, including members of executive management, could have a material adverse effect on our business and operating results. The expansion of marketing and sales of our products will require us to find, hire and retain additional capable employees who can understand, explain, market and sell our products. There is intense competition for capable personnel in all of these areas and we may not be successful in attracting, training, integrating, motivating, or retaining new personnel, vendors, or subcontractors for these required functions. New employees often require significant training and, in many cases, take a significant amount of time before they achieve full productivity. As a result, we may incur significant costs to attract and retain employees, including significant expenditures related to salaries and benefits and compensation expenses issued in connection to equity awards, and we may lose new employees to our competitors or other companies before we realize the benefit of our investment in recruiting and training them. In addition, as we move into new jurisdictions, we will need to attract and recruit skilled employees in those new areas.

We will need to grow the size of our organization, and we may experience difficulties in managing any growth we may achieve.

As our development and commercialization plans and strategies develop, we expect to need additional research, development, managerial, operational, sales, marketing, financial, accounting, legal and other resources. Future growth would impose significant added responsibilities on members of management. In order to manage growth and changes in strategy effectively, the Company must: (a) maintain adequate systems to meet customer demand; (b) expand sales and marketing, distribution capabilities, and administrative functions; (c) expand the skills and capabilities of its current management team; and (d) attract and retain qualified employees. Our management may not be able to accommodate those added responsibilities, and our failure to do so could prevent us from effectively managing future growth and successfully growing our Company.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us, our share price and trading volume could decline.

The trading market for our Common Shares will depend, in part, on the research and reports that securities or industry analysts publish about us or our operations. We do not have any control over these analysts and their research and reports. Securities and industry analysts do not currently, and may never, publish research on our business. If no security or industry analysts commence coverage of our Company, the trading price for our Common Shares would likely be negatively affected. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our shares or publish inaccurate or unfavorable research about our business, our share price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our shares could decrease, which might cause our share price and trading volume to decline.

After the completion of this offering, we may be at an increased risk of securities class action litigation.

Historically, securities class action litigation has often been brought against a company following a decline in the market price of its securities. If we are eventually listed on NASDAQ or another exchange or quoted over-the-counter and our share price decreases and we were to be sued, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

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We expect to incur significant ongoing costs and obligations related to our investment in infrastructure, growth, regulatory compliance and operations.

We expect to incur significant ongoing costs and obligations related to our investment in infrastructure and growth and regulatory compliance, which could have a material adverse effect on our results of operations, financial condition and cash flows. In addition, future changes in regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to our operations, increased compliance costs or give rise to material liabilities, which could have a material adverse effect on our business, results of operations and financial condition. Our efforts to grow our business may be costlier than we expect, and we may not be able to generate sufficient revenue to offset such higher operating expenses. We may incur significant losses in the future for a number of reasons, including unforeseen expenses, difficulties, complications and delays, and other unknown events.

There is no assurance that the Company’s insurance coverage will be sufficient to cover all claims to which the Company may become subject.

Our production is, in general, subject to different risks and hazards, including adverse weather conditions, fires, plant diseases and pest infestations, other natural phenomena, industrial accidents, labor disputes, changes in the legal and regulatory framework applicable to us and environmental contingencies.

We currently maintain insurance coverage over our production and facilities. We may not be able to maintain insurance of the type and amount desired at a reasonable cost. If we were to incur significant liability for which we were not fully insured, it could have an adverse effect on our business, financial condition and results of operations.

We do not currently maintain key-person insurance on the lives of any of our key employees.

We may be unable to implement our business strategy, which could have negative financial and reputational effects on our business.

The growth and expansion of our business is heavily dependent upon the successful implementation of our business strategy as described under the heading “Business.” There can be no assurance that we will be successful in the implementation of our business strategy. A failure to do so could have negative financial and reputational effects on us. Future clinical research studies may lead to conclusions that dispute or conflict with our understanding and belief regarding the medical benefits, viability, safety, efficacy, dosing and social acceptance of cannabis.

The Company could be subject to a security breach that could result in significant damage or theft of products and equipment.

Breaches of security at our facilities may occur and could result in damage to or theft of products and equipment. A security breach at our facilities could result in a significant loss of inventory or work in process, expose us to liability under applicable regulations and increase expenses relating to the investigation of the breach and implementation of additional preventative security measures, any of which could have an adverse effect on our business, financial condition and results of operations.

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MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is quoted on the OTCQB tier of the OTC Markets Group under the symbol, “ALID.” The OTC Market is a computer network that provides information on current “bids” and “asks,” as well as volume information. Our stock commenced trading on the OTCQB as ALID subsequent to the reverse acquisition in September 2019.

The following table sets forth the range of high and low closing bid quotations for our common stock for each of the periods indicated as reported by the OTC Markets. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

	Bid Prices
	Low		High
Quarter ended February 28, 2022 to date		0.90		1.69
Quarter ended February 28, 2022	$	1.75	$	2.11
Quarter ended November 30, 2021	$	1.05	$	2.00
Year ended August 28, 2021	$	.96	$	1.24
Quarter ended May 31, 2021	$	1.01	$	1.24
Quarter ended February 28, 2021	$	.63	$	1.18
Quarter ended November 30, 2020	$	.643	$	2.10
Year ended August 28, 2020	$	1.01	$	2.765
Quarter ended May 31, 2020	$	1.00	$	1.55
Quarter ended February 29, 2020	$	1.51	$	1.55
Quarter ended November 30, 2019	$	1.25	$	1.30

Holders of Common Stock

As of April 20, 2022, there were approximately 93,042,928 shares of common stock issued and outstanding and 136 record holders of our common stock. The number of record holders does not include beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other fiduciaries. Based on reports we have reviewed relative to such holders, we currently have at least 3,078 beneficial stockholders.

We have not paid any cash dividends on our common stock and do not currently anticipate paying cash dividends in the foreseeable future. We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business.

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DILUTION

Purchasers of our common stock in this offering will experience an immediate dilution of net tangible book value per share from the public offering price of $1.75. Dilution in net tangible book value per share represents the difference between the amount per share paid by the purchasers of shares of common stock and the net tangible book value per share immediately after this offering.

As of  February 28, 2022, our net tangible book value was ($4,935,058), or ($0.0531) per share of common stock. Net tangible book value per share represents our total tangible assets, less our total liabilities, divided by the number of outstanding shares of our common stock.

Dilution represents the difference between the amount per share paid by purchasers in this offering and the pro forma net tangible book value per share of common stock after the offering. After (i) giving effect to the sale of 5,714,286 shares of common stock in this offering at an offering price of $1.75 per share, and (ii) after deducting possible commissions and other estimated offering expenses payable by us of $800,000, our pro forma net tangible book value would be $4,984,942 or $0.0506 per share. This represents an immediate increase in pro forma net tangible book value per share of $0.1037 per share to our existing stockholders and immediate dilution of $1.6994 per share to new investors purchasing shares at the public offering price of $1.75 per share.

The following table illustrates the dilution in pro forma net tangible book value per share to new investors as of February 28, 2022 .

Assumed public offering price per share	$	1.75
Net tangible book value per share on February 28, 2022	$	(0.0531	)
Increase in net tangible book value per share to the existing stockholders attributable to this offering	$	0.1037
Adjusted net tangible book value per share after this offering	$	0.0506
Dilution in net tangible book value per share to new investors	$	1.6994

The following tables set forth, as of August 30, 2021, the number of shares of common stock purchased from us, the total cash consideration paid to us and the average price per share paid by the existing holders of our common stock and the price to be paid by new investors at the public offering price of $1.75 per share.

	Shares Purchase					Total Consideration					Average Price Per Share
	Number		Percent			Amount		Percent
Existing investors before this offering		85,305,780		94.7	%	$	7,961,892		44.3	%	$	0.09
Investors purchasing shares in this offering		5,714,286		5.3	%	$	10,000,000		55.7	%	$	1.75
Total		91,020,066		100.0	%	$	17,961,892		100.0	%	$	0.20

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USE OF PROCEEDS

Our offering of 5,714,286 Units is being made on a best efforts basis: The offering price per share is $1.75. The table below depicts how we plan to utilize the proceeds in the event that 25%, 50%, 75% and 100% of the Units in this offering are sold; however, the amounts actually expended for working capital as well as other purposes may vary significantly and will depend on a number of factors, including the amount of our future revenues and the other factors described under “Risk Factors.” Accordingly, we will retain broad discretion in the allocation of proceeds of this Offering.

Number of Units sold		25	%		50	%		75	%		100	%
Gross proceeds from this Offering (1)(2)	$	2,500,000		$	5,000,000		$	7,500,000		$	10,000,000
Underwriting discounts and commissions (3)	$	175,000		$	350,000		$	525,000		$	700,000
Other offering costs and listing fees	$	100,000		$	100,000		$	100,000		$	100,000
Net proceeds from this Offering	$	2,225,000		$	4,550,000		$	6,875,000		$	9,200,000
Operations (Colombia)	$	1,282,500		$	2,595,000		$	3,907,500		$	5,220,000
Operations (United States)	$	312,500		$	595,000		$	907,500		$	1,220,000
Natural Health Product Development	$	187,500		$	375,000		$	562,500		$	750,000
Pharmaceutical Product Clinical Trials and Licensing Agreements	$	200,000		$	450,000		$	700,000		$	950,000
Regulatory Matters (legal, and compliance)	$	31,250		$	62,500		$	93,750		$	125,000
Intellectual Property Patent Submission and Enforcement	$	10,000		$	20,000		$	30,000		$	40,000
General & Administrative	$	127,500		$	345,000		$	532,500		$	720,000
Additional General Working Capital	$	73,750		$	107,500		$	141,250		$	175,000

1. Expenditures for the 24 months following the completion of this offering. The expenditures are categorized by significant area of activity. The Company will hire more employees and consultants and scale up its operations based on the amount of funds it has.

2. Due to the uncertainties inherent in product development it is difficult to estimate with certainty the exact amounts of the net proceeds from this offering that may be used for the above purposes.

3. Consists of potential broker-dealer commissions of 7% of the offering proceeds.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents, debt and capitalization as of February 28, 2022:

You should read the following table in conjunction with the sections entitled “Use of Proceeds”, “Selected Consolidated Financial Information and Operating Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and our financial statements and the related notes thereto included elsewhere in this Offering Circular.

	As of   Feb ruary 28, 2022
	Actual
Cash and cash equivalents	$	618,612
Shareholders’ equity:
Common shares, par value $.0001 per share; 92,141,093 shares issued and outstanding	$	9,336
Accumulated other comprehensive loss	$	(684,623	)
Accumulated deficit	$	(31,787,038	)
Total shareholders’ equity (deficiency)	$	(432,784	)
Total capitalization	$	(432,784	)

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DESCRIPTION OF SECURITIES

Our authorized capital stock consists of 300,000,000 shares of common stock, $0.0001 par value, and 50,000,000 shares of preferred stock, $0.0001 par value. As of April 25, 2022, we had  93,042,928 shares of common stock, and no preferred stock outstanding.

In this offering, we are offering a maximum of up to 5,714,286 Shares of Common Stock. Each Share will be sold at a price of $1.75.

Common Stock

The following description of our common stock is a summary. It is not complete and is subject to and qualified in its entirety by our certificate of incorporation and bylaws, both as amended, a copy of each of which has been incorporated as an exhibit to the Offering Statement of which this Offering Circular forms a part.

We are authorized to issue up to 300,000,000 shares of Common Stock, par value $0.0001. Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote and may not cumulate their votes. Holders of common stock are entitled to share in all dividends that our Board of Directors, or the Board, in its discretion, declares from legally available funds. In the event of our liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock.

Holders of our common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to our common stock. The rights of the holders of common stock are subject to any rights that may be fixed for holders of preferred stock.

Preferred Stock

The following is a brief summary of our preferred stock and is subject to, and qualified in its entirety by our certificate of incorporation and bylaws, both as amended, a copy of each of which has been incorporated as an exhibit to the Offering Statement of which this Offering Circular forms a part.

We are authorized to issue up to 50,000,000 shares of Preferred Stock, par value $0.0001. The shares of Preferred Stock may be issued in series, and shall have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions providing for the issuance of such stock adopted from time to time by the board of directors. The board of directors is expressly vested with the authority to determine and fix in the resolution or resolutions providing for the issuances of Preferred Stock the voting powers, designations, preferences and rights, and the qualifications, limitations or restrictions thereof, of each such series to the full extent now or hereafter permitted by the laws of the State of Nevada.

Listing on the OTCQB Market

Our common stock is listed on the OTCQB tier maintained by OTC Markets Group under the symbol “ALID”.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock in the United States is ClearTrust LLC, 16540 Pointe Village Dr., Suite 205, Lutz, FL 33558 .

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OUR BUSINESS

Our Company

Allied Corp. (“Allied”) is an international company with a mission to address medical issues by researching, creating and producing targeted cannabinoid health solutions including CBD, cannabis, and psilocybin-based products. Through the efforts of its Officers, Directors, and strategic partners over the past two decades, we have developed a variety of cannabinoid and psilocybin solutions for health and wellness applications, with an initial focus on Post Traumatic Stress Disorder, General Depression and Anxiety. We use what we consider to be an evidence-informed scientific approach to undertake its mission, through pharmaceutical research and development, plant-based production and development of unique therapeutic products.

We are targeting the cannabis and psilocybin markets, which are growing at 50% per year and projected to reach $20 billion of global revenues by 2024, according to BDS Analytics. We believe we have an opportunity to diversify revenue streams across consumer segments of the CBD, cannabis, and psilocybin product markets, including wellness, beauty, as well as food and beverages.

 Historical Company Information

  We were incorporated in the State of Nevada on February 3, 2013 under the name “Cosmo Ventures, Inc.” On July 1, 2019 the Company filed a Certificate of Amendment with Nevada changing the name to Allied Corp.

  Effective July 25, 2019 the Company entered into a Stock Purchase and Reorganization Agreement with AM (Advanced Micro) Biosciences, Inc., a British Columbia Canada corporation. Upon completion of the closing effective September 10, 2019, AM (Advanced Micro) Biosciences became a wholly-owned operating subsidiary of the Company.

  References in this Offering Circular to “Allied” or the “Company” may include references to the operations of our subsidiaries AM (Advanced Micro) Biosciences, Inc., Allied Corp Colombia S.A.S., Allied US Products, LLC and Tactical Relief, LLC. All of these entities are 100% wholly owned subsidiaries of Allied.

 The Company’s principal corporate office is located at 1405 St. Paul St., Suite 201, Kelowna, BC Canada V1Y 9N2. Our telephone number is (877) 255-4337. Our email is ir@allied.health.

Our Opportunity

  We focus 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)1.

Our 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 significantly lower anticipated raw flower cash cost based on historical production of ours and other companies in the same region of cannabis production afforded by our Colombian production and cultivation should provide us a competitive advantage.

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 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.

 We intend for our clients to access superior cannabis-related products developed with a high level of quality control. The Company believes that is fortunate to have assembled a team of industry veterans and management professionals with the background and experience to enable the Company to build, manage and grow such systems.

Key Strategic Objectives

Scale cannabis production in Colombia

We believe our Bucaramanga, Colombia development and cultivation facility gives us a significant competitive advantage in our production and sales of cannabis:

· We are licensed to produce, extract, as well as both import and export psychoactive and non-psychoactive strains of cannabis.

· We were approved to export cannabis by the Colombian government in April 2021.

· We have constructed a one-hectare greenhouse, with another three to five additional hectares are anticipated in 2021, and ten to twenty hectares more planned for 2022.

· We are now deriving monthly revenue from our Colombian cannabis harvests.

· We completed our first harvest in July 2020 for the Colombian Ministry of Agriculture (“ICA”).

· We obtained commercial approval for production of non-psychoactive cannabis in October 2020, and commercial approval for production of psychoactive cannabis in February 2021.

· Each of our ten non-psychoactive CBD seed strains, and our ten THC seed strains submitted to ICA have been approved over a course of a process that began in October 2019.

· Lower production cost: Our anticipated cash cost of raw flower production is approximately $0.05 per gram based on historical production of ours and other companies based in the same region, as favorably compared to the North American production costs of as opposed to most production between $1.00 and $2.00 per gram that we have observed.

· Access to scalable land holdings in what we consider to be one of Colombia’s best suited climates for cannabis production in the order of 200 acres. Our Vice President of Colombia operations holds 8000 hectares of production land available to us upon the satisfaction of certain conditions.

· We have all Colombian commercial production approvals and has applied for psychoactive quota for the equivalent of 10,000 kgs of psychoactive flower for 2021 and 85,000 kgs of flower production in 2022, as applied for on April 29, 2021. Non psychoactive production and sales are limitless under current Colombian law.

· We have engaged what we consider to be one of Colombia’s leading agricultural genetics teams for cannabis production.

Since we received cultivation approval from ICA, we have developed what we consider to be competitive advantages of Yield, Cannabinoid Potency, Quality, Cost, Frequency of Harvests, and, notably have:

· Yield-Continually increased our yields per hectare.

· Potency-Increased and replicated the THC and CBD yields of our plant/seed strains.

· Significantly Cost-Reduced our cash cost of raw flower production based on historical production of ours and other companies in the same region.

· Quality-Met or Exceeded European Pharmacopeia Standards.

· Frequency of Harvest-We currently harvest six to seven times per year in order maximize our production footprint. Consequently, each hectare at our Colombian cultivation site is expected to produce the equivalent of six to seven hectares of cannabis on a mono-crop yearly cycle. (See-Cannabis Production-Colombia).

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Establish United States Production of Cannabis if Federally legalized

Our wholly owned subsidiary, Allied US Products LLC, a Nevada limited liability company, entered into a contingent asset purchase agreement (the “ Contingent Asset Purchase Agreement”) which allows for the purchase of a Nevada State US-based cannabis license from a subsidiary of Fiore Cannabis, Ltd. 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”). We 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. While we have 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 us in any activities in the United States respecting cannabis. (See-Potential United States Production in the Event of Federal Cannabis Legalization). Generate Revenues from Natural Health Products containing Hemp-based CBD.

With the launch of our health hemp-based CBD brands in the United States, we expect from product rollout and expanded distribution. We have conducted focus groups, brand creation and test marketing over the past year. We have now commercially launched three brands in the US: Tactical Relief™, Equilibrium Bio™, MaXXa ©. The Buds Pure Naturals brand is intended to be licensed to a Canadian License holder to sell into the Canadian market. (See-Our CBD Brands and Products).

Complete trials of ALID 11, 11 and Psilonex™ Prescription Medications

We expect to complete our clinical Phase 1 pharma trials in 2022, eventually leading to a drug indication for PTSD. We then plan to pursue a licensing deal with a larger developer, producer, and distributor of pharmaceuticals. (See-Pharmacologic Products).

Distribution

Our goal is to become a market leader in the cultivation and processing of medicinal-grade cannabis oil and high quality cannabis derived medical and well-being products for large channel distributors, including pharmacies, medical clinics, and cosmetic companies, by expanding our production capacity, creating sustainable and natural products, expanding our geographic footprint, continuing to explore strategic partnerships and pursuing accretive acquisitions to supplement our organic growth as set forth below.

Explore strategic partnerships.

Because we offer a variety of cannabis related products, including beauty and skincare products, foods and beverages, we believe that we can create a competitive advantage by partnering with national and multinational companies, across various product categories to jointly develop and market branded cannabis offerings.

Pursue accretive acquisitions.

We believe that our deal-making capabilities and experience will allow us to successfully identify, consummate and integrate acquisitions. The cannabis industry is highly fragmented and as it continues to evolve, we expect significant industry consolidation in existing and new markets. Our deal-making capabilities and experience may allow us to successfully identify, consummate and integrate acquisitions. As a public company, we could have greater ability to finance acquisitions, including through using our equity as consideration and accessing the capital markets.

Due to the competitive and dynamic nature of the emerging cannabis products market and rapid changes in the regulatory environment, we recognize the need to remain flexible, so we can react to opportunities and risks as they develop. We will continue to re-evaluate and re-prioritize our strategies to respond to these developments. We are actively fostering a culture of continued agility and exploration since the ability to pivot depending on market dynamics will deliver competitive advantage.

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Our CBD Brands and Products

Over the past year we have developed, manufactured and test marketed all of our hemp derived CBD products for sale in the United States. Under the Farm Bill of December 2018, the use and sale of hemp derived CBD products in the United States is legal.

We have three hemp derived CBD product brands to market in the United States all with a catalog of products. We are selling these through e-commerce portal at www.alliedcorpbrands.com, and is also actively seeking physical retail store distribution throughout many states.

Our core hemp derived CBD brands are:

Tactical Relief™ Brand www.tacticalrelief.com

Tactical Relief™ is intended to be considered a patriotic brand under which health and wellness products are brought to market to serve veterans and first responders. The flagship product “Liberty” is a hemp derived CBD tincture for sale in the United States. Additional products include Tactical Hydration, a CBD infused electrolyte replacement drink and many others (described below). The Tactical Relief™. Novel formulations are created to help those living with PTSD across the United States. We signed a distribution Agreement with Hollister Biosciences for the manufacturing and distribution into California, Nevada and Arizona. We own the trademarks for Tactical Relief™ and we license them for distribution by Hollister Biosciences. On June 26, 2020 we signed a definitive agreement with Hollister Biosciences to bring to market a pipeline of products that are targeted towards helping veterans and first responders. These products will be brought to market under the brand Tactical Relief™, a veteran-founded hemp-based CBD oil brand we own.

 Branded under Tactical Relief™, the first products to be manufactured will feature products recognized for their medicinal properties in the treatment of Post-Traumatic Stress Disorder (PTSD). Consistent with Hollister’s mission, the products will be crafted in small, artisanal batches for optimal quality and made from premium California-grown cannabis. We license the Tactical Relief hemp-based CBD product brand to Hollister for use in the State of California.

 Under the terms of the Agreement with Hollister Biosciences, we will contribute the Tactical Relief™ brand support including use of trademark, artwork, logos and package design for a series of products. On an ongoing basis, we will be financially responsible for all marketing design and support. Hollister will be responsible for all aspects of production and procurement of underlying materials. Hollister will also be responsible for all costs associated with distribution and sales support. All production of cannabis products will take place under Hollister’s supervision and licenses. We and Hollister will further explore the development and marketing of additional hemp-based CBD products, as well as expanding into additional regions within the United States over the coming years. The new Tactical Relief™ products will be distributed exclusively by Hollister’s distribution partner, Indus Holdings Inc. An estimated 5% of net profits from all sales will be donated to charity. The remaining profit generated from the sale of the hemp-based CBD products will be shared 60:40 between us and Hollister.

 We have contributed the veteran brand, artwork, logos, packaging design and marketing for all Tactical Relief™ products. Hollister has completed all aspects of production and procurement of underlying hemp-based CBD materials. We will be supporting the marketing and brand presence with veteran representation.

 Some of the Tactical Relief ™ products currently offered under this brand:

· Tactical Relief ™ Tactical Hydration – a CBD infused electrolyte replacement drink with sodium citrated electrolyte replacement in three refreshing flavors.

· Tactical Relief ™ Liberty – A mint and vanilla flavored 1000mg CBD tincture fortified with specific terpene profile.

· Tactical Relief ™ FIZZ Tablets – 35mg CBD fizz tablets for adding to your water bottle.

· Tactical Relief ™ Battle Balm – CBD roll on activity rub for aches and pains.

· Tactical Relief ™ Quick Hit – CBD gummies.

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Equilibrium Bio™ Brand www.equilibriumbiomed.com

Equilibrium Bio is a lifestyle brand that is focused on everything athletic. From Crossfit workouts to Ironman races to general athletic consumers, Equilibrium Bio products have been formulated to assist the athlete along the competitive journey. Hydration and recovery are the primary areas of focus for Equilibrium Bio products. We built a sales and distribution infrastructure for this brand in 2020. We signed contracts with two major athletes (Camille Leblanc and Dave Lipson) who have 2,000,000 followers on Instagram to endorse the products. On December 10, 2020, we announced the completion of the first manufacturing run of Hydro Sport CBD-infused rehydration drinks from our latest brand, Equilibrium Bio. These drinks have also been produced for the Tactical Relief™ branding as Tactical Hydration electrolyte replacement and rehydration drink products.

 The first Equilibrium Bio™ products known as Hydro Sport are available for purchase today on e-commerce platforms and have also been shipped to national retail buyers throughout the United States. The first manufactured batch encompasses six unique product SKUs (stock-keeping units). The CBD-infused drink pouches come in three flavors: Lemon Lime, Berry Fresh and Orange Burst. The all-natural flavoring and ingredients in the drinks include: Filtered Water, CBD 20 (mg), CBD, CBG, Sodium Citrate, Citric Acid, Sea Salt, Natural Flavor, Tripotassium Citrate, Vitamin B Complex, Ascorbic Acid (Vitamin C), Sucralose, Acesulfame Potassium and Beta Carotene for color.

 Some of the Equilibrium Bio™ products that are currently offered:

· Equilibrium Bio™ - Hydrosport CBD Drink – a CBD infused electrolyte replacement drink with sodium citrate electrolyte replacement in three refreshing flavors.

· Equilibrium Bio™ Hydrosport Tincture – 1000mg CBD tincture fortified with specific terpene profile.

· Equilibrium Bio™ FIZZ Tablets – 35mg CBD fizz tab for adding to a water bottle.

· Equilibrium Bio™ Sport Rub – CBD post activity rub for aches and pains.

· Equilibrium Bio™ Quick Hit – CBD gummies with vitamin B12.

On December 3, 2020, we announced an endorsement contract with elite athlete, David Lipson (“Lipson”), Founder of Thunder Bro Athletic Company. Lipson is a world-renowned athlete that founded an elite athlete training company called “Thundrbro”. As a professional baseball player and now a strength and conditioning leader, Lipson travels the world training trainers on how nutrition, training and athletic mind set impact sport performance and life. Lipson’s National reputation in the United States has several thousands of followers that adhere to his training programs and is well respected athlete within the trainer community. Lipson has trained entertainment celebrities, professional Major League Baseball and National Football League athletes and Crossfit Games champions.

 Thundrbro is a training and lifestyle brand with an objective of providing quality products, information, and resources to help people live optimally. The Thundrbro mission is to make the world a better place through physical training, and mental toughness with a winning mindset.

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MaXXa© Brand www.maxxabrand.com

MaXXa is a brand designed to be athletically sleek and focused on developing natural CBD infused cosmetics and beauty products. There are currently six unique products in the catalogue. These products are targeted with beauty and anti-aging in mind. There are MaXXa products focusing on anti-aging and cosmetics. MaXXa’s first shipment of products to Asia was completed on January 28, 2020. This shipment included a total of 120 total units encompassing 20 units for every six unique product SKUs (stock-keeping units). We then temporarily paused sales activities due to COVID. We intend to resume sales expansion efforts of MaXXa into the Asian marketplace following the decrease in restrictions due to COVID.

Some of the MaXXa™ products currently offered include:

· MaXXa™ Skin Structure - Skin Structure is a facial formula topically applied to improve skin’s radiance and youthfulness.

· MaXXa™ Eye Recover - Eye Recover is based on antioxidant power of low molecular weight hyaluronic acid. Ultra-hydrating eye serum helps the delicate eye skin ward off free radicals as well as helping to protect against sun damage.

· MaXXa™ Glossy Lip Recover - Glossy Lip Recover moisturizes and nourishes the lips and gives them a silky smoothness. Enriched with rich fruit extracts - beeswax as well as oils and butter - this lip gloss moisturizes, beautifies and revitalizes your lips.

· MaXXa™ Skin Designer – skin designer uplifts your skin with the power of CBD extracts and hyaluronic acid. This product stimulates cell regeneration while minimizing age spots.

· MaXXa™ Vitamin Absolute - Vitamin Absolute is a soothing, calming and all-around moisturizing facial oil.

· MaXXa™ Absolute Recover - this specialized formulation allows the infused bioactive compounds to be delivered directly to the desired areas of inflammation, pain and other skin ailments.

 Pharmacologic Products

Allied was organized because our founders believed veterans and first responders suffering from Post-Traumatic Stress Disorder (“PTSD”) could have their underlying symptoms better addressed with targeted cannabinoid pharmacologic solutions. The primary business plan is to develop psilocybin-based solutions, including both potential pharmaceutical and natural health products, for those suffering from PTSD. Accordingly, we have expanded our pharmacologic research to find better treatment options for those suffering from depression, anxiety and general mental health issues. Accordingly, we believe we are in a unique position to develop a full-scope, closed-loop therapy protocol, which contrasts with psilocybin therapies that support the patient for an episodic micro-dosing treatment regime following a specific dosing and wash out cycle. We believe our existing cannabinoid treatment solutions may alleviate the effects of the “treatment gaps” between psilocybin dosing periods, providing what we call the “Allied Full Scope Treatment”.

 Our proprietary “Allied Full Scope Treatment” offers the patient continual therapy with treatment options both before and after the psilocybin treatment period. This is accomplished by offering our cannabinoid and natural health products combined with the psilocybin products and protocols under legally mandated licenses with physician supervision.

 We are also in the process of applying for a Section 56 exemption in Canada for physicians to be able to prescribe our formulations to military veterans and first responders. Our objective is to be one of the first companies to come to market with a PTSD treatment regimen of internally-developed proprietary psilocybin products augmented by our natural health and cannabis-derived pharmacologic products.

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Products in Development

Psilonex™

On March 25, 2021 we announced that we filed for trademark protection with the United States Patent Office for our pharmaceutical product Psilonex™. Psilonex™ is a proprietary formulation prescribed within a treatment path that involves both a pharmaceutical psilocybin-based formulation, followed by a daily cannabinoid maintenance period. Psilonex™ is intended to be prescribed by a physician, followed by the cannabinoid daily therapy that can be purchased by the consumer in regions where it is legal to do so as “Psilonex™ Daily,” Both of these products are currently being researched, developed and tested by our pharmaceutical development team.

The filed trademark protects our intellectual property for Psilonex™ covering: chemical preparations for pharmaceutical or medical purposes, namely, for treating depression, anxiety, and PTSD, and for improving mental health; nutraceuticals for the treatment of mental health disorders and conditions, including depression, anxiety, and PTSD; nutraceuticals for use as a dietary supplement; Nutraceuticals for use as a dietary supplement for improving mental health; pharmaceutical preparations and substances for the treatment of psychiatric diseases and disorders; pharmaceutical preparations for the treatment and prevention of mental health disorders; Pharmaceuticals, namely, psychotropics; dietary and nutritional supplements; fungal extracts sold as a component ingredient of nutritional supplements and vitamins, and; related websites.

 ALID 10 and ALID 11

ALID 10 and ALID 11 target the treatment of Post-Traumatic Stress Disorder and related mental health conditions through the targeted function of the 5-HT2 receptor and physiological pathways. Following the completion of the pre-clinical research phase, we intend to bring ALID 10 and ALID 11 through human clinical trials through its relationships with the University of Haifa, Israel and MGC Pharma in Europe.

 In 2020, we filed a United States provisional patent application entitled “Compositions and Methods for Modulating Endocannabinoid Systems Activity and Treating Mental Health Disorders”. The patent application covers ALID-10 and ALID-11, as well as other cannabis derived compounds designed for superior pharmaceutical properties for treatment of PTSD and other mental disorders.

 In October 2019, we signed a Master Services Agreement with the University of Haifa, Israel. This academic research center gives us access to a proprietary pre-clinical animal model that is owned by Carmel. Carmel is the business unit that manages the University of Haifa center for Research in Israel. Specifically, we will use this proprietary animal model for the purposes of specialized pharmaceutical cannabinoid research and pharmaceutical product development. Through our agreement, we have access to the University of Haifa’s leading-edge facilities, proprietary animal model, pharmaceutical development, academic laboratory and associated scientists and investigators. This should enable us to conduct the pre-clinical phase of the development of a proprietary pharmaceutical product for ALID-10 and ALID-11.

In the second quarter of 2020, we expanded our ALID-10 and ALID-11 research activities, as well as entered into a manufacturing and sales agreement with MGC Pharmaceuticals of Australia (“MGC”). Under the terms of these agreements, MGC will manufacture our pharmaceutical products within their GMP (Good Manufacturing Practices) certified factory in Slovenia (which is in the European Union, or EU), which should enable us to have our pharmacological products produced under procedures and methods that meet those high-quality standards. In addition, the MGC sales and distribution agreement, should provide us a channel to sell our products following the completion of a PHASE I clinical trial. MGC currently has cannabis-based pharmaceutical products for sale in Europe, and. Moreover, we believe it has demonstrated a proven ability to commercialize cannabis based pharmaceutical products. We also announced the initiation of a pharmaceutical human clinical PHASE I research trial with MGC, but COVID-19 had an operational impact on the progression of this research trial. We intend to complete this trial as a part of the use of proceeds from this financing.

 Under the terms of our agreements with MGC, it will provide what we consider to be a comprehensive suite of pharmaceutical services to advance our pharmaceutical products into human clinical PHASE 1. This trial is expected to test the efficacy and pharmacodynamics of our pipeline of proprietary cannabis derived drug candidates targeting PTSD. The scope of MGC Pharma’s services are to cover clinical research, Investigational Medicinal Product (IMP) registration, manufacturing of lab volumes for the research project, drug stability testing, GMP manufacturing and regulatory assistance for obtaining an IMP numbers that are needed in order for pharmaceutical products to be sold.

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 Psilocybin Development

 Recent Regulatory Developments Suggest Increased Acceptance of Pharmacologic Psilocybin

· In 2018, the FDA recognized psilocybin therapies as a “breakthrough” therapy for PTSD and Major Depressive Disorder. (Food and Drug Administration, 2018).

· In 2019, Imperial College of London and John Hopkins open the first psychedelic research centers. MAPS clinics across the nation conduct research on psilocybin therapy. (Forbes.com, 2019).

· In 2020, Health Canada approves psilocybin for use with select patients with terminal illnesses, while the State of Oregon decriminalized psilocybin. (Health Canada, 2020 and Oregon State Health, 2020).

 Our Psilocybin Patent Applications

On October 20, 2020 we filed a new United States provisional patent application entitled “PSILOCYBIN COMPOSITIONS AND FORMULATIONS AND THEIR USE IN TREATING MENTAL HEALTH DISORDERS AND IMPROVING MENTAL HEALTH”. The provisional patent application covers a novel combination of psilocybin and proprietary mushroom formulation, as well as a novel treatment regimen targeting Post Traumatic Stress (PTSD), Depression and General Anxiety. Along with the novel treatment regimen, our formulation consists of novel micro-dose ratios of several medical mushroom compounds combined with additional natural health molecules.

 Along with the proprietary functional mushroom formulation under provisional patent, a full scope treatment regime involving our specific CBD and terpene products is ready to add to the patent. This is the first full scope treatment of its kind that involves a specific psilocybin treatment regime that is bridged with a cannabinoid therapy approach. A full scope psilocybin and cannabinoid treatment approach to mental health.

 In March 2021, we submitted a second provisional patent for our therapeutic formulation and treatment regimen involving a prescription drug followed by a prophylactic daily drug formulation. These two products together administered under a novel treatment regimen are intended to be tested through our clinical trial infrastructure in pursuit of a drug indication for general depression and anxiety.

The provisional patent submitted is entitled: COMPOSITIONS AND FORMULATIONS OF PSILOCYBIN AND CANNABINOIDS AND METHODS OF THEIR USE TOGETHER FOR TREATING MENTAL HEALTH DISORDERS AND IMPROVING MENTAL HEALTH.

 This provisional patent contemplates the full scope treatment of general depression and anxiety with a proprietary prescription medication followed by a daily prophylactic dose of proprietary medicinal compositions. This includes a proprietary dosing and therapeutic regimen of psilocybin, additional functional mushrooms and cannabinoid therapeutics.

 Among the various aspects of the present invention contemplated in the provisional patent submission are compositions, formulations, methods for modulating endocannabinoid system activity, for modulating neuro-steroid biosynthesis, and for modulating neurotransmission, and methods for treating mental health disorders and improving mental health, using synergistic combinations of psilocybin, cannabinoids, and other active agents, provided in distinct daily dosing regimens.

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Cannabis Production

Colombia

We believe our Bucaramanga, Colombia development and cultivation facility gives us a significant competitive advantage in our production and sales of cannabis:

· We are licensed to produce, extract, as well as both import and export psychoactive and non-psychoactive strains of cannabis.

· We were approved to export cannabis by the Colombian government in April 2021.

· We have constructed a one-hectare greenhouse, with another three to five additional hectares are anticipated in 2021, and ten to twenty hectares more planned for 2022.

· The Company has received multiple purchase orders for Colombian cannabis and derived revenue beginning in May 2021 through the successful completion of revenue transactions.

· We completed our first harvest in July 2020 as part of the approval process for the Colombian Ministry of Agriculture (“ICA”).

· We obtained commercial approval for production of non-psychoactive cannabis in October 2020, and commercial approval for production of psychoactive cannabis in February 2021.

· Each of our ten non-psychoactive CBD seed strains, and our ten THC seed strains submitted to ICA have been approved over a course of a process that began in October 2019.

· Lower production cost: Our anticipated cash cost of raw flower production is approximately $0.05 per gram based on historical production of ours and other companies in the same region, as favorably compared to the North American production costs of as opposed to most production between $1.00 and $2.00 per gram that we have observed.

· Access to scalable land holdings in what we consider to be one of Colombia’s best suited climates for cannabis production in the order of 200 acres. Our Vice President of Colombia operations holds 8000 hectares of production land available to us upon the satisfaction of certain conditions.

· We have all Colombian commercial production approvals and has applied for psychoactive quota for the equivalent of 10,000 kgs of psychoactive flower for 2021 and 85,000 kgs of flower production in 2022, as applied for on April 29, 2021. Non psychoactive production and sales are limitless under current Colombian law.

· We have engaged what we consider to be one of Colombia’s leading agricultural genetics teams for cannabis production.

In the 2020 fiscal year, we activated our Colombian licenses that are required to produce, extract, import and export psychoactive and non-psychoactive cannabis. This has been a year-long process that began with the registration of our ten (10) novel strains with the national cultivar registry. Each strain was then germinated into plantlets in our cultivation center in Colombia. Following germination, the plants entered into five (5) months of field trials that included rigorous data collection, analysis and phenotyping of the strains while in the vegetation life cycle. During this time, the strains were provided with propriety nutrients, handled with standard operating procedures and guided towards the plant flowering phase. Proprietary nutrients and procedures were also adhered to during the flowering phase and detailed batch record audit data were diligently collected during every day of the plant life cycle. Following flowering, the plants were harvested and tested for cannabinoid profiles and quality assurance testing parameters. The harvested material was then sent to several accredited testing laboratories and tested its products by high performance liquid chromatography testing methods. Testing was carried in several labs for validation of the results regarding the accuracy of the cannabinoid profiles.

The lab results from the testing of the cannabis showed a higher cannabinoid profile from being grown in the Colombian climate when compared to the same strains grown in North American climate. The lab results, batch records and procedural archives were also submitted to the Colombian Institute of Agriculture and a day-long presentation was provided by our team. As a result of this process, we received approval for twenty novel strains (ten psychoactive, ten non-psychoactive) from the technical directorate of the ICA, representing a diverse range of chemotypes with novel cannabinoid profiles.

Our production approach is designed according to the European Pharmacopeia and Good Agricultural Collection Practices (GACP) standards. These standards meet South American, European, US and Canadian quality assurance standards for production of commercialization of cannabis.

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 In addition, in order to adhere to Canadian production regulations with respect to seed approval and strain-acclimatization, in Canada we have created research and development environments (under personal production licenses approved by the Canada Regulators) that mimic the micro-climates in Suesca, Ibague and Bucaramanga. We found Bucaramanga to have the best micro climate for production of our plant strains, and accordingly located our Colombian production there. We have stressed the strains with high temperatures and humidity levels to mimic the natural weather patterns in the areas in which we will be cultivating. This is designed to mitigate the acclimatization risk that we believe many peer companies are experiencing in Colombia.

Our Colombian Cultivation Results

On April 15, 2021 we shared an analysis of our Colombian production harvests. Over this period, we continued to harvest weekly, while adding to our inventory and expanding our analytic data set.

We have now cultivated several successive Colombian harvests with what we consider to be consistent results. The results showed increased production yield, higher cannabinoid percentages, high quality as measured by cannabinoid potency, as well and as low cost per gram production cost relative to North American production. Our lab results showed a higher cannabinoid profile from being grown in the Colombian climate when compared to similar genotypes of strains grown in North American climate. These lab results, batch records and procedural archives, were submitted to ICA during a day-long presentation by our team, which, in turn, resulted in the approval by the technical directorate of ICA for the ten THC (i.e., psychoactive) strains tested. We believe these THC strains represent a diverse range of chemotypes with novel psychoactive cannabinoid profiles.

In addition to the increase in grams produced per square meter, the cannabinoid percentages showed an increase when produced in Colombia when compared to North America. We have now cultivated several successive harvests with repeatable results. We believe these results suggest we have competitive advantages that we describe as Yield, Cannabinoid Potency, Quality, Cost, Frequency of Harvests.

Increased yield – Approaching One kilogram per Square Meter

We believe we have a proprietary approach to cultivation which fosters high yield production. Our first Colombian harvest yielded 424 grams per square meter of production space. The second harvest, 612 grams per square meter and third and fourth harvest resulted in yields of 684 grams and 893 grams per square meter respectively. The fifth and sixth harvest yielded 894 and 905 grams per square meter respectively. We believe this data shows that our team, is approaching its goal of one kilogram per square meter goal of production output.

Potency-Cannabinoid Production

In Colombia, per our internal testing we have achieved repeatable THC cannabinoid percentages of 29.08% in the psychoactive varieties and CBD percentages of 24.64%. With our continuous quality improvement program, these percentages have continued to increase. The data collected showed that these strain profiles showed a significant increase in cannabinoid content when comparing the output from our Colombian cultivation to our North American cultivation environments.

Cost of Production

Our cash cost of raw flower production is anticipated to be significanly lower per gram based on historical production of ours and other companies in the same region. This presents a potential increased margin advantage to multi-state operators within the United States if and when we are able to sell cannabis to the United States, and potentially for wholesale buyers internationally. We believe suggests we can reduce the cost of supply and improve margin for distributors in markets with costs of production between $1.00 - $2.00.

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Quality – Meeting European Pharmacopeia (International) Standards

Our cultivation and production processes meet European Pharmacopeia standards and Good Agricultural Collection Practices (GACP) standards with zero pesticide use, as they were designed from inception. These standards meet South American, European, US and Canadian quality assurance standards for production of commercialization of cannabis. Every cannabis plant is counted and audited during every day of its life cycle. Data collected includes temperature, humidity, pest and disease management indicators. All harvested material is tested for physical identity, aflatoxins, foreign body count, total aerobic plate count, total yeast, e coli, salmonella, bile tolerant gram-negative bacteria, cannabinoids, cadmium, lead, arsenic, mercury, terpenes and pesticides. All product is analyzed and approved based upon meeting thresholds for each of the testing parameters.

Frequency of Harvests: We Have Maintained Consistent Production with Weekly Rolling Harvests

Given the advantages that the equatorial climate of Colombia offers, we have been harvesting weekly, suggesting we should be able to offer reliably consistent supplies in large volumes to multiple markets simultaneously.

Our Focused Cultivation and Cannabis Plant Development Approach

We received approval from the Colombian Ministry of Agriculture (“ICA”) for 20 out of 20 plant strains (10 CBD and 10 THC). ICA reported to us in February 2021 that we were the first company to do so. Our strains have both non-psychoactive and psychoactive varieties that have been legally cultivated both in North America and now in the South America. As a result, we have activated our Colombian licenses for production, extraction, importation and exportation of psychoactive and non-psychoactive cannabis.

This is the culmination of a year-long process that began with the registration of what, in our opinion, are our novel strains with the Colombian national cultivar registry. Each strain was then germinated into plantlets in our cultivation center in Colombia. Following germination, the plants were tested in field trials over five months of field trials that included data collection, analysis and phenotyping of the strains during the vegetation life cycle. These strains were given proprietary nutrients, handled with standard operating procedures guided towards the plant flowering phase, while detailed batch record audit data was collected every day of the plant life cycle. Following flowering, the plants were harvested and tested for cannabinoid profiles and quality assurance testing parameters. The harvested material was then sent to several (accredited testing laboratories and tested by liquid chromatography testing methods for validation of the accuracy of the cannabinoid profiles.

It should be noted that production is divided into two key types of products: (i) “non-psychoactive” means the strains and genetics with THC levels of less than 1% by weight (ii) “psychoactive” means the strains that have more than 1% THC by weight. Approval of psychoactive cultivation is much more complex than the non-psychoactive approvals in Colombia. In order for a Colombian licensed producer to gain approval to sell and export, the producer must first register their genetics, then go forth and cultivate a limited number of plants as a test harvest. Following the harvest, drying and extraction processing, the product is analyzed and presented to the Colombian Ministry of Agriculture; we have received the requisite approvals from the Colombian Government for each phase of its cannabis development and cultivation.

Our Path from Testing to Approved Cannabis Exports from Colombia

On April 20, 2021 we received clearance from the Colombian authorities to export our harvested non psychoactive cannabis-based products from our first harvest. This milestone was achieved after having undergone the testing and cultivation activities described immediately above herein, and having received the ICA and Colombian Ministry of Justice approvals and licenses described below. Moreover, on April 26, 2021, we received approval to export cannabis-based products to a second international market.

In October 2020 we were granted from ICA approval to begin the seed evaluation process for our ten non-psychoactive CBD strains. In addition, on April 29, 2021, the Ministry of Justice signed a resolution authorizing us to evaluate our Company’s proprietary strains in order that we could select our best pheno-typed THC psychoactive cannabis strains with the best commercial production characteristics. Along with our previous approval for non-psychoactive evaluation, our subsidiary Allied Colombia S.A.S. could then evaluate all twenty of our psychoactive and non-psychoactive strains.

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On October 15, 2020, we received approval from the Colombian Institute of Agriculture (“ICA”) for the cultivation and commercialization of each of our ten proprietary CBD non-psychoactive strains submitted within seed evaluation process which commenced a year earlier. Such enabled us to process and sell our Colombian CBD non-psychoactive production.

On March 9, 2021, we announced that we received ICA approval for the commercialization of its our proprietary THC psychoactive cannabis strains, which was the culmination of the evaluation process for which permission was granted in late April 2020. Each of our ten psychoactive strains were approved and we have passed all of the ICA requirements to be able to cultivate the resultant plants. As a result, we have has applied for a psychoactive export quota for both 2021 and 2022 under the Colombian regulatory regime. These applications are for the oil equivalent of 10,000 kgs of flower and 85,000 kgs of flower for 2021 and 2022 respectively.

Following the first commercial harvest, and in anticipation of requisite ICA and Ministry of Justice approvals, we obtained signed sales off-take contracts with international buyers from Canada, the USA, Europe, and then applied for clearance to export.

Potential United States Production in the Event of Federal Cannabis Legalization

Our wholly owned subsidiary, Allied US Products LLC, a Nevada limited liability company, entered into a contingent asset purchase agreement (the “ Contingent Asset Purchase Agreement”) which allows for the purchase of a Nevada State US-based cannabis license from a subsidiary of Fiore Cannabis, Ltd. 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 we have 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.

We 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. We are 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 do we have material ancillary involvement in the United States. cannabis industry in accordance with the Staff Notice. While we have 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 us in any activities in the United States respecting cannabis.

Regulatory Matters

Colombia

Our cultivation operations are in Colombia and are conducted by Allied Colombia S.A.S., a wholly-owned subsidiary. As a cultivator of cannabis, the Company is substantially dependent on the licenses for cultivation, production and other regulatory activities, granted to Allied Colombia by Colombian governmental and regulatory bodies.

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The following table summarizes regulations applicable to the cultivation, fabrication, import, export and use of cannabis in Colombia.

Regulation:	Regulates:
Law 1787 of 2016	Legalizes the use of Cannabis for medical and scientific purposes
Decree 613 of 2017 modifies Decree 780 of 2016	Regulates law 1787 establishing a licensing system and process. Defines psychoactive and non-psychoactive cannabis and the quota system for psychoactive cannabis in accordance with Single Convention of Narcotics of 1961 and amendments
Resolution 577 of 2017 from the Ministry of Justice	Regulates the evaluation and control of the following licenses:  a. Seed Use b. Cultivation of psychoactive plants (High-THC cultivation license)  c. Cultivation of non-psychoactive plants (Low-THC cultivation license)  Creates requirement for security protocol
Resolution 578 of 2017 from the Ministry of Justice	Resolution 578 of 2017 from the Ministry of Justice Regulates the cost of the following licenses:  a. Seed Use  b. Cultivation of psychoactive plants (High-THC cultivation license)  c. Cultivation of non-psychoactive plants (Low-THC cultivation license)
Resolution 579 of 2017 from the Ministry of Justice	Establishes that growers that cultivate on a half a hectare area (5,000 square meters) or less are considered small and medium growers and, therefore, may access technical advice, priority allocation of quotas and purchase of their production by the processor and requires that 10 percent of the total production of the processor must come from small and medium producers.
Resolution 2892 of 2017 from the Ministry of Health	Regulates the evaluation and control of the Fabrication of Cannabis derivatives (High-THC Production License) Provides guidelines for appropriate security protocols for manufacturing cannabis derivatives including physical security, monitoring, detection, and incident reporting to authorities.
Resolution 2891 of 2017 from the Ministry of Health	Regulates the cost of the High-THC production License
Resolution 1478 of 2006 from the Ministry of Health modified by Resolution 315 of 2020.	Regulation of the control, monitoring and surveillance of the import, export, processing, synthesis, manufacture, distribution, dispensing, purchase, sale, destruction and use of controlled substances, medicines or products containing them and on those which are State Monopoly
Decree 2200 of 2005 from the Ministry of Health	Regulates pharmaceutical services including the Magistral Preparations
Guidelines for the GEP certification for Magistral Preparations with Cannabis issued the 25 of October 2019 by INVIMA	Establishes the requirements for labs to obtain the GEP certification for the fabrication of Magistral Preparations with Cannabis derivatives

Licenses

The Ministries of Health, Justice and Agriculture issued Decree 613 of 2017 to define the licenses that can be granted with respect to permissible activities related to medical cannabis that include: (i) the production of cannabis derivatives; (ii) use of seeds for sowing; (iii) planting of psychoactive cannabis plants; and (iv) planting non-psychoactive cannabis plants.

Apart from a psychoactive cannabis license, Allied Colombia has obtained licenses in each of the above categories, necessary to carry out its operations. Licenses are not transferable, interchangeable, or assignable and are valid for five years and can be renewed for additional five-year periods upon request. Each of the Licenses is current and has not expired. None of the Licenses are subject to current, pending, or compromised regulatory action.

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Strains Registration

Allied Colombia has varieties of cannabis in various stages of the registration process. Each strain, whether high or low in THC, must undergo an agronomic evaluation by the agricultural health entity - Instituto Colombiano Agropecuario (ICA). For the strains to be included in the National Registry of Cultivars, the following steps must be completed: (i) Genetic Stabilization; (ii) Agronomic Test; (iii) Phase 1 strain registry (legal document that allows the license to enter a strain in the registry); and (iv) Strain registration phase 2 (registration that allows the licensee to market any cannabis product derived from the specific strain in the registry). The harvest is also in the process of agronomic evaluation of additional strains. Based on the yields of each strain, as determined by agronomic testing, Allied Colombia may decide to register fewer strains than available. The decision to complete the registration process of a strain depends on several factors, such as biomass yields, cannabinoid profile, average cannabinoid content, resistance to pests among others as determined by agronomic tests, and the intended uses by the company.

Allied Colombia has twenty varieties of medicinal cannabis registered with the ICA and has the registration as a producer of selected seeds granted by the ICA. Upon receiving the ICA Permit, Allied Colombia commenced commercial cultivation.

In compliance with its international obligations, Colombia establishes an annual limit for the production volume of cannabis plants and derivatives, which is monitored by the International Narcotics Control Board. Based on this limit, the Colombian government established a quota system, in order to control the amount of psychoactive cannabis production per license. This means that for the Psychoactive Cannabis License, licensees must first apply for a specific crop or manufacturing quota, before beginning production.

 According to publicly available information from ICA, as of December 2020, there are 650 companies with license for the production of Cannabis derivatives in Colombia. All companies are at different stages and many are not moving forward. Approximately 10% of these companies have passed their ICA seed evaluation and only a handful of companies have been cleared to export product. Allied Colombia is now one of the Colombian companies cleared to export to more than one international market.

Protection of Environment and Human Health and Safety

We are subject to various Colombian federal, state and local and regulations relating to the protection of the environment and human health and safety, including those governing the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites and the maintenance of a safe workplace. Some of our operations include the use, generation and disposal of hazardous materials. We also plan to acquire ownership in new facilities and properties, some of which may have had a history of commercial or other operations. We may, in the future, incur liability under environmental statutes and regulations with respect to contamination of sites we own or operate, including contamination caused by prior owners or operators of such sites, abutters or other persons, and the off-site disposal of hazardous substances. Violations of these laws and regulations may result in substantial civil penalties or fines.

United States

The United States health care industry is subject to extensive regulation by federal, state and local governments. Government regulation affects our businesses in several ways, including requiring licensure or certification of facilities. Our ability to conduct our business and to operate profitability depends in part upon obtaining and maintaining all necessary licenses and other approvals; and complying with applicable healthcare laws and regulations.

Regulation of CBD (Medical Cannabidiol Product)

The United States Agricultural Improvement Act of 2018 (the “2018 Farm Act”) removed hemp, defined as cannabis with less than 0.3% of THC, from Schedule 1 status under the Controlled Substances Act (“CSA”), and Federally legalized the cultivation and sale of hemp, subject to compliance with certain federal requirements and state laws. THC is the psychoactive component of plants in the cannabis family generally identified as marihuana or marijuana. Our medical CBD products are Federally legal in the United States in that they contain less than 0.3% THC in compliance with the 2018 Farm Act guidelines and have no psychoactive effects on our patients and customers. However, there can be no assurance that the 2018 Farm Act will not be repealed or amended such that our products containing hemp-derived CBD would once again be deemed illegal under Federal law in the United States.

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The 2018 Farm Act also shifted regulatory authority from the Drug Enforcement Administration to the Department of Agriculture. The 2018 Farm Act did not change the United States Food and Drug Administration’s (“FDA”) oversight authority over CBD products. The 2018 Farm Act delegated authority to regulate and limit the production of hemp and hemp derived products to the state governments. Although many states have adopted laws and regulations that allow for the production and sale of hemp and hemp derived products under certain circumstances, no assurance can be given that such laws of the several states will not be repealed or amended such that our intended products containing hemp-derived CBD would once again be deemed illegal, which in turn would render such intended products illegal in those states under federal law even if the federal law is unchanged. In the event of either repeal of Federal or State laws and regulations, or amendments thereto that are adverse to our intended medical CBD products, we may be restricted or limited with respect to those products that we may sell or distribute, which could adversely impact our intended business plan with respect to such intended products.

Additionally, the FDA has indicated its view that certain types of products containing CBD may not be permissible under the United States Federal Food, Drug and Cosmetic Act (“FDCA”). The FDA’s position is related to its approval of Epidiolex, a marijuana-derived prescription medicine to be available in the United States. The active ingredient in Epidiolex is CBD. On December 20, 2018, after the passage of the 2018 Farm Bill, FDA Commissioner Scott Gottlieb issued a statement in which he reiterated the FDA’s position that, among other things, the FDA requires a cannabis product (hemp-derived or otherwise) that is marketed with a claim of therapeutic benefit, or with any other disease claim, to be approved by the FDA for its intended use before it may be introduced into interstate commerce and that the FDCA prohibits introducing into interstate commerce food products containing added CBD, and marketing products containing CBD as a dietary supplement, regardless of whether the substances are hemp-derived. Although we believe our existing and planned CBD product offerings comply with applicable federal and state laws and regulations, legal proceedings alleging violations of such laws could have a material adverse effect on our business, financial condition and results of operations.

Marijuana (Cannabis)

Marijuana (Cannabis) in the United States, cannabis is regulated at the both the Federal and State levels. Notwithstanding the permissive regulatory environment of cannabis in some states, cannabis continues to be categorized as a Schedule I controlled substance under the Controlled Substances Act (“CSA”), making it illegal under Federal law in the United States to cultivate, distribute, or possess cannabis. Certain states may have enacted statutes and regulations take a permissive approach to medical and/or recreational use of cannabis, the CSA may still be enforced by U.S. Federal law enforcement officials against citizens and businesses of those states for activity that is legal under state law.

As a result of the conflicting views between state legislatures and the U.S. federal government regarding cannabis, investments in cannabis businesses in the United States are subject to inconsistent legislation and regulation. The response to this inconsistency was first addressed in August 2013 when then Deputy Attorney General James Cole authored a memorandum (the “Cole Memorandum”), addressed to all U.S. district attorneys acknowledging that notwithstanding the designation of cannabis as a controlled substance at the federal level in the United States, several U.S. states have enacted laws relating to cannabis.

The Cole Memorandum outlined certain priorities for the Department of Justice relating to the prosecution of cannabis offenses. In particular, the Cole Memorandum noted that in jurisdictions that have enacted laws legalizing cannabis in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale and possession of cannabis, conduct in compliance with those laws and regulations is less likely to be a priority at the federal level. Notably, however, the Department of Justice has never provided specific guidelines for what regulatory and enforcement systems it deems sufficient under the Cole Memorandum standard.

In light of limited investigative and prosecutorial resources, the Cole Memorandum concluded that the Department of Justice should be focused on addressing only the most significant threats related to cannabis. States where medical cannabis had been legalized were not characterized as a high priority. On January 4, 2018, then U.S. Attorney General Jeff Sessions issued a memorandum (the “Sessions Memorandum”) that rescinded the Cole Memorandum. The Sessions Memorandum rescinded previous nationwide guidance specific to the prosecutorial authority of U.S. attorneys relative to cannabis enforcement on the basis that they are unnecessary, given the well-established principles governing federal prosecution that are already in place. Those principles require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution and the cumulative impact of particular crimes on the community.

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As a result of the Sessions Memorandum, federal prosecutors are now free to utilize their prosecutorial discretion to decide whether to prosecute cannabis activities despite the existence of state-level laws that may be inconsistent with federal prohibitions. No direction was given to federal prosecutors in the Sessions Memorandum as to the priority they should ascribe to such cannabis activities, and therefore it is uncertain how active federal prosecutors will be in relation to such activities. Due to the ambiguity of the Sessions Memorandum, there can be no assurance that the federal government will not seek to prosecute cases involving cannabis businesses that are otherwise compliant with state law.\

On January 15, 2019, U.S. Attorney General nominee William P. Barr suggested a different approach to cannabis regulation than Sessions (his predecessor) during his confirmation hearing before the Senate Judiciary Committee. Mr. Barr stated that his approach to cannabis regulation would be not to upset settled expectations that have arisen as a result of the Cole Memorandum, that it would be inappropriate to upset the current situation as there has been reliance on the Cole Memorandum and that he would not be targeting companies that have relied on the Cole Memorandum and are complying with state laws with respect to the distribution and production of cannabis. While he did not offer support for cannabis legalization, Mr. Barr did emphasize the need for the U.S. Congress to clarify federal laws to address the untenable current situation which has resulted in a backdoor nullification of federal law.

Additionally, under U.S. federal law it may, under certain circumstances, be a violation of federal money laundering statutes for financial institutions to accept any proceeds from cannabis sales or any other Schedule I controlled substances. Certain Canadian banks are similarly reluctant to transact business with U.S. cannabis companies, due to the uncertain legal and regulatory framework characterizing the industry at present. Banks and other financial institutions could be prosecuted and possibly convicted of money laundering for providing services to U.S. cannabis businesses. Under U.S. federal law, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan or any other service could be found guilty of money laundering or conspiracy. Despite these laws, in February 2014, the Financial Crimes Enforcement Network (“FCEN”) of the U.S. Treasury Department issued a memorandum (the “FCEN Memo”) providing instructions to banks seeking to provide services to cannabis-related businesses. The FCEN Memo states that in some circumstances, it is permissible for banks to provide services to cannabis-related businesses without risking prosecution for violation of federal money laundering laws. It refers to supplementary guidance that Deputy Attorney General Cole issued to federal prosecutors relating to the prosecution of money laundering offenses predicated on cannabis-related violations of the CSA. It is unclear at this time whether the Biden administration will follow the guidelines of the FCEN Memo.

As previously discussed herein, we plan on expanding our activities to include cannabis and psilocybin product sales and distribution in the United States if and when such activities are legalized by the Federal Government of the United States.

If Federally legalized in the United States, we expect that our cannabis products will be specifically focused on cannabis for use (i) as a treatment aid; (ii) to provide relief for a large array of neurological and musculoskeletal system disorders; and (iii) as an alternative option for healthcare providers in place of prescribing opioids to patients. Offering our patients access to non-hallucinogenic and non-addictive natural remedies, under required clinical oversight policies and procedures as they relate to medicinal cannabis, combined with our existing clinic-based treatment protocols may allow us to provide a unique model that we do not believe is readily available in the United States.

Other Medical Practice Regulation

The United States healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments. Comprehensive statutes and regulations govern the manner in which we may provide cannabis products, our contractual relationships with our providers, vendors and clients, our marketing activities, and other aspects of our planned operations in the event such activities become Federally legal in the United States, of which there can be no assurance. Of particular importance are:

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· The Federal Anti-Kickback Statute that prohibits the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback, rebate or other remuneration for referring an individual, in return for ordering, leasing, purchasing or recommending or arranging for, or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by any federal healthcare program, such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

· The criminal healthcare fraud provisions of the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their implementing regulations (collectively, “HIPAA”), and related rules which prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying, concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent, to violate it to have committed a violation.

· Similar state law provisions pertaining to anti-kickback, and false claims issues.

· State laws that prohibit general business corporations, such as us, from practicing medicine, controlling physicians’ medical decisions, or engaging in certain practices such as splitting fees with physicians.

· Laws that regulate debt collection practices as applied to our debt collection practices.

Failure to comply with these laws and other laws can result in civil and criminal penalties such as fines, damages, overpayment, recoupment, imprisonment, and loss of status. The risk of our being found in violation of these laws and regulations is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are sometimes open to a variety of interpretations. Our failure to accurately anticipate the application of these laws and regulations to our business or any other failure to comply with applicable regulatory requirements could impose liability on us and negatively affect our business. Any action against us for violation of these laws or regulations could cause us to incur significant legal expenses, divert our management’s attention from business operations, and result in adverse publicity.

Packaging, Labeling and Advertising

The processing, formulation, manufacturing, packaging, labeling, advertising and distribution of our products are subject to federal laws and regulation by one or more federal agencies, including the FDA, the FTC, HHS, the USDA and the United States Environmental Protection Agency (the “EPA”). These activities are also regulated by various state, local and international laws and agencies of the states and localities in which our products are sold. Regulations may prevent or delay the introduction, or require the reformulation, of our products, which could result in lost sales and increased costs to the Company. A regulatory agency may not accept the evidence of safety for any new ingredients that we may want to market, or may determine that a particular product or product ingredient presents an unacceptable health risk. Regulatory agencies may also determine that a particular statement of nutritional support on our products, or a statement that we want to use on our products, is an unacceptable drug claim or an unauthorized version of a food “health claim,” or that particular claims are not adequately supported by available scientific evidence. Any such regulatory determination could prevent us from marketing particular products or using certain statements on those products, which could adversely affect our sales and results of operations.

Canada

On October 17, 2018 marijuana in Canada became Federally legal.

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According to Canadian Federal law, adults are legally permitted to purchase, use, possess, and grow recreational cannabis. The legal age and cultivation laws vary depending on the province. The minimum legal age is 19 in Canada except in the provinces of Alberta and Quebec where it is 18.

The maximum amount one is allowed to possess from a recreational source is 30 grams in all Canadian provinces, but in most locations, one is allowed to have larger amounts at home. In British Columbia for example, a person may possess up to 1,000 grams of marijuana at home. There is no limit to home possession in Manitoba. Those with a prescription are authorized to possess up to a five-day amount of their prescribed amount of medical cannabis.

Peru

We have been authorized to export our cannabis products from Colombia to Peru. Medical marijuana possession is legal, although recreational possession is not. In October 2017, Peru’s Congress passed a bill to legalize medical marijuana allowing cannabis oil to be produced, imported and commercialized. Additionally, although the cultivation and sale of cannabis remains illegal, the possession of small amounts of cannabis for personal usage has been decriminalized in Peru. According to Article 299 of the Peruvian Penal Code, one may legally carry eight grams of marijuana or two grams of its derivatives, for “your own and immediate consumption”.

Ukraine

Cannabidiol (CBD) products are legal in Ukraine if their THC concentration is lower than 0.08 percent. It is currently illegal to process hemp for CBD extraction in Ukraine. There are some local food processors who use hemp seeds in different food products which are sometimes marked as CBD products, but there is no CBD production in Ukraine.

Legal Proceedings

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

Employees

As of the date of this Offering Circular, the Company has approximately 15 contracted employees. The Company’s subsidiary Allied Colombia S.A.S. employs more than 100 workers. The Company does not intend to pay a full salary to any of its executives or management at this time, but has entered into certain consulting agreements. (See “Executive Compensation”). The Company believes that its relations with its employees are good.

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DESCRIPTION OF PROPERTY

Bucamaranga, Colombia

The Company’s 100% owned subsidiary, Allied Colombia, S.A.S., has secured vast agricultural land extension in both Bucamaranga and Ibagué, both key production farming region of Colombia. Both areas have the benefit of having 12 hours of sunlight most days year-round, temperatures oscillating between 20-30 degrees Celsius, with constant humidity. This environment and situation ideal to growing cannabis at low cost. The Ibague land has an area of 1,400 hectares (about 3,450 acres), all with water rights, an electrical substation, and great paved access to the property. This is situated in close proximity to the free trade zone. The Company currently has lease arrangement for 5 hectares and a cost of $1,600 per month with an option to purchase. Further, the Company has the ability to expand its leased land footprint to the adjacent 24 hectare property.

Kelowna, British Columbia, Canada

Our corporate headquarters are located at 1405 St. Paul Street, #201, Kelowna, BC V1Y 2E4 Canada. At that location Allied leases an office space within which Allied Executives can host virtual meetings via zoom, host team days and operate general corporate affairs. There is working space for Allied corporate personnel and several meeting rooms that can be rented from $10.00 per hour to a large hall that can be rented for $50.00 per hour. Due to COVID, this office closed for 12 months between March 2020 and March 2021. During this time, Allied continued to maintain the office space but very much functioned as a virtual office. The majority of Allied’s activities are international in nature so this closure did not largely affect corporate activities.

In order to adhere to Canadian production regulations with respect to seed approval and strain-acclimatization, in our facility in Kelowna Canada we have created research and development environments (under personal production licenses approved by the Canada Regulators) that mimic the micro-climates in Suesca, Ibague and Bucaramanga.

In June 2019, AM Biosciences signed the production and manufacturing contract to begin the manufacturing of the full building for what was anticipated to be a Canada extraction and production facility. This building will be a fully scalable, modular building. The Company made an upfront payment of $230,000 in June 2019, an additional payment of $903,385 in August 2019 and an additional payment of $92,000 in March 2020. At February 28, 2022, Company had deposits of $2,656.695 (August 31, 2020 - $2,600,720) to purchase prefabricated buildings. As of February 28, 2022, the Company had not yet received the building and the amounts have been recorded as deposits. In early 2021 the Company determined to use this building as part of its United States operations if and when it can legally operate in the United States.

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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 fiscal years ended August 31, 2021 and 2020 and for the six months ended February 28, 2022 and 2021.

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, and Allied US Products, LLC. 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)1.

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 significantly lower anticipated cash cost per gram 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.

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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.

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 interim 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 February 28, 2022, and the results of its operations for the six months ended February 28, 2022, and cash flows for the six months ended February 28, 2022. The results of operations for the period ended February 28, 2022 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, 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 February 28, 2022 and August 30, 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.

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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.

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.

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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 February 28, 2022 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

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.

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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).

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.

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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.

r) Recent accounting pronouncements

The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the six months ended February 28, 2022, are of significance or potential significance to the Company.

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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 six months ended February 28, 2022 of $12,393,226, has generated minimal revenue and as at February 28, 2022 has a working capital deficit of $4,884,084. 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 Results for the Fiscal Year ended August 31, 2021 compared to the Fiscal Year Ended August 31, 2020

Net Revenues

For the fiscal year ended August 31, 2021 the Company had $12,518 in revenues. For the fiscal year ended August 31, 2020, the Company had no revenues. We have a very limited operating history upon which to base an evaluation of our business and prospects. Our short operating history may hinder our ability to successfully meet our objectives and makes it difficult for potential investors to evaluate our business or prospective operations.

Expenses

For the fiscal year ended August 31, 2021 we had total operating expenses of $11,485,246, compared to total expenses of $6,607,763 for the fiscal year ended August 31, 2020. Of the operating expense for 2021 a total of $7,656,465 (2020 – $3,593,246) was operating expense and the remainder was non-recurring expenses the largest of which was an impairment of intangible assets related to licenses of $2,687,695 (2020 - $2,230,904) and accretion of $654,760 (2020 - $227,313). The operating expenses consisted principally of consulting fees in the development of the Company’s cannabis business, general office expenses, professional fees and rent.

Net Income (Loss)

For the fiscal year ended August 31, 2021, the Company had a net operating loss of $11,485,246 compared to a net loss of $6,607,763 for the fiscal year ended August 31, 2020. This was principally related to the expenses referenced in the previous paragraph.

Comparison of Unaudited Results for the Six Months Ended February 28, 2022 compared to the Six Months Ended February 28, 2021.

Sales and Revenue

For the six-month period ended February 28, 2022 we had $42,556 in revenue compared to $5,260 for the six month period ended February 28, 2021 . 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 six month period ended February 28, 2022 totaled $12,191,667 compared to $3,446,1252 for the six month period ended February 28, 2021. Operating expenses for the six month period ended February 28, 2022 is mainly a result of stock-based compensation of $4,584,inventory write-off to net realizable value of $471,549, office and miscellaneous expense of $704,913, professional fees of $554,054, and interest expense of $352,726. Operating expenses for the six month period ended February 28, 2021 is mainly a result of office and general expense of $572,719, professional fees of $372,779 and stock based compensation of $1,380,120 for options . The increase in operating expense during the quarter ended February 28, 2022 is principally the result of an increase in stock-based compensation of $8,169,817, which was necessary to develop our product lines and inventory write-off to net realizable value of $471,549.

Operating expenses for the six month period ended February 28, 2022 totaled $12,191,667 compared to $3,446,1252 for the six month period ended February 28, 2021 . Operating expenses for the six month period ended February 28, 2022 is mainly a result of stock-based compensation of $4,584,425 for bonus shares, stock-based compensation of $3,584,392 for consulting services, stock based compensation of $1,233,938 for options,  inventory write-off to net realizable value of $471,549 , office and miscellaneous expense of $704,913 , professional fees of $554,054 , and interest expense of $352,726 . Operating expenses for the six month period ended February 28, 2021 is mainly a result of office and general expense of $572,719 , professional fees of $372,779 and stock based compensation of $1,380,120 for options. The increase in operating expense during the quarter ended February 28, 2022 is principally the result of an increase in stock-based compensation of $8,169,817, which was necessary to develop our product lines and inventory write-off to net realizable value of $471,549.

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Net Loss

As a result of the changes described above, net loss from operations after income taxes increased to $12,393,226 during the six months ended February 28, 2022 compared to $3,895,298 during the six month period ended February 28, 2021.

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.

	Year Ended August 31, 2021			Six Months Ended   February 28, 2022
Cash used in operating activities	$	(3,956,255	)	$	(2,450,199	)
Cash from financing activities		4,616,094		$	3,670,211
Cash from (used in) investing activities	$	(274,908	)	$	(982,955	)
Change in cash during the period	$	384,931		$	237,057
Effect of exchange rate change	$	(59,153	)	$	(38,270	)
Cash, beginning of period	$	419,825		$	94,047
Cash, end of period	$	-		$	148,984

As of February 28, 2022 , the Company had $957,205 in current assets, consisting of $618,612 in cash, $171,511 in inventory, $33,813 in receivables, and $133,269 in prepaid expenses.  Long-term assets mainly include deposits and advances of $2,951,779 (principally related to our building to be located in Nevada), property, plant and equipment of $1,422,739, right-of-use assets of $225,335 and intangible assets of $50,974.

To date, the Company has financed its operations through equity sales and through the sale of secured 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.

Secured Convertible Notes

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.

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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 originally matured 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. On June 30, 2020, the Company repaid $200,000 of the $600,000 note which left $200,000 outstanding on each note. On July 1, 2020, the Company amended 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 be 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. On November 1, 2020, the Company again amended 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. On March 31, 2021, the Company again amended 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. On October 1, 2021, the Company again amended 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. During the three months ended November 30, 2021, the Company made interest payments of $20,000.

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.

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.

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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 was due on demand on or before March 31, 2022 for no additional consideration.

On March 26, 2021, the Company issued a convertible note with a face value of $18,000 and warrants to purchase 18,000 shares of the Company’s common stock at $0.50 per share for 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. 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.

On March 26, 2021, the Company issued a convertible note with a face value of $100,000 and warrants to purchase 100,000 shares of the Company’s common stock at $0.50 per share for 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.

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.

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. 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.

On April 30, 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 $1.00 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. 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.

On July 25, 2021, the Company issued a convertible note with a face value of $35,000. 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. 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.

On July 25, 2021, the Company issued a convertible note with a face value of $15,000. 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. 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.

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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

On December 23, 2021, the Company issued a convertible note with a face value of $100,000. The Note bears interest at 10% per annum and is due on demand 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. 

On January 11, 2022, the Company issued a convertible note with a face value of $150,000. The Note bears interest at 10% per annum and is due on demand 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. 

On January 31, 2022, the Company issued a convertible note with a face value of $100,000. The Note bears interest at 10% per annum and is due on demand after July 31, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to July 31, 2022 at a conversion price of $1.25 per share. 

Equity Transactions

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).

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.

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.

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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.

On October 20, 2021, the Company issued 3,853,121 units at $0.75 per unit for proceeds of $2,889,841, of which $865,467 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 $85,126 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.

On November 30, 2021, the Company issued 8,268 shares as consideration for extending the maturity date of a convertible note.

On January 20, 2022, the Company issued 75,000 units at $0.75 per unit for proceeds of $56,250 which was received during the year ended August 31, 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.

On January 20, 2022, the Company issued 46,834 units at $0.75 per unit for proceeds of $35,126 which was received during the period ended 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. The Company adjusted the effective issuance date to October 20, 2021.

On January 24, 2022, the Company issued 36,000 units at $0.75 per unit for proceeds of $27,000. 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. The Company adjusted the effective issuance date to October 20, 2021. The Company adjusted the effective issuance date to November 24, 2021.

On January 28, 2022, the Company issued 66,667 units at $0.75 per unit for proceeds of $50,000 which was received during the period ended 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.

On February 7, 2022, the Company issued 66,667 units at $0.75 per unit for proceeds of $50,000. 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.

On February 10, 2022, the Company issued 33,334 units at $0.75 per unit for proceeds of $25,000. 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.

On February 10, 2022, the Company issued 80,000 units at $1.25 per unit for proceeds of $100,000. 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 incurred finder’s fee of $8,000.

On February 20, 2022, the Company issued 40,000 units at $1.25 per unit for proceeds of $50,000. 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 incurred finder’s fee of $4,000.

On February 21, 2022, the Company issued 300,000 units at $1.25 per unit for proceeds of $375,000. 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 incurred finder’s fee of $30,000.

On February 22, 2022, the Company issued 80,000 units at $1.25 per unit for proceeds of $100,000. 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 incurred finder’s fee of $8,000.

On February 24, 2022, the Company issued 41,600 units at $0.75 per unit for proceeds of $31,200. 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.

On February 24, 2022, the Company issued 40,000 units at $1.25 per unit for proceeds of $50,000. 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 incurred finder’s fee of $4,000.

On February 25, 2022, the Company issued 96,000 units at $1.25 per unit for proceeds of $120,000. 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 incurred finder’s fee of $9,600.

On February 28, 2022, the Company issued 120,000 units at $1.25 per unit for proceeds of $150,000. 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 incurred finder’s fee of $12,000.

During the six months ended February 28, 2022, the Company issued 728,001 common shares to certain investors for no consideration by error. The Company is in the process of retracting the shares.

At February 28, 2022, the Company had received $20,800 in cash for share subscriptions. In connection with the financing, the Company incurred finder’s fee of $2,000.

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.

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.

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Capital Expenditures

As of February 28, 2022 the company had purchased property plant and equipment of $1,422,739 and paid net cash of $2,951,779 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 February 28, 2022, Company had deposits of $2,656,695 to purchase prefabricated buildings. As of February 28, 2022, 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 $31,787,038 at February 28, 2022 and a net loss of $12,393,226 for the six months ended February 28, 2022 .

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.

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.

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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 February 28, 2022. 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 Offering Circular 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 February 28, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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DIRECTORS AND EXECUTIVE OFFICERS

The table below reflects the Company’s executive officers and directors. There is no agreement or understanding between the Company and each current or proposed director or executive officer pursuant to which he was selected as an officer or director. The address for each such officer and director is 1405 St. Paul St., Suite 201, Kelowna, BC Canada V1Y 9N2.

Name	Positions and Offices
Calum Hughes	Chairman of the Board, Chief Executive Officer and Director
Paul Bullock	Chief Operating Officer and Director
Jim Smeeding	Vice President of Pharmaceuticals and Director
Ryan Maarschalk	Chief Financial Officer

The Directors and Officers named above will serve until the next annual meeting of the stockholders or until their respective resignation or removal from office. Thereafter, Directors are anticipated to be elected for one-year terms at the annual stockholders’ meeting. Officers will hold their positions at the pleasure of the Board of Directors, absent any employment agreement, of which none currently exists or is contemplated.

Calum Hughes, Chairman of the Board, Chief Executive Officer, Director

Calum Hughes has been responsible for leading activities relating to large scale Quality Assurance and Evaluation of Health Programs. He is skilled in the Project Management Institute’s Methodology© for managing projects through mitigating risk, maximizing communication and ensuring project success.

In the past, Calum has created and presented at top level educational presentations for Healthcare Executives, Business Professionals, Psychiatrists, Nursing staff, General Practitioners, Internal Medicine, ObGyn, and Cardiologists. He has worked as an Adjunct Professor for the UBC Faculty of Health and Social Development, as a Consultant to several large for-profit and non-profit Health Organizations and Nutraceutical companies.

Calum, has held an appointment of Adjunct Professor for the University of British Columbia Faculty of Health and Social Development, and is a Registered Kinesiologist with the British Columbia Association of Kinesiologists. He has also completed a Post Baccalaureate Diploma in Gerontology. Calum holds certification in designation of Project Management Professional (PMP) from the Project Management Institute (Pennsylvania, USA). He achieved a 98% (certified with Gold Standing) in his studies towards a LEAN Greenbelt in 2009, and is also working towards his Doctorate Degree with Royal Roads University.

Calum’s past clinical experience includes functioning as a health care provider for patients with co-morbid chronic diseases, acute disability and workplace health & wellness. Working as a clinician, Calum has created Physical & Functional Diagnostic Tools and Chronic Disease Management Protocols for Cardiovascular, Orthopedic, Obesity, Respiratory, Brain Injury, and Cerebrovascular disease. He has created teaching resources and presented at top-level educational presentations regarding Change Management, Quality Improvement, Personality & Communication, Project Management and Lean Manufacturing Method for Healthcare.

Paul James (“Jim”) Bullock, Chief Operating Officer and Director

Born and raised in Kelowna, BC, Canada, Paul Bullock comes from one of Kelowna’s oldest pioneer families, which possesses a rich history in both agricultural innovation and entrepreneurial spirit. Jim brings 10 years of experience to the Allied team from MMAR, MMPR, and ACMPR cannabis cultivation, genetics, compliance and facility design.

Previous to joining Allied, Jim owned and operated a company specializing in both personal and corporate finance for clients, which offered exportable services in overseas and offshore markets. Earlier, Jim worked in the oil and gas industry specializing in offshore construction. Jim also owned and operated an agricultural management and consulting firm, which renovated and replanted over 2,500 acres of orchard and vineyard in the Okanagan Valley. He was also the Kelowna site operations manager for Kettle Mountain Ginseng, one of the pioneers in the British Colombia ginseng industry.

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Jim Smeeding, Vice President of Pharmaceuticals and Director

Jim Smeeding is a Registered Pharmacist (RPh) from the State University of New York, and also holds a Masters degree in Business Administration (MBA) from the University of Texas (with an emphasis in pharmaceutical marketing, organizational strategies and pharma sales management). He is the Executive Vice President of CP Pharmaceutical International: a division of CP Global Health (Hong Kong and Texas).

Some of Mr. Smeeding’s past experience has included working as the Executive Director of the National Association of Specialty Pharmacy (NASP), a founder of the Center for Pharmacoeconomic Studies at the University of Texas College of Pharmacy and a founder and President of the International Society of Pharmacoeconomics and Outcomes Research (ISPOR).

Within Mr. Smeeding’s specialty pharmacy consultancy practice, Project Rx, Mr. Smeeding has offered management services to hospitals and pharmaceutical companies throughout the US. Mr. Smeeding has also been active in other Cannabis Based Medicines (CBM) research as a founder of CannaPharma Rx and has authored more than 85 peer-reviewed publications and has given hundreds of presentations.

Mr. Smeeding has worked with many major pharmaceutical companies and is aa founder and president of Indication Biosciences; an early stage drug discovery company that is examining the use of CBD with statin agents to safely lower lipid anomalies. Mr. Smeeding also was the Executive VP and founder of Engaged Media; a technology driven patient engagement solution used in multiple pharmaceutical co-pay programs that was acquired in May of 2018.

As President of the National Payer Roundtable, Mr. Smeeding is in regular contact with the Chief Medical Officers and Chief Pharmacy Officers of national and regional health insurers, as well as, pharmaceutical executives.

Ryan Maarschalk, Bsc, CPA, Chief Financial Officer

Mr. Maarschalk is a driven leader with multifaceted communication skills, and a proven track record of successfully working with senior leadership to achieve growth. Mr. Maarschalk uses his entrepreneurship experience to communicate financial information for real life decision making. Some of Mr. Maarschalk’s past experience includes merger and acquisition activities to successfully close the acquisition of IMPACT Radio Accessories to private equity for $23,000,000, building extraction and cultivation facilities in Las Vegas with 1933 Industries (TGIF.CSE). Mr. Maarschalk has worked with variety of companies since becoming a consulting CFO, including micro- mobility, wineries, cannabis and real estate. Mr Maarschalk has also worked as a Business Valuation Associate with MVI Valuations & Planning, Senior Accountant with Crowe MacKay LLP (accounting firm) and has been a Co-Founder / Board Member of various companies over the years.

Mr. Maarschalk is a Chartered Professional Accountant (CPA) Institute of Chartered Professional Accountants. He has a Bachelor of Biomedical Science BSc. (Hons) and is a Chartered Business Valuator (CBV) candidate (CICBV Canadian Institute of Business Valuators).

Mr. James McMillan - Chief Commercial Officer

Jay McMillan is an accomplished corporate development and M&A executive with a passion for product innovation. Leveraging 25 years of international markets experience, Jay has an extensive background in new market development and strategic engagements with Fortune 500 organizations in Consumer-Packaged Goods, Technology, and Consumer Electronics spaces. His most recent role was as Chief Development Officer with HEXO Corp, a leading Licensed Producer in Canada, where he played a pivotal role over the last 6.5 years in helping to grow HEXO to a top 3 licensed producer by market share. There he headed up identifying Strategic Business Development opportunities for both M&A, joint ventures and key partnerships in addition to being responsible for R&D, Innovation and Commercialization. The expanding cannabis market continues to be his playground as a Principle with UberGreen, a cannabis consulting firm focused on growth strategies, market consolidation and product development.

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Dr. Terry Johnston, Medical Advisor to the Board

Dr Johnston is a family physician with a practice of 47 years. Dr. Johnston is an Occupational Physician specializing in occupational medicine for Transport Canada Aviation & Marine. Dr. Johnston also works with Worksafe BC for commercial dive medicine as well as medical advice for Canada’s Driver Certification Board of Canada, and Oil and Gas UK for off-shore medicine. He is an FAA class 1 examiner as well as a fitness examiner to work with candidates for pre-placement medicals. Dr. Johnson is a specialist in audiometry, resting and stress EKGs, drug testing under National Institute for Occupational Safety & Health guidelines, Chester fitness test, Farnsworth and Titmus visual screening, and the Visia Facial Skin assessment. Dr Johnston is an expert in cannabinoid medicine with a special interest in pharmaceutical development and product discovery and evolution.

Committees of the Board of Directors

Our board of directors will prior to this offering establish an audit committee, a compensation committee and a nominating and governance committee. Each of these committees will operate under a charter that will be approved by our board of directors prior to this offering.

Audit Committee. Our audit committee consists of all three of directors. We intend to engage independent directors who will subsequently be on this committee. The audit committee consists exclusively of directors who are financially literate. In addition, Mr. Bullock will be considered an “audit committee financial expert” as defined by the SEC’s rules and regulations.

The audit committee responsibilities include:

· overseeing the compensation and work of and performance by our independent auditor and any other registered public accounting firm performing audit, review or attestation services for us;

· engaging, retaining and terminating our independent auditor and determining the terms thereof;

· assessing the qualifications, performance and independence of the independent auditor;

· evaluating whether the provision of permitted non-audit services is compatible with maintaining the auditor’s independence;

· reviewing and discussing the audit results, including any comments and recommendations of the independent auditor and the responses of management to such recommendations;

· reviewing and discussing the annual and quarterly financial statements with management and the independent auditor;

· producing a committee report for inclusion in applicable SEC filings;

· reviewing the adequacy and effectiveness of internal controls and procedures;

· establishing procedures regarding the receipt, retention and treatment of complaints received regarding the accounting, internal accounting controls, or auditing matters and conducting or authorizing investigations into any matters within the scope of the responsibility of the audit committee; and

· reviewing transactions with related persons for potential conflict of interest situations.

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Compensation Committee. Our compensation committee consists of all three of our directors. The committee has primary responsibility for:

· reviewing and recommending all elements and amounts of compensation for each executive officer, including any performance goals applicable to those executive officers;

· reviewing and recommending for approval the adoption, any amendment and termination of all cash and equity-based incentive compensation plans;

· once required by applicable law, causing to be prepared a committee report for inclusion in applicable SEC filings;

· approving any employment agreements, severance agreements or change of control agreements that are entered into with the CEO and certain executive officers; and

· reviewing and recommending the level and form of non-employee director compensation and benefits.

Nominating and Governance Committee. The Nominating and Governance Committee consists of all three of our directors. The Nominating and Governance Committee’s responsibilities include:

· recommending persons for election as directors by the stockholders;

· recommending persons for appointment as directors to the extent necessary to fill any vacancies or newly created directorships;

· reviewing annually the skills and characteristics required of directors and each incumbent director’s continued service on the board;

· reviewing any stockholder proposals and nominations for directors;

· advising the board of directors on the appropriate structure and operations of the board and its committees;

· reviewing and recommending standing board committee assignments;

· developing and recommending to the board Corporate Governance Guidelines, a Code of Business Conduct and Ethics and other corporate governance policies and programs and reviewing such guidelines, code and any other policies and programs at least annually;

· making recommendations to the board as to determinations of director independence; and

· making recommendations to the board regarding corporate governance based upon developments, trends, and best practices.

The Nominating and Governance Committee will consider stockholder recommendations for candidates for the board of directors.

Our bylaws provide that, in order for a stockholder’s nomination of a candidate for the board to be properly brought before an annual meeting of the stockholders, the stockholder’s nomination must be delivered to the Secretary of the Company no later than 120 days prior to the one-year anniversary date of the prior year’s annual meeting.

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Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Following this offering, a copy of the code will be made available on the Corporate Governance section of our website, which is located at www.allied.health. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K filed with the SEC.

Involvement in Certain Legal Proceedings

No director, executive officer, promoter or control person of Allied has, during the last ten years: (i) been convicted in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law, nor (iii) any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto.

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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Summary Compensation Table

The following table sets forth the total compensation paid to, or accrued by, the Named Executive Officers and any other employees earning over $100,000 per year from August 31, 2019 to date. No restricted stock awards, long-term incentive plan payout or other types of compensation were paid to these executive officers during those fiscal years.

Name	Year	Fees Earned or paid in cash ($)		Stock awards ($)		Option Awards ($)		Non-equity incentive plan compensation ($)		Change in pension value and nonqualified deferred compensation earnings		All other compensation ($)		Total ($)
Calum Hughes	2021	$	118,756	$	-	$	-		-		-		-	$	118,756
	2020	$	169,460	$	-	$	-		-		-		-	$	169,460
	2019	$	102,250	$	-	$	-		-		-		-	$	102,250
Paul Bullock	2021	$	101,563	$	-	$	-		-		-		-	$	101,563
	2020	$	159,193	$	-	$	-		-		-		-	$	159,193
	2019	$	60,324		-			$	-		-			$	60,324
Jim Smeeding	2021	$	75,000		-	$	600,000		-					$	75,000
	2020	$	20,000		-	$	600,000		-					$	620,000
	2019	$	0	$	-	$	-		-		-		-	$	0
Ryan Maarschalk	2021	$	96,530	$	-	$	600,000		-		-		-	$	96,530
Ryan Maarschalk	2020	$	36,768	$	-	$	600,000		-		-		-	$	636,768

Although compensation has been paid to our officers and directors on behalf of Advanced Biosciences, no compensation has been paid to date from Allied Corp. to any of our existing officers and directors. 

Employment Agreements

The Company is not a party to any employment agreement with its Officers or its Directors at this time. At present, the Company has entered into consulting agreements with entities controlled by Calum Hughes (Director & CEO), Paul Bullock (Director & COO), Jim Smeeding (Director & VP Pharmaceutical), and Ryan Maarschalk (CFO). At present these individuals are paid on a monthly basis in the amounts of CA$10,000, CA$10,000, US$5,000 and CA$10,000 respectively. Total balances paid during the course of the year included amounts paid to previous directors and officers of the Company.

Equity Compensation Plans

During 2020, the Company’s board of directors approved the Allied Corp. 2020 Incentive Plan (“Plan”) which authorized the issuance of options, restricted stock units or other equity compensation to its employees directors, and consultants.

As of the year ended August 31, 2021, pursuant the Company’s Plan, the Company had granted 4,450,000 stock options, of which 1,483,333 stock options had vested with an average exercise prices of $0.77 and a term of five years. These options vested one-third immediately upon issuance of this option, one-third on the first anniversary and one-third on the second anniversary.

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All compensation and stock option plans for executives and employees will be governed by the Compensation and Governance Committee.

Expense Reimbursement

We will reimburse our officers and directors for reasonable expenses incurred during the course of their performance.

Retirement Plans and Benefits.

None.

Director Compensation

We do not have a standard compensation arrangement for directors. The Company has formed a Compensation and Governance Committee to make such determinations, with approval by both the Board of Directors and the Audit Committee.

Indemnification and Limitation on Liability of Directors

The Nevada Revised Statutes allows indemnification of directors, officers, employees and agents of a company against liabilities incurred in any proceeding in which an individual is made a party because he or she was a director, officer, employee or agent of the company if such person conducted himself in good faith and reasonably believed his actions were in, or not opposed to, the best interests of the company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A person must be found to be entitled to indemnification under this statutory standard by procedures designed to assure that disinterested members of the board of directors have approved indemnification or that, absent the ability to obtain sufficient numbers of disinterested directors, independent counsel or shareholders have approved the indemnification based on a finding that the person has met the standard. Indemnification is limited to reasonable expenses.

We do not have indemnification provisions in our articles or bylaws.

Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable.

Outstanding Stock Options or other Equity Awards

The following table summarizes the stock options we have issued during the year ended August 31, 2021.

Name	Issuance Date		Expiration Date		Exercise Price per share ($)		Number of common shares granted
Calum Hughes		N/A		N/A		N/A		N/A
Paul Bullock		N/A		N/A		N/A		N/A
Jim Smeeding	February 1, 2021		February 1, 2026		$	0.825		600,000
Ryan Maarschalk	February 1, 2021		February 1, 2026		$	0.825		600,000

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The fair value of each option granted was estimated on the date of grant using the BlackScholes option pricing model with the following weighted average assumptions:

	Six Months Ended   February 28, 2022			Six Months Ended   February 28, 2021
Expected dividend yield		0	%		-
Expected volatility		161	%		-
Expected life (in years)		5			-
Risk-free interest rate		1.11	%		-

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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table sets forth as of  April 20, 2022 the number of shares of common stock beneficially owned by (i) those persons or groups known to beneficially own more than 10% of the Company’s common stock, (ii) each current director and executive officer of the Company, and (iii) all the current executive officers and directors as a group.

Pursuant to Rule 13d-3 under the Exchange Act, a beneficial owner of securities is a person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has, or shares, voting power and/or investment power with respect to the securities, and any person who has the right to acquire beneficial ownership of the security within 60 days through any means, including the exercise of any option, warrant or right or the conversion of a security. Any shares that are not outstanding that a person has the right to acquire are deemed to be outstanding for the purpose of calculating the percentage of beneficial ownership of such person, but are not deemed to be outstanding for the purpose of calculating the percentage of beneficial ownership of any other person.

Title of Class	Name of Beneficial Owner	Amount of Beneficial Ownership (1)		Percentage of Stock Before Offering			Percentage of Stock After Offering (2)
Common Stock	Calum Hughes, Chief Executive Officer and Director		20,490,028		22.4	%		21.0	%
Common Stock	Paul Bullock, Chief Operating Officer and Director (3)		9,976,969		10.9	%		10.2	%
Common Stock	Jim Smeeding, Director (4)		691,667		0.8	%		0.7	%
Common Stock	Oceanus Contracting Ltd (3).		9,114,652		9.9	%		9.4	%
Common Stock	Ryan Maarschalk, Chief Financial Officer (5)		1,019,898		1.1	%		1.0	%
Common Stock	0994091 BC, Ltd. (3)		862,317		0.9	%		0.9	%
Common Stock	All officers and directors (4 persons)		32,178,562		34.7	%		32.6	%

____________

(1)	Calculated pursuant to Rule 13d-3 under the Exchange Act, a beneficial owner of securities is a person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has, or shares, voting power and/or investment power with respect to the securities, and any person who has the right to acquire beneficial ownership of the security within 60 days through any means, including the exercise of any option, warrant or right or the conversion of a security. Any shares that are not outstanding that a person has the right to acquire are deemed to be outstanding for the purpose of calculating the percentage of beneficial ownership of such person, but are not deemed to be outstanding for the purpose of calculating the percentage of beneficial ownership of any other person. All of the foregoing shares are legally held of record by SECFAC Exchange Corp., which has an agreement with the shareholders to exchange shares of SECFAC Exchange Corp. for Allied Corp. shares on a one for one basis at the request of any such shareholder.
(2)	Assumes sale of all shares in this Offering.
(3)	All shares are held through Oceanus Consulting Ltd and 0994091 BC Ltd. Mr. Paul James Bullock is the principal of Oceanus Contracting Ltd. and 09940901 BC Ltd., and consequently may be deemed to be the beneficial owner of shares held by such entities.
(4)	Mr. Smeeding holds 600,000 shares pursuant to options and an additional 91,667 shares are held by Adjudicate LLC, a company beneficially owned by Mr. Smeeding.
(5)	Mr. Maarschalk holds 600,000 shares pursuant to options and an additional 419,898 shares are held by Maarschalk Capital, Inc., a company beneficially owned by Mr. Maarschalk.

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Holders of Common Stock

As of the date of this Offering Circular, Allied had 136 shareholders of record of our common stock, and pursuant to our review of non-objecting beneficial owner reports, at least 3,078 additional shareholders.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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.

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 during the nine months ended were as follows:

	February 28, 2022		February 28, 2021
Consulting fees and benefits	$	178,947	$	221,213

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 noninterest bearing, unsecured and due on demand. The following table summarizes the amounts were due from related parties:

	February 28, 2022			August 31,, 2021
CEO and Director	$	(82,642	)	$	(65,254	)
COO and Director		(89,480	)		(76,574	)
An entity controlled by the CFO		(49,405	)		(34,655	)
	$	(221.348	)	$	(176,843

As of February 28, 2022, the Company had $221,347 (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.

Director Independence

The Company is not currently listed on any national exchange, or quoted on any inter-dealer quotation service, that imposes independence requirements on any committee of the Company’s directors, such as an audit, nominating or compensation committee. The Company currently does not currently have any independent directors on its Board.

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of substantial amounts of common stock in the public market after this offering could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities. We are unable to estimate the number of shares of common stock that may be sold in the future.

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Upon the closing of this offering, we will have:

· 98,757,214 shares of common stock outstanding (if the maximum number of units are sold);

· 5,714,286 shares of common stock issuable upon the exercise of warrants (if the maximum number of units are sold);

· 1,633,333 shares of common stock that may be issued upon the exercise of outstanding options;

· 1,643,913 shares of common stock that will issuable upon the conversion of our outstanding convertible notes (exclusive of shares issuable for accrued interest under such notes). No holder of these notes will be permitted to convert such notes to the extent that the holder or any of its affiliates would beneficially own in excess of 5.0% of our common stock after such conversion. The number of shares set forth assumes no such limitation on the conversion of the notes;

All of the shares sold in this offering will be freely tradable without restriction under the Securities Act unless purchased by one of our affiliates as that term is defined in Rule 144 under the Securities Act, which generally includes directors, officers or 10% stockholders. None of the holders of shares of our common stock or securities exercisable for or convertible into shares of our common stock have any registration rights.

Rule 144

Shares of common stock held by any of our affiliates, as that term is defined in Rule 144 of the Securities Act, as well as shares held by our current stockholders, may be resold only pursuant to further registration under the Securities Act or in transactions that are exempt from registration under the Securities Act. In general, under Rule 144 as currently in effect, any person who is or has been an affiliate of ours during the 90 days immediately preceding the sale and who has beneficially owned shares for at least six months is entitled to sell, within any three-month period commencing 90 days after the date of this Offering Circular, a number of shares that does not exceed the greater of: (i) 1% of the number of shares of common stock then outstanding, or (ii) the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a Form 144 with respect to the sale.

Sales under Rule 144 by our affiliates will also be subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

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CERTAIN TAX CONSIDERATIONS

The following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition of our Common Shares, including the Common Shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any local, state, foreign, including Canada, or other taxing jurisdiction.

The Company is a corporation and expects to be taxed for U.S. income tax purposes as such. We and our Investors will be subject to U.S. federal income tax and may also be subject to state and local income tax taxes in states and localities in which we are deemed to be doing business. Except where we reference specific states, this discussion does not cover state or local income tax consequences you may incur in connection with your investment.

Except as to disclosure of the Company’s withholding and reporting requirements under U.S. income tax law as to possible payments to be made to holders of our Unit(s) presented herein, this Offering Circular does not otherwise address any of the other applicable aspects of U.S. federal income taxation that may be relevant to you, including, the federal income tax ramifications as to the purchase, ownership or disposition of the Shares. This summary is not tax advice. The tax treatment of a holder will vary depending upon the holder’s particular situation. Accordingly, this summary does not purport to deal with all aspects of U.S. federal income taxation that may be relevant to an Investor’s decision to purchase our Unit(s), nor any tax consequences arising under the laws of any state, locality or foreign jurisdiction.

You are urged to consult your own tax advisors as to the specific tax consequences of purchasing, owning and disposing of any Shares, including any federal, state or local tax consideration.

No ruling has been or will be requested from the Internal Revenue Service regarding any matter affecting our Investors or us. Tax benefits should not be considered a primary investment feature of our Shares. Opinions and statements made in this Offering Circular may not be sustained by a court if contested by the Internal Revenue Service. Any contest of this sort with the Internal Revenue Service could materially adversely impact your investment in our Units. Additionally, the costs of any contest with the Internal Revenue Service will be borne by our Investors, whether directly or indirectly. An investment in us may be materially modified by future legislative or administrative changes or future court decisions. Such changes and decisions may be subject to retroactive application.

In recent years there have been a number of proposals made in Congress by legislators, government agencies and by the executive branch of the federal government for changes in the federal income tax laws. In December 2017, the Tax Cuts and Jobs Act was signed into law making sweeping changes to the revenue laws of the United States commencing for taxpayer tax years commencing on or after January 1, 2018. In that connection, the Internal Revenue Service continues to adopt regulations and procedures implementing the Tax Cuts and Jobs Act and compliance with the new U.S. revenue laws and procedures is evolving. Additionally, numerous private interest groups continue to lobby for regulatory and legislative changes in certain areas of the U.S. federal income tax law. It is impossible to predict the effect of any proposals that might be adopted upon the income tax treatment presently associated with investment in the Units or the effective date, which could be retroactive, of any legislation that may derive from any past or future proposal.

We strongly urge you to consider ongoing developments in this uncertain area and to consult your own tax advisors in assessing the risks of investment in Units.

U.S. Income Tax Withholding

To ensure collection of U.S. income tax, the payor of fixed or determinable annual or periodic income from U.S. sources to any nonresident alien individual or foreign partnership, trust, estate, or Company is required to withhold taxes. Respective to any distributions in respect of Securities, therefore, we would be deemed to be a payor.

A payee, on the other hand, is defined as the person to whom a payment is made, regardless of whether such person is the beneficial owner of the amount paid. A foreign payee is a payee who is a foreign person, while a U.S. payee is a U.S. person. The determination of the withholding agent concerning the status of the payee (U.S. or foreign) and the characteristics of a payee, such as whether the payee is a beneficial owner or intermediary, or an individual, Company or flow-through payee, is made on the basis of a withholding certificate that is a Form W-8, a Form 8233 (indicating foreign status of the payee or beneficial owner) or a Form W-9 (indicating U.S. status of the payee).

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A nonresident alien is generally defined as an individual whose residence is not within the United States and who is not a citizen of the United States. However, an alien who meets either the lawful permanent residence test (i.e., the green card test) or the substantial presence test for the calendar year is considered a U.S. resident. An alien is a resident alien for a calendar year if he or she is a lawful permanent resident at any time during the calendar year. Under the substantial presence test, an alien is a resident alien if he or she has been present in the United States for at least 31 days during the current year and at least 183 days during the three-year period that includes the current year.

Generally, a person that makes a payment of U.S. source interest, dividends, royalties, and certain other types of income to a foreign person, such as Company payments that may be paid in respect of the Securities, must deduct and withhold 30 percent from the payment. A lower rate of withholding may apply under the Code, the regulations, or an income tax treaty. Under the Code, a withholding agent, in the case of the Company either the Company or its designee, must make an income tax return on Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, reporting the tax withheld and also must file an information return reporting the amounts on Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding.

Payors of interest, dividends, royalties, gross proceeds from the sales of securities, and other fixed or determinable income must report payments on the appropriate Form 1099 series form, unless an exception applies. It is not certain how income, if any, to be paid in respect of the Company’s Shares would be classified, albeit that we believe same would be deemed dividends. Payment information regarding U.S. taxpayers is generally reportable on a Form 1099 series form, and the Company will be required to obtain a Form W-9 from any U.S. taxpayer purchasers. Form W-9, Request for Taxpayer Identification Number (“TIN”) and Certification is used to determine whether to treat a payee or beneficial owner as a U.S. person. A payee must certify that he or she is a U.S. person (including a U.S. resident alien). Form W-9 will require that the purchaser of our Units provide his or her TIN and certify that he or she is a U.S. person or a U.S. resident alien. If the Company would not receive a Form W-9, it must generally backup withhold at a 24-percent rate for tax years beginning after December 31, 2017, and before January 1, 2026, and report the payment on Form 1099. Collected backup withholding amounts, if any, must be reported on Form 945, Annual Return of Withheld Federal Income Tax.

An exception to the Form 1099 reporting provisions applies if the payee is a foreign person. A payor can treat a person as a “foreign person” if the payor can reliably associate the payment with documentation that establishes that the person is a foreign beneficial owner of the income or a foreign payee. A foreign person may not use Form W-9 to furnish his or her taxpayer identification number to a payor. Rather, foreign payees must use the appropriate Form W-8. The IRS Form W-8 series of forms is made up of certificates that are used to establish foreign status. A payor does not have to backup withhold on payments to foreign beneficial owners or foreign payees because backup withholding applies only to amounts that the payor must report on Form 1099.

Generally, all nonresident aliens and foreign corporations, foreign partnerships, and foreign trusts and estates, that have income from sources within the United States, not effectively connected with the conduct of a trade or business within the United States, will be subject to withholding at a rate of 30 percent unless a lower treaty rate applies.

The Form W-8 series of IRS forms are certificates provided to withholding agents to establish foreign status. In this context, the Company, or its third-party designee, would be the “withholding agent.” Non-

U.S. taxpayer Investors in our Units will be required to provide us or our designee with one of Form W- 8BEN, W-8BEN-E or W-8ECI depending on Investor status. Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (Individuals) is used exclusively by individuals and should be provided to the Company or its designee, as applicable, as the withholding agent or payer by a beneficial owner to claim foreign status, claim beneficial ownership of income and, if applicable, claim a reduced rate of or exemption from withholding.

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Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities) allows an entity to certify as to its status as a beneficial owner or payee for purposes of Chapter 3 and Chapter 61 of the Code, as well as to its status under Chapter 4 of the Code, as a payee or account holder of a foreign financial entity. The form can also be used by a beneficial owner to seek a reduced rate of withholding under a treaty.

Form W-8ECI, Certificate of Foreign Person’s Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States, form should be used to establish foreign status, claim beneficial ownership and claim that income is effectively connected with the conduct of a trade or business in the United States. We believe, but have not endeavored to obtain any formal ruling of the IRS confirming same, nor do we anticipate doing so, that any amounts paid to holders of our Securities will be classified as income effectively connected income with a United States trade or business for these purposes.

WE URGE YOU TO CONSULT AND RELY UPON YOUR OWN TAX ADVISOR WITH RESPECT TO YOUR OWN TAX SITUATION, POTENTIAL CHANGES IN APPLICABLE LAWS AND REGULATIONS AND THE FEDERAL AND STATE CONSEQUENCES ARISING FROM AN INVESTMENT IN THE UNITS. THE COST OF THE CONSULTATION COULD, DEPENDING ON THE AMOUNT CHARGED TO YOU, DECREASE ANY RETURN ANTICIPATED ON YOUR INVESTMENT. NOTHING IN THIS OFFERING CIRCULAR IS OR SHOULD BE CONSTRUED AS LEGAL OR TAX ADVICE TO ANY SPECIFIC INVESTOR, AS INDIVIDUAL CIRCUMSTANCES MAY VARY. THIS FEDERAL INCOME TAX CONSEQUENCES SECTION OF THIS OFFERING CIRCULAR ONLY PROVIDES THE CURRENT STATE OF TAX LAWS. YOU SHOULD BE AWARE THAT THE INTERNAL REVENUE SERVICE MAY NOT AGREE WITH ALL TAX POSITIONS TAKEN BY US AND THAT LEGISLATIVE, ADMINISTRATIVE OR COURT DECISIONS MAY REDUCE OR ELIMINATE YOUR ANTICIPATED TAX BENEFITS.

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PLAN OF DISTRIBUTION

We are offering the securities on a best efforts basis directly from the Company or through placement agents we may later identify.  Any such placement agents would not be purchasing or selling any securities under this prospectus, nor would they be required to arrange for the purchase or sale of any specific number or dollar amount of Units.

There is no minimum number of Units that must be sold as a condition to closing this offering; the actual number of Units sold in this offering is not presently determinable.

The Company in good faith determined the offering price for the Securities in this offering. The factors considered in determining the price included the history of, and the prospects for the industry in which we compete, our past and present operations and our prospects for future revenues.

In the event we engage any placement agents we would pay them an aggregate placement agent fee equal to 7% of the gross proceeds of the sale of securities in the offering. The estimated offering expenses payable by us, in addition to any placement agent fees, are approximately $100,000, which includes our legal and accounting costs and various other fees and costs associated with offering. After deducting our estimated offering expenses, we expect the net proceeds from this offering to be approximately $9,200,000, assuming all securities offered are sold in this offering.

We will pay all of the expenses incident to the registration, offering, and sale of the Units to the public other than commissions or discounts of underwriters, broker-dealers, or agents.  This does not include payment for any costs or expenses incurred by shareholders related to ownership or sales of their shares.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons, we have been advised that in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable.

ERISA Considerations

Special considerations apply when contemplating the purchase of Units of our common stock on behalf of employee benefit plans that are subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), plans, individual retirement accounts (“IRAs”) and other arrangements that are subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of the Code or ERISA, and entities whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”). A person considering the purchase of the Offered Shares on behalf of a Plan is urged to consult with tax and ERISA counsel regarding the effect of such purchase and, further, to determine that such a purchase will not result in a prohibited transaction under ERISA, the Code or a violation of some other provision of ERISA, the Code or other applicable law. We will rely on such determination made by such persons, although no Shares of our common stock will be sold to any Plans if management believes that such sale will result in a prohibited transaction under ERISA or the Code.

Marketability

Our Common Stock is currently quoted on the OTCQB tier of the OTC Markets under the symbol “ALID”. The OTC Markets is maintained by OTC Market Group, Inc. The securities traded on the OTC Markets are not listed or traded on the floor of an organized national or regional stock exchange. Instead, these securities transactions are conducted through a telephone and computer network connecting dealers in stocks. Over-the-counter stocks are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

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Notwithstanding our Common Stock being quoted on the OTC Markets, a purchaser of the Offered Shares may not be able to resell them. Broker-dealers may be discouraged from effecting transactions in our Common Stock because they will be considered penny stocks and will be subject to the penny stock rules. Rules 15g-1 through 15g-9 promulgated under the Exchange Act impose sales practice and disclosure requirements on FINRA brokers-dealers who make a market in a “penny stock.” A penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transactions is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.

The additional sales practice and disclosure requirements imposed upon brokers-dealers may discourage broker-dealers from effecting transactions in our Common Stock, which could severely limit the market liquidity of the Offered Shares and impede the sale of our Offered Shares in the secondary market, assuming one develops.

Foreign Regulatory Restrictions on Purchase of the Offered Shares

We have not taken any action to permit a public offering of our Offered Shares outside the United States or to permit the possession or distribution of this Offering Circular outside the United States. Persons outside the United States who come into possession of this Offering Circular must inform themselves about and observe any restrictions relating to this offering of Offered Shares and the distribution of the Offering Circular outside the United States.

Investment Amount Limitations

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

As a Tier 2, Regulation A offering, investors must comply with the 10% limitation to investment in the offering. The only investor in this offering exempt from this limitation is an accredited investor, an “Accredited Investor,” as defined under Rule 501 of Regulation D. If you meet one of the following tests you should qualify as an Accredited Investor:

(i)	You are a natural person who has had individual income in excess of $200,000 in each of the two most recent years, or joint income with your spouse or spousal equivalent in excess of $300,000 in each of these years, and have a reasonable expectation of reaching the same income level in the current year;
(ii)	You are a natural person and your individual net worth, or joint net worth with your spouse or spousal equivalent, exceeds $1,000,000 at the time you purchase Offered Shares (please see below on how to calculate your net worth);
(iii)	You are a director, executive officer or general partner of the issuer or a director, executive officer, or general partner of the general partner of the issuer;
(iv)	You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or the Code, a corporation, a Massachusetts or similar business trust or a partnership, or limited liability company, not formed for the specific purpose of acquiring the Offered Shares, with total assets in excess of $5,000,000;

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(v)	You are a bank or a savings and loan association or other institution as defined in the Securities Act, a broker or dealer registered pursuant to Section 15 of the Exchange Act, an investment advisor registered pursuant to the Investment Advisers Act of 1940 or registered pursuant to the laws of a state, an investment advisor relying on the exemption of registering with the SEC under the Investment Advisers Act of 1940, an insurance company as defined by the Securities Act, an investment company registered under the Investment Company Act of 1940, or a business development company as defined in that act, any Small Business Investment Company licensed by the Small Business Investment Act of 1958, or a Rural Business Investment Company as defined in the Consolidated Farm and Rural Development Act, or a private business development company as defined in the Investment Advisers Act of 1940;
(vi)	You are an entity (including an Individual Retirement Account trust) in which each equity owner is an accredited investor;
(vii)	You are a trust with total assets in excess of $5,000,000, your purchase of Offered Shares is directed by a person who either alone or with his purchaser representative(s) (as defined in Regulation D promulgated under the Securities Act) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, and you were not formed for the specific purpose of investing in the Offered Shares;

(viii)	You are a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
(ix)	You are an entity, of a type not listed in the above paragraphs (iv), (v), (vi), (vii), or (viii), not formed for the specific purpose of acquiring the Offered Shares, owning investments in excess of $5,000,000;
(x)	You are a natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the SEC has designated as qualifying an individual for accredited investor status;

(xi)

You are a “family office,” as defined by the Investment Advisers Act of 1940, with assets under management in excess of $5,000,000, and is not formed for the specific purpose of acquiring the Offered Shares, and your prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment;

(xii)

You are a “family client,” as defined under the Investment Advisers Act of 1940, of a family office meeting the requirements in the above paragraph (xi), and your prospective investment in the issuer is directed by such family office pursuant to the above paragraph (xi).

Offering Period and Expiration Date

This Offering will start on the date this Offering Circular is declared qualified by the SEC. The Offering is expected to expire on the first of: (i) all of the Offered Shares are sold; or (ii) the close of business on that date which is 90 days from the dated this Offering Circular is declared qualified by the SEC, unless sooner terminated or extended up to no more than an additional ninety (90) days by us.

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Procedures for Subscribing

If you decide to subscribe for any Common Stock in this Offering, you should follow the procedures as described below

1.	Electronically receive, review, execute and deliver to us through DocuSign, a Subscription Agreement; and
2.	Deliver funds only by ACH, wire transfer or check for the amount set forth in the Subscription Agreement directly to the specified bank account maintained by escrow agent.

Any potential investor will have ample time to review the Subscription Agreement, along with their counsel, prior to making any final investment decision. We shall only deliver such Subscription Documents upon request after a potential investor has had ample opportunity to review this Offering Circular. Further, we will not accept any money until the SEC declares the Offering Statement qualified.

We anticipate that we may hold one or more closings for purchases of the Units until the offering is fully subscribed or we terminate the Offering. Proceeds will be held maintained by Sutter Securities, LLC, as Deposit Account Agent in an Offering Deposit Account subject to compliance with Exchange Act Rule 15c2-4 until closing occurs. Our Underwriter and/or the participating broker-dealers will submit a subscriber’s form(s) of payment in compliance with Exchange Act Rule 15c2-4, generally by noon of the next business day following receipt of the subscriber’s subscription agreement and form(s) of payment.

You will be required to represent and warrant in your subscription agreement that you are an accredited investor as defined under Rule 501 of Regulation D or that your investment in the shares of Common Stock does not exceed 10% of your net worth or annual income, whichever is greater, if you are a natural person, or 10% of your revenues or net assets, whichever is greater, calculated as of your most recent fiscal year if you are a non-natural person. By completing and executing your subscription agreement you will also acknowledge and represent that you have received a copy of this offering circular, you are purchasing the shares of Common Stock for your own account and that your rights and responsibilities regarding your shares of Common Stock will be governed by our chart and bylaws, each filed as an exhibit to the Offering Circular of which this offering circular is a part.

Right to Reject Subscriptions. After we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been transferred to the escrow account, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, without interest or deduction.

Acceptance of Subscriptions. Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the Units subscribed at closing. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.

Under Rule 251 of Regulation A, non-accredited, non-natural investors are subject to the investment limitation and may only invest funds which do not exceed 10% of the greater of the purchaser’s revenue or net assets (as of the purchaser’s most recent fiscal year end). A non-accredited, natural person may only invest funds which do not exceed 10% of the greater of the purchaser’s annual income or net worth (please see below on how to calculate your net worth).

NOTE: For the purposes of calculating your Net Worth, it is defined as the difference between total assets and total liabilities. This calculation must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the Offered Shares.

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In order to purchase Units and prior to the acceptance of any funds from an investor, an investor will be required to represent, to our satisfaction, that he is either an accredited investor or is in compliance with the 10% of net worth or annual income limitation on investment in this offering.

Non-U.S. investors may participate in this Offering by depositing their funds in the escrow account. Any such funds that the Deposit Account Agent receives shall be held on deposit until the applicable closing of the Offering or such other time as determined by the Company, and then used to complete securities purchases.

EXPENSES RELATED TO THE OFFERING

The following table sets forth the costs and expenses, other than the underwriting discounts and commissions and expenses, payable in connection with this offering. All amounts shown are estimates and subject to future contingencies, except the U.S. Securities and Exchange Commission registration fee and the Financial Industry Regulatory Authority filing fee.

Description
U.S. Securities and Exchange Commission registration fee	$	1,091.00
Accounting and audit fees and expenses		25,000
Legal fees and expenses		25,000
Transfer agent fees		5,000
Road show costs and expenses		25,000
Miscellaneous		10,909
Total	$	100,000.00

ADDITIONAL REQUIREMENTS AND RESTRICTIONS

Stock Certificates

Ownership of the Offered Shares will be “book-entry” only form, meaning that ownership interests shall be recorded by the Transfer Agent, and kept only on the books and records of Transfer Agent. There will be no cost to the Subscriber to hold the shares, in book entry, on the books of the Company. No physical certificates shall be issued, nor received, by Transfer Agent or any other person. The Transfer Agent records and maintains securities of Company in book-entry form only. Book-entry form means the Transfer Agent maintains shares on an investor’s behalf without issuing or receiving physical certificates. Securities that are held in un-certificated book-entry form have the same rights and privileges as those held in certificate form, but the added convenience of electronic transactions (e.g. transferring ownership positions between a broker-dealer and the Transfer Agent), as well as reducing risks and costs required to store, manage, process and replace lost or stolen securities certificates. Transfer Agent shall send out email confirmations of positions and notifications of changes “from” Company upon each and every event affecting any person’s ownership interest, with a footer referencing Transfer Agent.

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Restrictions Imposed by the USA PATRIOT Act and Related Acts

In accordance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, the securities offered hereby may not be offered, sold, transferred or delivered, directly or indirectly, to any “unacceptable investor,” which means anyone who is:

· a “designated national,” “specially designated national,” “specially designated terrorist,” “specially designated global terrorist,” “foreign terrorist organization,” or “blocked person” within the definitions set forth in the Foreign Assets Control Regulations of the United States, or U.S., Treasury Department;

· acting on behalf of, or an entity owned or controlled by, any government against whom the U.S. maintains economic sanctions or embargoes under the Regulations of the U.S. Treasury Department;

· within the scope of Executive Order 13224 — Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit, or Support Terrorism, effective September 24, 2001;

· a person or entity subject to additional restrictions imposed by any of the following statutes or regulations and executive orders issued thereunder: the Trading with the Enemy Act, the National Emergencies Act, the Antiterrorism and Effective Death Penalty Act of 1996, the International Emergency Economic Powers Act, the United Nations Participation Act, the International Security and Development Cooperation Act, the Nuclear Proliferation Prevention Act of 1994, the Foreign Narcotics Kingpin Designation Act, the Iran and Libya Sanctions Act of 1996, the Cuban Democracy Act, the Cuban Liberty and Democratic Solidarity Act and the Foreign Operations, Export Financing and Related Programs Appropriations Act or any other law of similar import as to any non-U.S. country, as each such act or law has been or may be amended, adjusted, modified or reviewed from time to time; or

· designated or blocked, associated or involved in terrorism, or subject to restrictions under laws, regulations, or executive orders as may apply in the future similar to those set forth above.

ERISA CONSIDERATIONS

An investment in us by an employee benefit plan is subject to additional considerations because the investments of these plans are subject to the fiduciary responsibility and prohibited transaction provisions of ERISA and restrictions imposed by Section 4975 of the Code. For these purposes the term “employee benefit plan” includes, but is not limited to, qualified pension, profit-sharing and stock bonus plans, Keogh plans, simplified employee pension plans and tax deferred annuities or IRAs established or maintained by an employer or employee organization. Among other things, consideration should be given to:

· whether the investment is prudent under Section 404(a)(1)(B) of ERISA;

· whether in making the investment, that plan will satisfy the diversification requirements of Section 404(a)(1)(C) of ERISA; and

· whether the investment will result in recognition of unrelated business taxable income by the plan and, if so, the potential after-tax investment returns.

The person with investment discretion with respect to the assets of an employee benefit plan, often called a fiduciary, should determine whether an investment in us is authorized by the appropriate governing instrument and is a proper investment for the plan.

Section 406 of ERISA and Section 4975 of the Code prohibit employee benefit plans from engaging in specified transactions involving “plan assets” with parties that are “parties in interest” under ERISA or “disqualified persons” under the Code with respect to the plan.

In addition to considering whether the purchase of Units is a prohibited transaction, a fiduciary of an employee benefit plan should consider whether the plan will, by investing in us, be deemed to own an undivided interest in our assets, with the result that our operations would be subject to the regulatory restrictions of ERISA, including its prohibited transaction rules, as well as the prohibited transaction rules of the Code.

94

The Department of Labor regulations provide guidance with respect to whether the assets of an entity in which employee benefit plans acquire equity interests would be deemed “plan assets” under some circumstances. Under these regulations, an entity’s assets would not be considered to be “plan assets” if, among other things:

(1)	the equity interests acquired by employee benefit plans are publicly offered securities - i.e., the equity interests are widely held by 100 or more investors independent of the issuer and each other, freely transferable and registered under some provisions of the federal securities laws;
(2)	the entity is an “operating company”—i.e., it is primarily engaged in the production or sale of a product or service other than the investment of capital either directly or through a majority-owned subsidiary or subsidiaries; or
(3)	there is no significant investment by benefit plan investors, which is defined to mean that less than 25% of the value of each class of equity interest is held by the employee benefit plans referred to above.

We do not intend to limit investment by benefit plan investors in us because we anticipate that we will qualify as an “operating company”. If the Department of Labor were to take the position that we are not an operating company and we had significant investment by benefit plans, then we may become subject to the regulatory restrictions of ERISA which would likely have a material adverse effect on our business and the value of our common stock.

Plan fiduciaries contemplating a purchase of Units should consult with their own counsel regarding the consequences under ERISA and the Code in light of the serious penalties imposed on persons who engage in prohibited transactions or other violations.

ACCEPTANCE OF SUBSCRIPTIONS ON BEHALF OF PLANS IS IN NO RESPECT A REPRESENTATION BY OUR BOARD OF DIRECTORS OR ANY OTHER PARTY RELATED TO US THAT THIS INVESTMENT MEETS THE RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY ANY PARTICULAR PLAN OR THAT THIS INVESTMENT IS APPROPRIATE FOR ANY PARTICULAR PLAN. THE PERSON WITH INVESTMENT DISCRETION SHOULD CONSULT WITH HIS OR HER ATTORNEY AND FINANCIAL ADVISERS AS TO THE PROPRIETY OF AN INVESTMENT IN US IN LIGHT OF THE CIRCUMSTANCES OF THE PARTICULAR PLAN.

LEGAL MATTERS

We are being represented by Cutler Law Group, P.C., with respect to certain legal matters as to United States federal securities and state securities law. The validity of the Common Shares offered in this offering and certain legal matters as to Canadian law will be passed upon for us by Cutler Law Group, P.C., Canadian law will be passed upon for us by Pushor Mitchell, LLP, and Colombian law will be passed upon for us by our Colombian counsel.

EXPERTS

The financial statements as of August 31, 2021 and August 31, 2020, included in this Offering Circular have been so included in reliance on the audit report (which contains an explanatory paragraph relating to our ability to continue as a going concern as described in Note 1 to the Financial Statements), by Manning Elliott LLP, an independent registered public accounting firm, given on the authority of such firm as experts in auditing and accounting. Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. Manning Elliott is independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB on auditor independence. Manning Elliott’s headquarters are located at 1700-1030 W. Georgia St., Vancouver, BC V6E 2Y3 Canada.

WHERE YOU CAN FIND MORE INFORMATION

We have filed an offering statement on Form 1-A with the SEC under the Securities Act with respect to the common stock offered by this Offering Circular. This Offering Circular, which constitutes a part of the offering statement, does not contain all of the information set forth in the offering statement or the exhibits and schedules filed therewith. For further information with respect to us and our common stock, please see the offering statement and the exhibits and schedules filed with the offering statement. Statements contained in this Offering Circular regarding the contents of any contract or any other document that is filed as an exhibit to the offering statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the offering statement. The offering statement, including its exhibits and schedules, may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and copies of all or any part of the offering statement may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is www.sec.gov.

95

We also maintain a website at www.allied.health. Upon completion of this offering, you may access these materials at our website free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this Offering Circular and the inclusion of our website address in this Offering Circular is an inactive textual reference only.

After the completion of this Tier II, Regulation A offering, we intend to continue to file reports under Section 15(d) of the Exchange Act, which, in accordance with Rule 257(b)(6) of Regulation A, will satisfy our reporting obligations under Regulation A. Such reports and other information will be available for inspection and copying at the public reference room and on the Commission’s website referred to above.

If we no longer file reports under Section 15(d) of the Exchange Act, we will be required to furnish the following reports, statements, and tax information to each stockholder:

1.	Reporting Requirements under Tier II of Regulation A. If we no longer file reports under Section 15(d) of the Exchange Act, we will be required under Rule 257 of Regulation A to file: an annual report with the SEC on Form 1-K; a semi-annual report with the SEC on Form 1-SA; current reports with the SEC on Form 1-U; and a notice under cover of Form 1-Z. The necessity to file current reports will be triggered by certain corporate events, similar to the ongoing reporting obligation faced by issuers under the Exchange Act, however the requirement to file a Form 1-U is expected to be triggered by significantly fewer corporate events than that of the Form 8-K. Such reports and other information will be available for inspection and copying at the public reference room and on the Commission’s website referred to above. Parts I & II of Form 1-Z will be filed by us if and when we decide to and are no longer obligated to file and provide annual reports pursuant to the requirements of Regulation A.
2.	Annual Reports. As soon as practicable, but in no event later than one hundred twenty (120) days after the close of our fiscal year, ending on the last Sunday of a calendar year, our Board of Directors will cause to be mailed or made available, by any reasonable means, to each Stockholder as of a date selected by the Board of Directors, an annual report containing financial statements of the Company for such fiscal year, presented in accordance with GAAP, including a balance sheet and statements of operations, company equity and cash flows, with such statements having been audited by an accountant selected by the Board of Directors. The Board of Directors shall be deemed to have made a report available to each stockholder as required if it has either (i) filed such report with the SEC via its Electronic Data Gathering, Analysis and Retrieval, or EDGAR, system and such report is publicly available on such system or (ii) made such report available on any website maintained by the Company and available for viewing by the stockholders.
3.	Tax Information. On or before September 30th of the month immediately following our fiscal year, which is currently September 1st through August 31st, we will send to each stockholder such tax information as shall be reasonably required for federal and state income tax reporting purposes.

96

PART F/S

ALLIED CORP.

CONSOLIDATED FINANCIAL STATEMENTS

97

Contents

 ALLIED CORP.

CONSOLIDATED FINANCIAL STATEMENTS

Part 1	FINANCIAL INFORMATION
	Report of Independent Registered Public Accounting Firms	F-2
	Consolidated Balance Sheets at August 31, 2021 and 2020	F-4
	Consolidated statements of operations and comprehensive loss for the years ended August 31, 2021 and 2020	F-5
	Consolidated statements of stockholders’ equity (deficiency) for the years ended August 31, 2021 and 2020	F-6
	Consolidated statements of cash flows for the years ended August 31, 2021 and 2020	F-8
	Notes to the consolidated financial statements	F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Allied Corp.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Allied Corp. and its subsidiaries (together, the “Company”), which comprise the consolidated balance sheets as at August 31, 2021 and 2020, and the consolidated statements of operations and comprehensive loss, changes in equity (deficiency) and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as at August 31, 2021 and 2020, and its financial performance and its cash flows for the years ended August 31, 2021 and 2020, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has generated minimal revenue, incurred a loss from operations and has a working capital deficit as at August 31, 2021. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement, whether due to fraud or error. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a reasonable basis for our audit opinion.

F-2

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matter Description - Impairment testing of Intangible Assets – Colombian Cannabis Licenses – Refer to Note 8 to the consolidated financial statements

The Company has intangible assets which are comprised of licenses to cultivate and export cannabis and hemp products in Colombia (collectively the “Licenses”). The Licenses are tested for impairment when events or circumstances indicate that impairment could have occurred. If the carrying value of the intangible assets exceeds its fair value an impairment charge is recorded. At the reporting date, the Company determined the fair value of the Licenses was below the carry value and recorded an impairment charge of $2,687,695 for the year ended August 31, 2021 reflecting fair value of the Licenses of $46,000 as at August 31, 2021.  

In determining the fair value of the Licenses for the purpose of impairment test, the Company used the replacement value method, an asset-based approach. The replacement cost method was used by the Company as management assessed this method to be the most supportable in terms of fair value for the Licenses as other methods would require observable market data inputs which are not readably available in an emerging market.  In addition, the Company has limited operational history and has generated losses.  The judgement and assumptions with the highest degree of impact and subjectivity are the selection of the fair value methodology and costs to replace the Licenses. Auditing management’s assumptions and impairment analysis required a high degree of auditor judgment and an increase extent of audit effort, include the need to involve fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures included the following, among others, in considering assessing the fair value management assessment of the intangible assets relate to the determination of the replacement value based on costs and fees to replace the Licenses which included the following:

· Assessing the appropriateness of management’s use and selection of the replacement value method as the fair value technique used in impairment testing;

· Compared the projected costs and fees to replace the Licenses to historical results and other relevant information including current costing;

· Confirmed the understanding of the application process with a specialist; and

· With the assistance of fair value specialist:

- Review of management’s assessment of the existence of impairment indicators of the Licenses and,

- Evaluate the reasonableness and applicability of the valuation methodology.

/s/ Manning Elliott LLP

CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, British Columbia, Canada

December 14, 2021

We have served as the Company’s auditor since 2019.

F-3

ALLIED CORP.

Consolidated Balance Sheets

(Expressed in US Dollars)

	August 31, 2021			August 31, 2020
Assets
Current assets
Cash	$	419,825		$	94,047
Inventory (Note 5)		136,261			52,585
Other receivables		82,837			-
Prepaid expenses		277,529			51,682
Total current assets		916,452			198,314
Deposits and advances (Note 6)		3,156,163			3,008,246
Right-of-use assets (Note 9)		247,325			374,997
Property, plant and equipment (Note 7)		267,835			223,020
Intangible assets (Note 8)		46,000			3,300,000
Total assets	$	4,633,775		$	7,104,577
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	1,871,659		$	1,396,495
Current portion of lease liabilities (Note 9)		25,013			17,073
Loan payable (Note 10)		1,596,522			1,253,772
Secured convertible notes payable (Note 11)		1,889,050			400,000
Total current liabilities		5,382,244			3,067,340
Lease liabilities, net of current portion (Note 9)		222,312			333,073
Total liabilities	$	5,604,556		$	3,400,413
Stockholders’ equity (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; 79,858,867 shares issued and outstanding (85,105,780 – par value $0.0001 – August 31, 2020)		7,986			8,511
Treasury stock		707			-
Additional paid in capital		18,099,226			12,226,382
Common stock issuable		929,985			19,952
Accumulated deficit		(19,393,812	)		(7,908,566	)
Accumulated other comprehensive loss		(614,873	)		(642,115	)
Total stockholders’ equity (deficiency)		(970,781	)		3,704,164
Total liabilities and stockholders’ equity (deficiency)	$	4,633,775		$	7,104,577

Nature of operations and going concern (Note 1)

Commitments (Note 16)

Subsequent events (Note 23)

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

F-4

ALLIED CORP.

Consolidated Statements of Operations and Comprehensive Loss

(Expressed in US dollars)

	For the Year Ended  August 31, 2021			For the Year Ended  August 31, 2020
Revenues
Sales	$	12,518		$	-
Expenses
Amortization		547,478			466,042
Purchase of inventory		2,773			-
Charitable donations		9,221			164,197
Consulting fees		978,022			1,099,670
Stock-based compensation		2,666,077			-
Foreign exchange loss (gain)		16,416			(5,110	)
Interest expense and bank charges		625,424			148,236
Office and miscellaneous		1,198,828			948,175
Professional fees		916,039			680,673
Rent		50,570			90,537
Travel		10,398			826
Inventory costs and write-down to net realizable value (Note 5)		635,219			-
Operating expenses		7,656,465			3,593,246
Loss before other items		(7,643,947	)		(3,593,246	)
Other income and expenses
Other income		48,517			-
Impairment of assets (Note 17)		(245,500	)		-
Loss on termination of lease		(65,565	)		-
Settlement payments (Note 16)		(108,500	)		-
Loss on debt extinguishment		(118,448	)		-
Impairment of intangible assets (Note 8)		(2,687,695	)		(2,230,904	)
Gain on forgiveness of promissory note		-			536,729
Write-off of receivables and deposits		(9,348	)		(342,773	)
Loss on extinguishment of secured convertible notes payable		-			(220,065	)
Contingent expenses on Allied Colombia (Note 4)		-			(530,191	)
Accretion		(654,760	)		(227,313	)
Total other expenses		(3,841,299	)		(3,014,517	)
Net loss		(11,485,246	)		(6,607,763	)
Other comprehensive income (loss)
Foreign currency translation adjustments		27,242			(611,624	)
Comprehensive loss	$	(11,458,004	)	$	(7,219,387	)
Basic and diluted loss per share	$	(0.14	)	$	(0.08	)
Weighted average number of common shares outstanding		80,389,077			80,746,754

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

F-5

ALLIED CORP.

Consolidated Statements of Stockholders’ Equity (Deficiency)

(Expressed in US dollars)

	Common stock						Treasury stock						Additional						Stock						Accumulated other comprehensive
	Number of shares			Amount			Number of shares			Amount			paid in capital			Stock issuable			subscription receivable			Accumulated deficit			income (loss)			Total
Balance, August 31, 2019		51,200,014		$	5,120			-		$	-		$	912,965		$	24,135		$	(364	)	$	(1,300,803	)	$	(30,491	)	$	(389,438	)
Cancellation of common stock		(10,459,220	)		(1,046	)		-			-			1,046			-			-			-			-			-
Shares reacquired by treasury		(4,500,000	)		(450	)		4,500,000			450			-			-			-			-			-			-
Shares issued on acquisition of assets		4,500,000			450			(4,500,000	)		(450	)		4,500,000			-			-			-			-			4,500,000
Effect of reverse acquisition		42,027,986			4,203			-			-			3,925,542			65,092			364			-			-			3,995,201
Shares issued for cash		2,050,000			205			-			-			2,440,795			(65,092	)		-			-			-			2,375,908
Share issuance costs		72,000			7			-			-			(7	)		-			-			-			-			-
Beneficial conversion feature		-			-			-			-			115,383			-			-			-			-			115,383
Detachable warrants issued with convertible notes payable		-			-			-			-			108,100			-			-			-			-			108,100
Shares issued for services provided in prior year		215,000			22			-			-			24,113			(24,135	)		-			-			-			-
Shares issuable and warrants issued upon modification of debt		-			-			-			-			198,445			19,952			-			-			-			218,397
Comprehensive loss for the year		-			-			-			-			-			-			-			(6,607,763	)		(611,624	)		(7,219,387	)
Balance, August 31, 2020		85,105,780		$	8,511			-		$	-		$	12,226,382		$	19,952		$	-		$	(7,908,566	)	$	(642,115	)	$	3,704,164

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

F-6

ALLIED CORP.

Consolidated Statements of Stockholders’ Equity (Deficiency)

(Expressed in US dollars)

	Common stock						Treasury stock						Additional						Stock					Accumulated other comprehensive
	Number of shares			Amount			Number of shares			Amount			paid in capital			Stock issuable			subscription receivable		Accumulated deficit			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 returned to treasury		(8,123,170	)		(812	)		8,123,170			812			-			-			-		-			-			-
Common stock subscribed for cash		-			-			-			-			-			2,031,717			-		-			-			2,031,717
Shares issued for cash		2,746,667			275			-			-			1,859,725			(1,110,000	)		-		-			-			750,000
Share issuance costs		-			-			-			-			(100,514	)		-			-		-			-			(100,514	)
Shares issued to settle debts		142,790			14			-			-			124,396			-			-		-			-			124,410
Shares issued upon modification of debt		136,000			13			-			-			149,938			(19,952	)		-		-			-			129,999
Shares issued for finders fees		800			-			-			-			-			-			-		-			-			-
Cancellation of shares for no consideration		(1,200,000	)		(120	)		-			-			120			-			-		-			-			-
Detachable warrants issued with convertible notes payable		-			-			-			-			434,594			-			-		-			-			434,594
Beneficial conversion feature		-			-			-			-			276,008			-			-		-			-			276,008
Shares re-issued for asset acquisition		200,000			20			(200,000	)		(20	)		160,000			-			-		-			-			160,000
Shares issuable for promissory note		100,000			10			(100,000	)		(10	)		90,000			-			-		-			-			90,000
Stock-based compensation		-						-			-			2,241,077			-			-		-			-			2,241,077
Shares issuable for modification of debt		-			-			-			-			-			8,268			-		-			-			8,268
Shares issued for consulting services		750,000			75			(750,000	)		(75	)		637,500			-			-		-			-			637,500
Comprehensive loss for the year		-			-			-			-			-			-			-		(11,485,246	)		27,242			(11,458,004	)
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	)

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

F-7

ALLIED CORP.

Consolidated Statements of Cash Flows

(Expressed in US dollars)

	For the Year Ended August 31,  2021			For the Year Ended August 31,  2020
Cash provided by (used in):
Operating activities
Net loss for the year	$	(11,485,246	)	$	(6,607,763	)
Adjustment to net loss for the period for non-cash items
Accretion		654,760			227,313
Accrued interest		129,506			-
Inventory write-down to net realizable value		635,219			-
Amortization		547,478			466,042
Impairment of acquired assets		245,500			-
Loss on debt extinguishment		118,448			220,065
Loss on termination of lease		65,565			-
Write-off of receivables and deposits		-			342,773
Impairment of intangible assets		2,687,695			2,230,904
Gain on forgiveness of promissory note		-			(536,729	)
Contingent expenses on Allied Colombia		-			530,191
Stock-based compensation		2,666,077			-
Changes in non-cash working capital balance:
Increase in other receivables		(82,837	)		-
Increase in prepaid expenses		88,889			(14,327	)
Increase in due from related parties		-			(130,190	)
Increase in accounts payable and accrued liabilities		322,707			163,504
Increase in inventory		(550,016	)		(52,585	)
		(3,956,255	)		(3,160,802	)
Investing activities
Cash paid and advances for the acquisition of assets (Notes 1, 3, 17)		(138,201	)		(1,721,938	)
Cash paid for acquisition of subsidiary		(42,750	)		-
Refunds of deposits		129,897			-
Purchase of property, plant, and equipment		(223,854	)		(111,553	)
Cash obtained from acquisition of assets		-			12,893
		(274,908	)		(1,820,598	)
Financing activities
Proceeds of convertible notes payable		1,634,891			588,000
Proceeds from loan payable		300,000			1,253,773
Repayment of convertible notes payable		-			(200,000	)
Proceeds from the issuance of common stock		1,759,486			2,375,908
Proceeds for subscriptions of stock issuable		921,717			-
		4,616,094			4,017,681
Increase (decrease) in cash		384,931			(963,719	)
Effect of exchange rate on changes of cash		(59,153	)		(23,116	)
Cash, beginning of year		94,047			1,080,882
Cash, end of year	$	419,825		$	94,047
Supplemental cash flow disclosures:
Income taxes paid		-			-
Interest paid		491,378			148,236
Non-cash activities: See Note 20

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

F-8

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(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 (see Note 3) by AM (Advanced Micro) Biosciences, Inc. (“AM Biosciences”). For accounting purposes, the legal subsidiary, AM Biosciences has been treated as the acquirer and Allied Corp., the legal parent, has been treated as the acquiree. 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”), see Note 4. The assets, liabilities and results of Allied Colombia are consolidated in these financial statements beginning from the February 18, 2020 acquisition date. As at August 31, 2021, Allied Colombia has a licensed producing 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 51,200,014 shares of common stock, representing approximately 65.42% of the outstanding equity of Allied Corp. to SECFAC Exchange Corp. on behalf of the prior shareholders of AM Biosciences and certain other designees of AM Biosciences as a consideration to acquire 100% of the issued and outstanding equity of AM Biosciences. Further, as part of the transaction, the Allied Shareholder submitted for cancellation and return to treasury 10,459,220 and 4,500,000 shares of common stock. As a consequence, immediately subsequent to the close of the Reorganization Agreement, Allied had 78,268,780 shares of common stock outstanding.

F-9

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

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

	The Reorganization Agreement constitutes a reverse merger, such that AM Biosciences acquired control of Allied Corp. At the time of the Reorganization Agreement, the operations of Allied Corp. did not constitute businesses under ASC 805 Business Combinations and accordingly the transaction is considered a reverse asset acquisition in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). Under this method of accounting, AM Biosciences was deemed to be the accounting acquirer for financial reporting purposes. This determination was primarily based on the facts that, immediately following the acquisition: (i) AM Biosciences’ stockholders owned a substantial majority of the voting rights in the combined company, (ii) AM Biosciences designated a majority of the members of the initial board of directors of the combined company, and (iii) AM Biosciences’ senior management holds all key positions in the senior management of the combined company. As a result, as of the closing date of the acquisition, the net assets of the Company were recorded at their acquisition-date relative fair values in the consolidated financial statements of the Company and the reported operating results prior to the acquisition will be those of AM Biosciences. See Note 3 for details on the RTO.
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 year ended August 31, 2021 of $11,485,246, has generated minimal revenue and as at August 31, 2021 has a working capital deficit of $4,465,792. 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. Management has determined that there has been no significant impact to the Company’s operations, however management continues to monitor the situation.

e)

Business Risks

While some states in the United States have authorized the use and sale of cannabis, it remains illegal under federal law and the approach to enforcement of U.S. federal laws against cannabis is subject to change. Because the Company plans to engage in cannabis-related activities in the United States, it assumes certain risks due to conflicting state and federal laws. The federal law relating to cannabis could be enforced at any time and this would put the Company at risk of being prosecuted and having its assets seized.

F-10

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

1.	Nature of operations, reverse take-over transaction and going concern (continued)
	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 Canada in order to support continuing operations.
2.	Significant accounting policies
	Business Presentation These 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. 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 August 31, 2021 and August 31, 2020.

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

F-11

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

2. Significant accounting policies (continued)

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 balance sheets, statements of net loss and comprehensive loss and statements of cash flows.

e)

Intangible assets

At August 31, 2021 and 2020, intangible assets include licenses which are being amortized over their estimated useful lives of 10 years. The Company’s licenses are amortized over their economic or legal life on a straight-line basis, whichever is shorter. The licenses have been amortized from the date of acquisition.  The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives. For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value. During the year ended August 31, 2021, the Company recognized impairment of intangible assets in the amount of $2,687,695 (2020 – $2,230,904). Indicators of impairment the Company considered included the following: limited history which to base future outcomes from operations including cash flows; insufficiently established observable legal markets; uncertainty in what will be legally permissible in a future market and what prices and demand there would be in Columbia; uncertainty about future changes in law; and uncertainty in the timing and amount of future cash flows.

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.

F-12

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(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.

F-13

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

2. Significant accounting policies (continued)

	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.

F-14

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

2. Significant accounting policies (continued)

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.

F-15

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

2. Significant accounting policies (continued)

	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 August 31, 2021 and 2020 other than cash. Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions.
p)	Leases
	In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The standard states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. The Company adopted ASU 2016-02 on September 1, 2019, using the transition relief to the modified retrospective approach, presenting prior year information based on the previous standard. The Company did not have any leases until the acquisition of its wholly owned subsidiary, Allied Colombia S.A.S. on February 18, 2020.

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

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

F-16

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

2. Significant accounting policies (continued)

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).

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)).

F-17

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

2. Significant accounting policies (continued)

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.

Presentation of consolidated financial statements post reverse acquisition (continued)

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.

F-18

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

2.	Significant accounting policies (continued)
		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.
	r)	Recent accounting pronouncements
		The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the year ended August 31, 2021, are of significance or potential significance to the Company.

3.

Reverse take-over transaction

Pursuant to the Reorganization Agreement (see Note 1(b)), effective on September 10, 2019, the Company acquired 100% of the issued and outstanding equity of AM Biosciences (the “Acquisition”). As consideration for the equity of AM Biosciences, the Allied Shareholder issued and delivered 51,200,014 shares of common stock, representing approximately 62.12% of the outstanding equity of the Company to SECFAC Exchange Corp. on behalf of the previous shareholders of AM Biosciences and other designees of AM Biosciences. The Acquisition was accounted for as a reverse asset acquisition pursuant to ASC 805, Business Combinations, as substantially all of the fair value of the assets acquired were concentrated in a group of similar non-financial assets, and the acquired assets did not have outputs or employees. The total purchase price paid in the Acquisition has been allocated to the net assets acquired and liabilities assumed based on their fair values as of the completion of the Acquisition. The following summarizes the purchase price paid in the Acquisition

Number of shares AM Bioscience would have had to issue to Allied Shareholders for the same interest in the combined entity		31,289,441
Multiplied by the fair value per share of AM Bioscience’s common stock	$	0.1142
Fair value of consideration issued to effect the Acquisition	$	3,573,254

F-19

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

3.	Reverse take-over transaction (continued)
	The total purchase price of $3,573,254 was allocated to the fair value of the net assets of Allied as follows:

Cash	$	12,893
Other current assets		8,707
Advances receivable		4,072,988
Current liabilities		(99,386	)
Effect of the Acquisition on equity		(421,948	)
Purchase price	$	3,573,254

4.

Acquisition of Allied Colombia S.A.S. (formerly known as Medicolombia)

On August 29, 2019, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with Dorson Commercial Corp. (“Dorson”) to purchase all of the issued and outstanding shares of Allied Colombia S.A.S. (“Allied Colombia”) held by Dorson. Pursuant to the Purchase Agreement the purchase price of Allied Colombia was $700,000 and 4,500,000 common shares of Allied with total fair value of $4,500,000. The Company closed and completed the acquisition of Allied Colombia on February 18, 2020. During the period leading up to the acquisition, the Company made additional advances to Allied Colombia totaling $329,436, which was eliminated at consolidation after the acquisition. The Company determined that Allied Colombia did not meet the definition of a business found in ASC 805 Business Combinations. As the purchase of Allied Colombia did not qualify as a business acquisition, the Company accounted for the transaction as an asset acquisition. As the fair value of the purchase price consideration paid was more reliably measurable than the assets acquired, the cost of the non-cash assets received was based on the fair value of the consideration given. The cost of the asset acquisition was allocated on a fair value basis to the net assets acquired. The Company allocated the cost of the assets as follows:

Purchase Price:
Cash	$	700,000
Common stock issued		4,500,000
Liabilities assumed		556,820
Total purchase price	$	5,756,820

Fair value of assets acquired:
Other current assets	$	115,475
Right-of-use asset		82,398
Property and equipment		123,613
Licenses		5,435,334
Total assets acquired	$	5,756,820

In connection with the acquisition of MediColombia, the Company also assumed the contingent liability of paying $598,326 (CAD$700,000) in cash or issuing equity for the equivalent amounts to the previous shareholders of MediColombia before Baleno acquired MediColombia on May 13, 2019, when MediColombia reaches to certain production milestone. On February 18, 2020, the Company assessed that the contingent consideration did not qualify for recognition at the acquisition date under ASC 480 or ASC 815, and therefore, the Company did not recognize any contingent consideration pertaining to this. As at August 31, 2020, the Company reassessed and determined that it became probable that MediColombia would reach to the production milestone and therefore, the contingent liability meets the recognition criteria under ASC 480 as at August 31, 2020. During the year ended August 31, 2020, the Company recognized contingent expenses on MediColombia of $530,191. As at August 31, 2020, the accrued contingent liabilities totaled $536,727, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. The impact of foreign exchange is $6,536.

F-20

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

5.	Inventory
	Inventory is comprised of the following items:

	August 31, 2021		August 31, 2020
Raw materials and supplies	$	-	$	52,585
Work in progress		51,831		-
Finished goods		84,430		-
Total inventory	$	136,261	$	52,585

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 year, 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 year, 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 year, the Company recorded write-off of inventory costs which include labor, utilities, nutrition, and irrigation, overhead and depreciation to net realizable value of $635,219. The Company’s sales were generated from cannabis products purchased from certain third-party supplier during the year ended August 31, 2021.

6.

Deposits and advances

	August 31, 2021		August 31, 2020
a) Towards the purchase of prefabricated buildings	$	2,656,695	$	2,600,720
b) Refundable deposits towards future land acquisitions		-		174,030
c) Vitalis equipment deposit		233,496		233,496
d) Deposit towards a license acquisition		150,000		-
e) Prepayments for construction facility in Colombia		115,972		-
Total deposits and advances	$	3,156,163	$	3,008,246

a)	In 2019, the Company entered to a separate modular building purchase agreement to acquire and construct an 8,700 square foot facility to be used as a certified Cannabis Cultivation and extraction facility. At August 31, 2021, Company had deposits of $2,656,695 (August 31, 2020 - $2,600,720) to purchase prefabricated buildings. As of August 31, 2021, the Company had not yet received the buildings and the amounts have been recorded as deposits.
b)	At August 31, 2021, the Company has entered into two purchase and sale agreements to acquire land as described in Note 16(a). At August 31, 2021, Company had deposits totaling $Nil (August 31, 2020 - $174,030).
c)	At August 31, 2021 and 2020, the Company had paid $233,496 to purchase equipment as described in Note 16(b). At August 31, 2021, the Company had not yet received the equipment and the amount paid has been recorded as a deposit.

F-21

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

6. Deposits and advances (continued)

d)	At August 31, 2021 and August 31, 2020, the Company had paid $150,000 to acquire a license through an asset purchase agreement as described in Note 16(b). At August 31, 2021, the asset purchase has not closed and the amount paid has been recorded as a deposit.
e)	The Company paid certain vendors for the construction of farm facilities in Colombia in advance. As at August 31, 2021, the prepayments totaled $115,972.

7.	Property, plant and equipment
	At August 31, 2021, property, plant and equipment (“PPE”) consisted of:

	Construction in process			Farm facility and equipment			Office and computer equipment			Land equipment			Total
Cost
August 31, 2020	$	136,114		$	79,956		$	3,161		$	6,000		$	225,231
Additions		64,057			20,738			7,515			10,354			102,664
Transfer		(174,990	)		174,990			-			-			-
Foreign exchange		2,288			(908	)		(23	)		(44	)		1,313
August 31, 2021	$	27,469		$	274,776		$	10,653		$	16,310		$	329,208
Accumulated depreciation
August 31, 2020	$	-		$	2,211		$	-		$	-		$	2,211
Additions		-			57,660			1,980			941			60,581
Foreign exchange		-			(1,352	)		(45	)		(22	)		(1,419	)
August 31, 2021	$	-		$	58,519		$	1,935		$	919		$	61,373
Net book value
August 31, 2020	$	136,114		$	77,745		$	3,161		$	6,000		$	223,020
August 31, 2021	$	27,469		$	216,257		$	8,718		$	15,391		$	267,835

	As of August 31, 2021, the construction in process has not been in use. During the year ended August 31, 2021, the Company included depreciation of PPE of $13,818 in cost of inventory.
8.	Intangible assets
	At August 31, 2021, intangible assets consisted of:

	Cost $		Foreign exchange $			Accumulated amortization $			Accumulated impairment $			August 31, 2021 Net carrying value $		August 31, 2020 Net carrying value $
Cannabis licenses		5,435,334		(464,973	)		(1,122,694	)		(3,801,667	)		46,000		3,300,000
		5,435,334		(464,973	)		(1,122,694	)		(3,801,667	)		46,000		3,300,000

On February 17, 2020, the Company acquired $5,435,334 of licenses as part of the acquisition of Allied Colombia described in Note 4. 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 (2020 - $463,858) for the year ended August 31, 2021, of which $158,121 was included in cost of inventory.

F-22

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

8.	Intangible assets (continued)
	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 Columbia 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. These factors formed an indicator of impairment. Due to the uncertainty in the timing and amount of future cash flows from operations and unobservable market values for license sales, the Company has written down its licenses to the estimated replacement value of $46,000. During the year ended August 31, 2021, the Company recorded impairment of intangible assets in the amount of $2,687,695 (2020 – $2,230,904).
9.	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 (COP 9,970,675) 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 Note 6(b) and 16(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 August 31, 2021, the Company did not have any finance leases. At August 31, 2021, the weighted average remaining operating lease term was 6.90 years and the weighted average discount rate associated with operating leases was 15%.

F-23

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

9.	Leases (continued)
	The components of lease expenses were as follows:

Operating lease cost:	$
Amortization of right-of-use assets		10,403
Interest on lease liabilities		29,022
Total operating lease cost		39,425

The following table provides supplemental cash flow and other information related to leases for the year ended August 31, 2021:

	$
Lease payments		38,809

Supplemental balance sheet information related to leases as of August 31, 2021 are as below:

	$
Cost		587,448
Accumulated amortization		(13,490	)
Lease termination		(299,115	)
Foreign exchange		(27,518	)
Net carrying value at August 31, 2021		247,325

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

	$
2022		60,437
2023		60,437
2024		60,437
Thereafter		218,581
Total minimum lease payments		399,892
Less: amount of lease payments representing effects of discounting		(152,567	)
Present value of future minimum lease payments		247,325
Less: current obligations under leases		(25,013	)
Lease liabilities, net of current portion		222,312

10. Loans payable

a) In June 2020, the Company entered into a financing agreement to finance the buildings described in Note 6(a). Pursuant to the agreement, the Company financed $1,253,772 of the purchase price. The Company paid $71,023 at commencement date on May 29, 2020, and will make six monthly interest payments of $37,613 commencing June 20, 2020 and repay the principal of $1,253,772 on November 20, 2020. During the year ended August 31, 2021, the Company amended the loan agreement to extend the repayment due date to December 20, 2021. During the year ended August 31, 2021, the Company paid interest in the amount of $451,378.

F-24

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

10.	Loans payable (continued)
	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 year ended August 31, 2021, the Company paid $42,750 towards the promissory note, leaving a balance owing of $42,750. The remaining balance was paid subsequent to year-end.
	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 year ended August 31, 2021, the Company amended the promissory note to extend the repayment due date to August 31, 2021. The promissory note was paid in full subsequent to year-end.

11. 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 secured 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 August 31, 2021, the conversion features and warrants would not meet derivative classification. The relative fair values of the secured 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 $108,100 discounted the carrying value of the convertible debt on the date of issue. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. On June 30, 2020, the Company repaid $200,000 of the $600,000 note which left $200,000 outstanding on each note.

F-25

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

11. Secured convertible notes payable (continued)

i.

First Modification:

On July 1, 2020, the Company entered into amendments to the secured convertible notes. Pursuant to the amendments, beginning on July 1, 2020, the secured convertible notes bear simple interest at 5% per annum. The maturity date of the secured 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 secured 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 secured convertible notes had a total carrying value of $400,000. As the common shares and warrants were issued as consideration for extending the secured 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 secured convertible notes. Pursuant to the amendments, the maturity date of the secured 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 secured 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 secured convertible notes had a total carrying value of $400,000. As the common shares were issued as consideration for extending the secured 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.

F-26

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

11. Secured convertible notes payable (continued)

iii.	Third Modification:
	On March 31, 2021, the Company entered into amendments to the secured convertible notes. Pursuant to the amendments, beginning on April 1, 2021, the secured convertible notes bear simple interest at 10% per annum.  Pursuant to the amendments, the maturity date of the secured 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 secured 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 secured convertible notes had a total carrying value of $400,000. As the common shares were issued as consideration for extending the secured 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.
As at August 31, 2021, the Company has recorded accrued interest of $36,658, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. Subsequent to August 31, 2021, the Company amended the secured convertible notes as described in Note 24(c).

b)

On September 29, 2020, the Company issued a secured convertible note with a fair value of $163,341 (the “Note”) and warrants to purchase 130,673 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note is due on demand after March 27, 2021. The Note 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 August 31, 2021, the conversion features and warrants do not meet derivative classification.

F-27

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

11. Secured convertible notes payable (continued)

The relative fair values of the secured 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 amendment to the secured convertible note. Pursuant to the amendment, beginning on April 1, 2021, the secured convertible note bear simple interest at 10% per annum. The maturity date of the secured convertible note 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 secured convertible note holder 8,268 common shares of the Company. These shares were issued subsequent to August 31, 2021.  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 secured convertible note had a total carrying value of $163,341. As the common shares were issued as consideration for extending the secured 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 amendment to the secured convertible note. Pursuant to the amendment, beginning on June 1, 2021, the secured convertible note bear simple interest at 10% per annum. The maturity date of the secured 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.
As at August 31, 2021, the Company has recorded accrued interest of $15,036, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

F-28

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

11. Secured convertible notes payable (continued)

	Subsequent to August 31, 2021, the Company amended the secured convertible note as described in Note 24(f).
c)	On October 26, 2020, the Company issued a secured convertible note with a face value of $37,613 (the “Note”) and warrants to purchase 30,090 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note is due on demand after April 23, 2021. The Note 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 August 31, 2021, the conversion features and warrants do not meet derivative classification.

The relative fair values of the secured 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 amendment to the secured convertible note. Pursuant to the amendment, beginning on June 1, 2021, the secured convertible note bear simple interest at 10% per annum. The maturity date of the secured 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.

F-29

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

11. Secured convertible notes payable (continued)

As at August 31, 2021, the Company has recorded accrued interest of $3,184, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

Subsequent to August 31, 2021, the Company amended the secured convertible note as described in Note 24(f).

d)

On November 11, 2020, the Company issued a secured convertible note with a face value of $85,937 (the “Note”) and warrants to purchase 68,750 shares of the Company’s common stock at $1.25 per share for 2 years.   The Note bears interest at 10% per annum. The Note is due on demand after May 9, 2021.  The Note 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 August 31, 2021, the conversion features and warrants do not meet derivative classification.

The relative fair values of the secured 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 amendment to the secured convertible note. Pursuant to the amendment, beginning on June 1, 2021, the secured convertible note bear simple interest at 10% per annum. The maturity date of the secured 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.

F-30

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

11. 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 August 31, 2021, the Company has recorded accrued interest of $6,899, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. Subsequent to August 31, 2021, the Company amended the secured convertible note as described in Note 24(f).

e) On December 2, 2020, the Company issued a secured convertible note with a face value of $600,000 (the “Note”) and warrants to purchase 240,000 shares of the Company’s common stock at $1.25 per share for 2 years.   The Note bears interest at 10% per annum. The Note is due on demand after November 27, 2021.  The Note 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 August 31, 2021, the conversion features and warrants do not meet derivative classification.

The relative fair values of the secured convertible note and the warrants were $457,436 and $142,564 respectively. The effective conversion price was then determined to be $0.95. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature (“BCF”). The Company recognized the relative fair value of the BCF of $457,436 and an equivalent discount. The Company then recognized the relative fair value of the warrants of $22,564 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $Nil. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.

As at August 31, 2021, the Company has recorded accrued interest of $44,712, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

Subsequent to August 31, 2021, the Company amended the secured convertible note as described in Note 24(c).

F-31

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

11. Secured convertible notes payable (continued)

f)

On January 7, 2021, the Company issued a secured convertible note with a face value of $300,000 (the “Note).   The Note bears interest at 10% per annum and is due on demand after November 27, 2021.  The Note 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 August 31, 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”). As at August 31, 2021, the Company has recorded accrued interest of $19,398, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. Subsequent to August 31, 2021, the Company amended the secured convertible note as described in Note 24(c).

g)

On March 26, 2021, the Company issued a secured 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 is due on demand after September 26, 2021.  The Note is convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share.

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 August 31, 2021, the conversion features and warrants do not meet derivative classification.

F-32

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

11. Secured convertible notes payable (continued)

	The relative fair values of the secured 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. As at August 31, 2021, the Company has recorded accrued interest of $779, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. Subsequent to August 31, 2021, the Company amended the secured convertible note as described in Note 24(f).
h)	On March 26, 2021, the Company issued a secured 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 is due on demand after September 26, 2021. The Note is convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share.
	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 August 31, 2021, the conversion features and warrants do not meet derivative classification.

The relative fair values of the secured 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.

As at August 31, 2021, the Company has recorded accrued interest of $4,329, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

Subsequent to August 31, 2021, the Company amended the secured convertible note as described in Note 24(f).

F-33

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

11. Secured convertible notes payable (continued)

i)

On April 30, 2021, the Company issued a secured 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 is due on demand after October 31, 2021. The Note is 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 August 31, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the secured 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. As at August 31, 2021, the Company has recorded accrued interest of $3,370, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. Subsequent to August 31, 2021, the Company amended the secured convertible note as described in Note 24(f).

j) On April 29, 2021, the Company issued a secured 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 is 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.

F-34

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

11. 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 August 31, 2021, the conversion features and warrants do not meet derivative classification. The relative fair values of the secured 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. As at August 31, 2021, the Company has recorded accrued interest of $6,115, which is included in accounts payable and accrued liabilities on the consolidated balance sheets. Subsequent to August 31, 2021, the Company amended the secured convertible note as described in Note 24(f).
k)	On July 25, 2021, the Company issued a secured 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 August 31, 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”). As at August 31, 2021, the Company has recorded accrued interest of $336, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

F-35

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

11. Secured convertible notes payable (continued)

l) On July 25, 2021, the Company issued a secured 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 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 August 31, 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”). As at August 31, 2021, the Company has recorded accrued interest of $144, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

12.

Equity

During the year ended August 31, 2020: Pursuant to the Acquisition described in Note 1, the Allied Shareholder submitted for cancellation and return to treasury 10,459,220 shares of common stock. On September 9, 2019, the Company returned 4,500,000 common shares to treasury and reserved for acquisition of Allied Colombia. On February 14, 2020, the 4,500,000 common shares were re-issued to the previous shareholders of Allied Colombia with a fair value of $4,500,000. On December 1, 2019, the Company issued 130,000 common shares at $0.50 per share, for which gross cash proceeds of $265,000 had previously been received. On January 21, 2020, the Company issued 240,000 common shares at $1.25 per share for gross cash proceeds of $300,000 in cash. Company paid cash finders fees of $24,092 as part of the financing. On March 6, 2020, the Company issued 240,000 shares of common stock at $1.25 per share for gross cash proceeds of $300,000. On March 9, 2020, the Company issued 200,000 shares of common stock at $1.25 per share for gross proceeds of $250,000. On March 12, 2020, the Company issued 120,000 common shares at $1.25 per share for cash proceeds of $150,000, and 56,000 shares were paid as a finder’s fee. On May 20, 2020, the Company issued 160,000 common shares at $1.25 per share for cash proceeds of $200,000, and 16,000 shares were paid as a finder’s fee. On June 8, 2020, the Company issued 960,000 shares of common stock at $1.25 per share for gross cash proceeds of $1,200,000. In connection with the extension of convertible notes payable, as of August 31, 2020, the Company had share issuable of $19,952. During the year ended August 31, 2020, the Company issued 215,000 common shares for services provided in the prior period.

F-36

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

12.	Equity (continued)
	During the year ended August 31, 2021: On September 21, 2020, the Company issued 80,000 shares of common stock at $1.25 per share for gross cash proceeds of $100,000.
	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. On March 1, 2021, the Company re-issued 100,000 common shares from treasury with fair value of $90,000 for the promissory note of $300,000 (Note 9). On March 5, 2021, the Company re-issued 200,000 shares of common stock with fair value of $160,000 from treasury for acquisition of PSF (Note 16). On March 17, 2021, the Company issued 500,000 shares of common stock at $0.50 per share for gross proceeds of $250,000. On March 17, 2021, the Company issued 86,044 shares of common stock with a fair value of $70,164 to settle $87,483 of accounts payable, which resulted in a gain on settlement of debt of $17,319. On March 22, 2021, the Company issued 25,000 shares of common stock with a fair value of $22,500 to settle $25,000 of accounts payable, which resulted in a gain on settlement of debt of $2,500. On April 7, 2021, the Company issued 100,000 shares of common stock at $0.50 per share for gross proceeds of $50,000. On April 20, 2021, the Company issued 250,000 shares of common stock at $0.50 per share for gross proceeds of $125,000. On May 7, 2021, the Company issued 50,000 shares of common stock at $0.50 per share for gross proceeds of $25,000. On May 12, 2021, the Company issued 31,746 shares of common stock with a fair value of $31,746 to settle $31,746 of accounts payable, which resulted in a gain on settlement of debt of $nil. On May 13, 2021, the Company received 1,200,000 shares of common stock from the counterparties of certain previous cancelled asset acquisitions for no consideration. The shares were cancelled upon being returned to treasury. On May 14, 2021, the Company issued 200,000 shares of common stock at $0.50 per share for gross proceeds of $100,000. On May 14, 2021, the Company issued 300,001 shares of common stock at $0.75 per share for gross proceeds of $225,000. On May 17, 2021, the Company issued 800 shares of common stock as a finder’s fee. On May 27, 2021, the Company issued 136,000 shares of common stock with a fair value of $149,952 in connection with modifications of a convertible note payable (Note 10(a)). On June 17, 2021, the Company issued 1,046,666 shares of common stock at $0.75 per share for gross proceeds of $785,000. On July 6, 2021, the Company issued 100,000 shares of common stock at $0.50 per share for gross proceeds of $50,000 During the year ended August 31, 2021, the Company received 8,123,170 shares of common stock from previous management for no consideration, and the shares were returned to treasury. 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 and $212,500 was deferred compensation included in prepaid expenses on the consolidated balance sheet. At August 31, 2021, the Company had received $921,717 for the purchase of 1,228,956 of common shares which were issued subsequent to August 31, 2021.

F-37

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

13.	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:

	August 31, 2021		August 31, 2020
Consulting fees and benefits	$	391,850	$	505,889

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:

	August 31, 2021			August 31, 2020
CEO and Director	$	(65,254	)	$	(12,588	)
COO and Director		(76,574	)		(42,059	)
An entity controlled by the CFO		(34,655	)		(10,797	)
An entity controlled by a Director		-			(5,142	)
	$	(176,483	)	$	(70,586	)

As of August 31, 2021, the Company had $176,483 (August 31, 2020 - $70,586) payable to related parties for fees or expenses incurred or expensed paid on behalf of the Company by the parties which has been presented in accounts payable and accrued liabilities.

14.	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:

F-38

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

14. Financial risk factors (continued)

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:

	August 31, 2021
Balance in Canadian dollars:
Cash and cash equivalents	$	85,581
Accounts payable		(527,754	)
Net exposure		(442,173	)
Balance in US dollars:	$	(350,458	)

A 10% change in the US dollar to the Canadian dollar exchange rate would impact the Company’s net loss by approximately $44,217 for the year ended August 31, 2021 (August 31, 2020 – $26,003).

F-39

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

14.	Financial risk factors (continued)
	The Company is exposed to foreign currency risk to the extent that the following monetary assets and liabilities are denominated in Colombian Pesos:

	August 31, 2021
Balance in Colombian Pesos dollars:
Cash and cash equivalents	$	60,142,222
Other receivables		282,501,000
Accounts payable		(4,132,175,610	)
Net exposure		(3,789,532,388	)
Balance in US dollars:	$	(1,006,067	)

A 10% change in the US dollar to the Colombian Peso exchange rate would impact the Company’s net loss by approximately $100,607 for the year ended August 31, 2021 (August 31, 2020 - $91,603).

15.

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.

16. Commitments

a)

On November 6, 2018, the Company signed an assignment to purchase two separate lots located at 8999 Jim Bailey Road in Kelowna, British Columbia, Canada. The land is zoned I2 General Industrial and allows for “Cannabis Production Facilities” as a principal use.

The total commitment for the two parcels of land is CAD$1,942,250 (US$1,457,367) (Lot 1 - $988,550, Lot 2 - CAD$953,700). During the year ended August 31, 2019, the Company executed several “offer to purchase amendments” to defer the assignment and close of the two parcels of land. On November 11, 2019, the Company executed an additional offer to purchase amendment to extend the assignment and close of the land parcels no later than February 10, 2020 and there was an additional amendment to extend the close of the purchase to May 2020. On May 7, 2020, the Company assigned the purchase of Lot 1 to a third party. In June 2020, the Company entered into a lease agreement to lease Lot 1 from the third party for an annual rent of CAD$70,442 for 10 years commencing June 1, 2020 until May 31, 2030. On November 1, 2020, the lease agreement was terminated. In November 2019, the board of directors determined the Company would not close on Lot 2 as the parcel of land will not be required for future operations. As a result, the Company does not have a commitment to pay the value of CAD$953,700 for the land and will eligible to receive or assign the initial refundable deposit of CAD$10,000. During the year ended August 31, 2020, this contract of purchase and sale for LOT 2 – 8999 Jim Bailey Road was assigned to another non-related party.

F-40

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

16. Commitments

b)	In August 2019, the Company entered into an agreement for the construction and installation of equipment (Note 6a), as of August 31, 2021, $208,279 remained payable upon completion of the construction.
c)	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 August 31, 2021, the $233,496 (Note 5(c)) has been recorded as a deposit until the remaining purchase price is paid and the equipment is received.
d)	On June 30, 2021, the Company entered into a construction agreement for building an energy network and transformer with a total cost of $235,788 (COP$888,139,643). During the year ended August 31, 2021, the vendor has completed 10%, or $23,579 (COP$88,813,964), of the work related to the construction agreement, which has been capitalized as construction in process. As at August 31, 2021, the Company held deposits of $47,157 (COP$177,627,929) and is obligated to pay the remaining $165,052 (COP$621,697,750) prior to completion of the construction.
e)	As of August 31, 2021, the Company recorded a contingent liability of $532,841 (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 sheet.
f)	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 August 31, 2021, $90,000 remained outstanding and was included in accounts payable and accrued liabilities in the consolidated balance sheet.
g)	The Company has entered into leases for farm land in Colombia. See Note 9 for details.

17.

Acquisition of Pacific Sun Fungi Inc.

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 $160,000. The primary business of PSF is the production and commercialization of organic, vegan and non-genetically modified psilocybin micro dosing products. The Company analyzed the acquisition under ASU 2017-01 and determined that PSF did not meet the definition of a business. Therefore, the transaction has been accounted for as an asset acquisition. The Company analyzed the gross assets acquired and determined that there were no identifiable assets acquired. As no assets were identified, the Company measured the acquisition at the cost of the consideration and impaired the value of the acquisition immediately, resulting in an impairment loss of $245,500 during the year ended August 31, 2021.

F-41

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

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

	Number of warrants			Weighted average exercise price $
Balance, August 31, 2020		560,000			1.25
Issued		3,343,135			1.21
Expired		(240,000	)		1.25
Balance, August 31, 2021		3,663,135			1.21

As at August 31, 2021, the following share purchase warrants were outstanding:

Number of warrants		Exercise price $		Expiry date
	320,000		1.25	October 31, 2021
	130,673		1.25	September 29, 2022
	30,090		1.25	October 16, 2022
	68,750		1.25	November 11, 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

19.

Stock options

On February 1, 2021, the Company granted 4,900,000 stock options to directors, officers and employees of the Company. The options expire five years after the grant date and 1,200,000 options are exercisable at $0.825 per share and 3,700,000 options are exercisable at $0.75 per share. The options vest one third on the grant date and one third on the first and second years after the grant date. The weighted average grant date fair value of stock options granted was $0.77 per share. During the year ended August 31, 2021, the Company recorded stock-based compensation of $2,666,077 on the consolidated statement of operations.

F-42

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

19.	Stock options (continued)
	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, 2020		–			–		–		–
Granted		4,900,000			0.77		4.42
Cancelled		(450,000	)		0.75		4.42
Outstanding, August 31, 2021		4,450,000			0.77		4.42		1,334,000
Exercisable, August 31, 2021		1,483,333			0.77		4.42		444,667

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:

	Year Ended August 31, 2021			Year Ended August 31, 2020
Expected dividend yield		0	%		-
Expected volatility		182	%		-
Expected life (in years)		5			-
Risk-free interest rate		0.42	%		-

	At August 31, 2021, there was $1,289,875 of unrecognized compensation costs related to non-vested stock-based compensation arrangements granted under the Plan.
20.	Non-cash activities

	For the Year Ended August 31, 2021		For the Year Ended August 31, 2020
Non-cash activities:
Common stock issued pursuant to asset acquisitions		160,000		4,500,000
Common stock issued to settle debt		124,410		-
Common stock issued for promissory note		90,000		-
Common stock issued for consulting services		637,500		-
Beneficial conversion feature		276,008		115,383
Relative fair value of warrants issued with convertible note		434,594		108,100
Fair value of warrants issued on modification of convertible note		-		198,445
Fair value of shares issued on modification of convertible note		129,952		-
Fair value of shares issuable on modification of debt		8,268		19,952
Original debt discount against convertible notes		-		12,000
Net liabilities acquired in Allied Colombia Acquisition		-		(222,837	)

F-43

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

21.	Segment disclosure
	The Company has two operating segments including:
	a)	Allied Columbia, a Columbian based company through which the Company intends to commence commercial production in Colombia. (Allied Colombia)
	b)	Allied Corp. which consists of the rest of the Company’s operations. (Allied)
	Factors used to identify the Company’s reportable segments include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance. The Company’s operating segments have been broken out based on similar economic and other qualitative criteria. The Company operates the Allied reporting segment in one geographical area (Canada), and the Allied Colombia reporting segment in one geographical area (Colombia). Financial statement information by operating segment for the year ended August 31, 2021 is presented below:

	Allied $			Allied Colombia $			Total $
Net sales		6,358			6,160			12,518
Net loss		(7,089,987	)		(4,395,259	)		(11,485,246	)
Accretion		654,760			-			654,760
Depreciation and amortization		-			547,478			547,478
Total assets as of August 31, 2021		3,690,362			943,413			4,633,775

Financial statement information by operating segment for the year ended August 31, 2020 is presented below:

	Allied $			Allied Colombia $			Total $
Net loss		(3,134,323	)		(3,473,440	)		(6,607,763	)
Accretion		227,313			-			227,313
Depreciation and amortization		-			466,042			466,042
Total assets as of August 31, 2020		3,425,088		3.679,489				7,104,577

Geographic information for the year ended and as at August 31, 2021 is presented below:

	Revenues $		Total Assets $
Canada		6,358		3,690,362
Colombia		6,160		943,413
Total		12,518		4,633,775

F-44

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

21.	Segment disclosure (continued)
	Geographic information for the year ended and as at August 31, 2020 is presented below:

	Revenues $		Total Assets $
Canada		-		3,425,088
Colombia		-		3,679,489
Total		-		7,104,577

22.	Income taxes
	At August 31, 2021, the Company has a net operating loss carryforward of approximately $8,609,000. The significant components of deferred income tax assets at August 31, 2021 and 2020 were as follows:

	August 31, 2021			August 31, 2020
Deferred tax asset:
Net operating loss carryforward	$	2,200,000		$	1,165,000
Less: valuation allowance		(2,200,000	)		(1,165,000	)
Net deferred income tax asset	$	-		$	-

The amount taken into income as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide a full valuation allowance against all available income tax loss carry forwards. The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management’s judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.

As of August 31, 2021 and 2020, the Company has no recognized income tax benefits. The Company’s policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been recorded during the year ended August 31, 2021 or 2020. No interest or penalties have been accrued as of August 31, 2021. As of August 31, 2021 and 2020, the Company did not have any amounts recorded pertaining to uncertain tax positions.

A reconciliation of the provision for income taxes at the combined statutory rate for the year ended August 31, 2021 and 2020 is as follows:

	August 31, 2021			August 31, 2020
Income tax benefit	$	1,035,000		$	808,000
Change in valuation allowance		(1,035,000	)		(808,000	)
Provision for income taxes	$	-		$	-

F-45

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

22.

Income taxes (continued)

As of August 31, 2021, the Company had approximately $8,609,000 of federal net operating losses that may be available to offset future taxable income. The net operating loss carryforwards will begin to expire in 2034 unless utilized. In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company’s U.S. net operating carryovers may be subject to an annual limitation in the event of a change of control as defined the regulations. A Section 382 analysis has not been prepared and the Company’s NOLs could be subject to limitation.

23. 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 August 31, 2021, the asset purchase has not been closed and the amount paid has been recorded as a deposit.

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 July 2, 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.
b)	On September 2, 2021, the Company issued 7,073,170 common shares to certain management for service commitments.
c)	On October 1, 2021, the Company entered into amendment agreements for the secured convertible notes as described in Note 11. Pursuant to the amendments, the secured convertible notes shall be payable with simple interest of 10% per annum, all on demand on or after March 31, 2022.
d)	On October 1, 2021, the Company issued a secured 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 on or 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 per share. On November 1, 2021, the maturity date was amended to March 31, 2022.

F-46

ALLIED CORP.

Notes to the consolidated financial statements

For the year ended August 31, 2021 and 2020

(Expressed in US dollars)

23. Subsequent events (continued)

e)	On October 25, 2021, the Company issued a secured 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 on or 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 per share.
f)	On November 1, the Company entered into amendment agreements for the secured convertible notes as described in Note 11. Pursuant to the amendments, the secured convertible notes shall be payable with simple interest of 10% per annum, all on demand on or after March 31, 2022.
g)	Subsequent to the year ended August 31, 2021, the Company issued 3,517,666 units at $0.75 per unit for proceeds of $2,638,250 less finder's fee of $206,043. 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.

F-47

ALLIED CORP.

CONSOLIDATED FINANCIAL STATEMENTS

Condensed consolidated interim balance sheets at February 28, 2022 (unaudited) and August 31, 2021	F-49
Condensed consolidated interim statements of operations and comprehensive loss for the three and six months ended February 28, 2022 and 2021 (unaudited)	F-50
Condensed consolidated interim statements of stockholders’ equity (deficit) for the six months ended February 28, 2022 and 2021 (unaudited)	F-51
Condensed consolidated interim statements of cash flows for the six months ended February 28, 2022 and 2021 (unaudited)	F-53
Notes to the unaudited condensed consolidated interim financial statements	F-54

F-48

ALLIED CORP.

Condensed Consolidated Interim Balance Sheets

(Expressed in US Dollars)

	February 28, 2022			August 31, 2021
	(Unaudited)
Assets
Current assets
Cash	$	618,612		$	419,825
Inventory (Note 3)		171,511			136,261
Other receivables		33,813			82,837
Prepaid expenses		133,269			277,529
Total current assets		957,205			916,452
Deposits and advances (Note 4)		2,951,779			3,156,163
Right-of-use assets (Note 7)		225,335			247,325
Property, plant and equipment (Note 5)		1,422,739			267,835
Intangible assets (Note 6)		50,974			46,000
Total assets	$	5,608,032		$	4,633,775
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	1,913,944		$	1,871,659
Current portion of lease liabilities (Note 7)		25,808			25,013
Loan payable (Note 8)		1,520,129			1,596,522
Secured convertible notes payable (Note 9)		2,381,408			1,889,050
Total current liabilities		5,841,289			5,382,244
Lease liabilities, net of current portion (Note 7)		199,527			222,312
Total liabilities	$	6,040,816		$	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; 92,898,929 shares issued and outstanding (79,858,867 – par value $0.0001 – August 31, 2021)		9,336			7,986
Treasury stock		-			707
Additional paid in capital		32,008,741			18,099,226
Common stock issuable		20,800			929,985
Accumulated deficit		(31,787,038	)		(19,393,812	)
Accumulated other comprehensive loss		(684,623	)		(614,873	)
Total stockholders’ deficiency		(432,784	)		(970,781	)
Total liabilities and stockholders’ deficiency	$	5,608,032		$	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.

F-49

ALLIED CORP.

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss

(Expressed in US dollars)

(Unaudited)

	For the Three Months  Ended  February 28,  2022			For the Three Months  Ended  February 28, 2021			For the Six Months  Ended  February 28, 2022			For the Six Months Ended February 28, 2021
Revenues
Sales	$	23,378		$	1,060		$	42,556		$	5,260
Expenses
Amortization		56,729			196,341			70,028			366,021
Charitable donations		-			15,000			-			15,000
Consulting fees		268,655			163,892			569,657			491,735
Foreign exchange loss (gain)		(698	)		(11,291	)		(555	)		(16,256	)
Interest expense and bank charges		181,585			145,588			352,726			258,428
Inventory cost		26,926			-			37,204			-
Office and miscellaneous		402,623			446,075			704,913			572,719
Professional fees		310,266			242,148			554,054			372,779
Research and development		12,062			-			12,062			-
Stock-based compensation – bonus shares (Note 11)		-			-			4,585,425			-
Stock-based compensation – consulting services (Note 10)		53,126			-			3,584,392			-
Stock-based compensation – options		702,683			1,380,120			1,233,938			1,380,120
Travel		3,574			4,265			16,274			5,606
Write-down of inventory to net realizable value (Note 3)		218,910			-			471,549			-
Operating expenses		2,236,441			2,582,138			12,191,667			3,446,152
Loss before other items		(2,213,063	)		(2,581,078	)		(12,149,111	)		(3,440,892	)
Other expenses
Loss on termination of lease		-			-			-			(65,565	)
Settlement payments (Note 14)		-			-			-			(105,000	)
Gain (loss) on debt extinguishment		-			19,820			-			(90,180	)
Accretion		(112,082	)		(138,178	)		(244,115	)		(193,661	)
Total other expenses		(112,082	)		(118,358	)		(244,115	)		(454,406	)
Net loss		(2,325,145	)		(2,699,436	)		(12,393,226	)		(3,895,298	)
Other comprehensive income (loss)
Foreign currency translation adjustments		(18,709	)		42,354			(69,750	)		160,572
Comprehensive loss	$	(2,343,854	)	$	(2,657,082	)	$	(12,462,976	)	$	(3,734,726	)
Basic and diluted loss per share	$	(0.03	)	$	(0.03	)	$	(0.14	)	$	(0.05	)
Weighted average number of common shares outstanding		92,359,427			85,276,609			90,599,466			85,305,780

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

F-50

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
Detachable warrants issued with convertible notes payable		-		-		142,564		-		-		-			-			142,564
Beneficial conversion feature		-		-		22,564		-		-		-			-			22,564
Stock-based compensation		-		-		1,380,120		-		-		-			-			1,380,120
Common stock issuable to settle debt		-		-		-		92,664		-		-			-			92,664
Common stock subscribed		-		-		-		250,000		-		-			-			250,000
Comprehensive loss for the period		-		-		-		-		-		(2,699,436	)		41,649			(2,657,787	)
Balance, February 28, 2021		85,305,780	$	8,531	$	14,308,501	$	472,616		-	$	(11,803,864	)	$	(481,543	)	$	2,504,241

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

F-51

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		4,566,389		456		-			-			3,426,404			(873,735	)		(250,000	)		-			-			2,303,125
Share issuance costs		-		-		-			-			(253,390	)		-			-			-			-			(253,390	)
Shares subscribed		-		-		-			-			-			85,126			-			-			-			85,126
Shares issued for finders fees		8,000		1		-			-			5,999			-			-			-			-			6,000
Shares issued in error not yet cancelled		634,667		64		-			-			(64	)		-			-			-			-			-
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		92,141,093	$	9,214		-			-		$	29,967,303		$	141,376		$	(250,000	)	$	(29,461,893	)	$	(665,914	)	$	(259,914	)
Subscriptions received		-		-		-			-			-			-			250,000			-			-			250,000
Shares issued for stock issuable		188,501		19		-			-			141,357			(141,376	)		-			-			-			-
Shares issued for cash		933,601		94		-			-			1,078,107			-			-			-			-			1,078,201
Share issuance costs		-		-		-			-			(81,900	)		-			-			-			-			(81,900	)
Shares subscribed		-		-		-			-			-			20,800			-			-			-			20,800
Shares issued in error not yet cancelled		93,334		9		-			-			(9	)		-			-			-			-			-
Beneficial conversion feature		-		-		-			-			201,200			-			-			-			-			201,200
Stock-based compensation		-		-		-			-			702,683			-			-			-			-			702,683
Comprehensive loss for the period		-		-		-			-			-			-			-			(2,325,145	)		(18,709	)		(2,343,854	)
Balance, February 28, 2022		93,356,529	$	9,336		-			-		$	32,008,741		$	20,800			-		$	(31,787,038	)	$	(684,623	)	$	(432,784	)

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

F-52

ALLIED CORP.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in US dollars)

(Unaudited)

	For the Six Months Ended February 28, 2022			For the Six Months Ended February 28, 2021
Cash provided by (used in):
Operating activities
Net loss for the period	$	(12,393,226	)	$	(3,895,298	)
Adjustment to net loss for the period for non-cash items
Accretion		244,115			193,661
Accrued interest		102,065			-
Inventory write-down to net realizable value		471,549			-
Amortization		70,028			366,021
Loss on debt extinguishment		-			90,180
Loss on termination of lease		-			65,566
Stock-based compensation - consulting services (Note 10)		3,584,392			-
Stock-based compensation - bonus shares (Note 11)		4,585,425			-
Stock-based compensation - options		1,233,938			1,380,120
Changes in non-cash working capital balance:
Decrease in other receivables		49,024			-
Increase (decrease) in prepaid expenses		(68,240	)		34,179
Decrease in deposits and advances		233,496			-
Increase in due from related parties		-			(11,738	)
Increase (decrease) in accounts payable and accrued liabilities		(55,966	)		95,637
Increase in inventory		(506,799	)		(51,388	)
		(2,450,199	)		(1,733,060	)
Investing activities
Refunds of deposits		-			129,897
Purchase of intangible assets		(10,008	)		-
Purchase of property, plant, and equipment		(972,947	)		(33,209	)
		(982,955	)		96,688
Financing activities
Proceeds of convertible notes payable		650,000			1,186,892
Repayment of loan payable		(387,750	)		-
Repayment of finance lease obligations		-			(16,315	)
Proceeds from the issuance of common stock		-			250,000
Proceeds for subscriptions of stock issuable		3,407,961			250,000
		3,670,211			1,670,577
Increase (decrease) in cash		237,057			34,205
Effect of exchange rate on changes of cash		(38,270	)		20,732
Cash, beginning of period		419,825			94,047
Cash, end of period	$	618,612		$	148,984
Supplemental cash flow disclosures:
Income taxes paid		-			-
Interest paid		264,493			225,679
Non-cash activities: See Note 17

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

F-53

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(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 February 28, 2022, 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 51,200,014 shares of common stock, representing approximately 65.42% of the outstanding equity of Allied Corp. to SECFAC Exchange Corp. on behalf of the prior shareholders of AM Biosciences and certain other designees of AM Biosciences as a consideration to acquire 100% of the issued and outstanding equity of AM Biosciences. Further, as part of the transaction, the Allied Shareholder submitted for cancellation and return to treasury 10,459,220 and 4,500,000 shares of common stock. As a consequence, immediately subsequent to the close of the Reorganization Agreement, Allied had 78,268,780 shares of common stock outstanding.

The Reorganization Agreement constitutes a reverse 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.

F-54

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(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 six months ended February 28, 2022 of $12,372,006, has generated minimal revenue and as at February 28, 2022 has a working capital deficit of $4,884,084. 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.

F-55

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(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 February 28, 2022, and the results of its operations for the three months and six months ended February 28, 2022, and cash flows for the six months ended February 28, 2022. The results of operations for the period ended February 28, 2022 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 February 28, 2022 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.

F-56

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(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.

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.

F-57

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

2. Significant accounting policies (continued)

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.

F-58

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

2. Significant accounting policies (continued)

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:

F-59

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

2. Significant accounting policies (continued)

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 February 28, 2022 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

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.

F-60

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

2. Significant accounting policies (continued)

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).

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)).

F-61

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

2. Significant accounting policies (continued)

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 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.

F-62

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

2. Significant accounting policies (continued)

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 six months ended February 28, 2022, are of significance or potential significance to the Company.

3. Inventory

Inventory is comprised of the following items:

	February 28, 2022		August 31, 2021
Work in progress	$	82,289	$	51,831
Finished goods		89,222		84,430
Total inventory	$	171,511	$	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 $471,549 write-off of inventory costs which include labor, utilities, nutrition, and irrigation, overhead and depreciation to reduce inventory to its net realizable value of $171,511.

4. Deposits and advances

	February 28, 2022		August 31, 2021
a) Towards the purchase of prefabricated buildings	$	2,656,695	$	2,656,695
b) Vitalis equipment deposit		-		233,496
c) Deposit towards a license acquisition		150,000		150,000
d) Prepayments for construction facility in Colombia		29,384		115,972
e) Eteros equipment deposit		115,700		-
Total deposits and advances	$	2,951,779	$	3,156,163

F-63

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

4. Deposits and advances (continued)

a) In 2019, the Company entered to a separate modular building purchase agreement to acquire and construct an 8,700 square foot facility to be used as a certified Cannabis Cultivation and extraction facility. At February 28, 2022, Company had deposits of $2,656,695 (August 31, 2021 - $2,656,695) to purchase prefabricated buildings. As of February 28, 2022, the Company had not yet received the buildings and the amounts have been recorded as deposits.

b) At August 31, 2021, the Company had paid $233,496 to purchase equipment. The Company entered into a financing agreement for this equipment as described in Note 8 d)). At February 28, 2022, the Company received the equipment and the deposit was applied to the purchase price.

c) At February 28, 2022 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 February 28, 2022, 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 February 28, 2022, the prepayments totaled $29,384.

e) At February 28, 2022, the Company had paid $115,700 to purchase equipment. At February 28, 2022, the Company had not yet received the equipment and the amount paid has been recorded as a deposit.

5. Property, plant and equipment

At February 28, 2022, property, plant and equipment (“PPE”) consisted of:

	Construction in process			Farm facility and equipment			Office and computer equipment			Land equipment			Total
Cost
August 31, 2021	$	27,469		$	274,776		$	10,653		$	16,310		$	329,208
Additions		594,944			636,394			7,778			11,325			1,250,441
Transfer		(212,736	)		212,736			-			-			-
Foreign exchange		(16,154	)		(12,174	)		(586	)		(917	)		(29,831	)
February 28, 2022	$	393,523		$	1,111,732		$	17,845		$	26,718		$	1,549,818
Accumulated depreciation
August 31, 2021	$	-		$	58,519		$	1,935		$	919		$	61,373
Additions		-			66,000			1,097			1,070			68,167
Foreign exchange		-			(2,327	)		(90	)		(44	)		(2,461	)
February 28, 2022	$	-		$	122,192		$	2,942		$	1,945		$	127,079
Net book value
August 31, 2021	$	27,469		$	216,257		$	8,718		$	15,391		$	267,835
February 28, 2022	$	393,523		$	989,540		$	14,903		$	24,773		$	1,422,739

As of February 28, 2022 and August 31, 2021, the construction in process has not been in use.

During the period ended February 28, 2022, the Company included depreciation of PPE of $9,100 in cost of inventory.

F-64

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

6. Intangible assets

At February 28, 2022, intangible assets consisted of:

	Cost $		Foreign exchange $			Accumulated amortization $			Accumulated impairment $			February 28, 2022 Net carrying value $		August 31, 2021 Net carrying value $
Cannabis licenses		5,445,342		(468,146	)		(1,124,555	)		(3,801,667	)		50,974		46,000
		5,445,342		(468,146	)		(1,124,555	)		(3,801,667	)		50,974		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. [JB3] During the year ended August 31, 2021, the Company recorded impairment of intangible assets in the amount of $2,687,695.

During the six months ended February 28, 2022, the Company acquired $10,008 (COP 39,014,526) of licenses and Company recorded amortization of $1,861 (COP 3,938,776).

7. Leases

The Company accounts for leases under ASC 842, Leases, 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 was 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 additional 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.

F-65

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(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 February 28, 2022, the Company did not have any finance leases.

At February 28, 2022, 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		11,634
Interest on lease liabilities		17,565
Total operating lease cost		29,199

The following table provides supplemental cash flow and other information related to leases for six months ended February 28, 2022:

	$
Lease payments	29,199

Supplemental balance sheet information related to leases as of February 28, 2022 are as below:

	$
Cost	282,273
Accumulated amortization	(19,064	)
Foreign exchange	(37,874	)
Net carrying value at February 28, 2022	225,335

F-66

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

7. Leases (continued

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

	$
2022	28,941
2023	57,881
2024	57,881
Thereafter	209,337
Total minimum lease payments	354,040
Less: amount of lease payments representing effects of discounting	(128,705	)
Present value of future minimum lease payments	225,335
Less: current obligations under leases	(25,808	)
Lease liabilities, net of current portion	199,527

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. On December 27, 2021, the Company entered into an amendment agreement. Pursuant to the amendment, the Company will make 27 monthly payments starting on January 20, 2022. For the first 3 months, 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. During the six months ended February 28, 2022, the Company paid interest in the amount of $225,679 (2021 - $225,679). As of February 28, 2022, the balance owing is $1,253,772 (August 31, 2021 - $1,253,772).

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 six months ended February 28, 2022, the Company made the final $42,750 payment towards the promissory note. As of February 28, 2022, the balance owing is $nil (August 31, 2021 - $42,750).

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 six months ended February 28, 2022, the Company made the final payment of $315,000 which included interest payment of $15,000. As of February 28, 2022, the balance owing is $nil (August 31, 2021 - $300,000).

d) On December 17, 2021, the Company entered into a financing agreement to finance an equipment as described in Note 14(c). Pursuant to the agreement, the Company financed $307,543 of the purchase price with an interest rate of 8% per annum. The Company will make 20 monthly principal and interest payments of $15,000 and a final payment of $14,434 in September 2023. During the six months ended February 28, 2022, the Company paid interest in the amount of $3,814 (2021 - $nil). As of February 28, 2022, the balance owing is $266,357 (August 31, 2021 - $nil).

F-67

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

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 aright 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 determined that there was no derivative liability associated with the Notes 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 features are indexed to the Company’s own stock and are 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 February 28, 2022, the conversion features and warrants do 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 $108,100 discounted the carrying value of the convertible debt on the date of issue. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method. On June 30, 2020, the Company repaid $200,000 of the $600,000 note which left $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.

F-68

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

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.

F-69

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(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.

During the six months ended February 28, 2022, the Company made interest payments of $20,000. As at February 28, 2022, the Company has recorded accrued interest of $36,493, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

b) On September 29, 2020, the Company issued a convertible note with a fair value of $163,341 (the “Note”) and warrants to purchase 130,673 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note is due on demand after March 27, 2021. The Note 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 determined that there was no derivative liability associated with the Note 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 feature would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion feature is not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2022, the conversion feature 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 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 shares of $8,268 was expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $8,268.

F-70

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable(continued)

ii. Second Modification:

On June 1, 2021, the Company entered into 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.

iii. Third Modification:

On November 1, 2021, the Company entered into 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 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 February 28, 2022, the Company has recorded accrued interest of $23,136, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

c) On October 26, 2020, the Company issued a convertible note with a face value of $37,613 (the “Note”) and warrants to purchase 30,090 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note is due on demand after April 23, 2021. The Note 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.

F-71

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable(continued)

The Company determined that there was no derivative liability associated with the Note 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 feature would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion feature is not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2022, the conversion feature 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 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 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 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.

F-72

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(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 February 28, 2022, the Company has recorded accrued interest of $5,050, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

d) On November 11, 2020, the Company issued a convertible note with a face value of $85,937 (the “Note”) and warrants to purchase 68,750 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note is due on demand after May 9, 2021. The Note 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 determined that there was no derivative liability associated with the Note 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 feature would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion feature is not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2022, the conversion feature 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 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.

F-73

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable(continued)

ii. Second Modification:

On November 1, 2021, the Company entered into 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 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 February 28, 2022, the Company has recorded accrued interest of $11,160, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

e)  On December 2, 2020, the Company issued a convertible note with a face value of $600,000 (the “Note”) and warrants to purchase 240,000 shares of the Company’s common stock at $1.25 per share for 2 years. The Note bears interest at 10% per annum. The Note is due on demand after November 27, 2021. The Note 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 determined that there was no derivative liability associated with the Note 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 feature would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion feature is not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2022, the conversion feature 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 amendment to the convertible note. Pursuant to the amendment, 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 March 31, 2022 for no additional consideration.

F-74

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(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 February 28, 2022, the Company has recorded accrued interest of $74,466, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

f) On January 7, 2021, the Company issued a convertible note with a face value of $300,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after November 27, 2021. The Note 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 determined that there was no derivative liability associated with the Note 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 feature would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion feature is not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2022, the conversion feature does not meet derivative classification. In addition, it was determined that there was no beneficial conversion feature (“BCF”) as the stock price at the issuance date was less than the conversion price.

Modification:

On October 1, 2021, the Company entered into amendment to the convertible note. Pursuant to the amendment, 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 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 February 28, 2022, the Company has recorded accrued interest of $37,644, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

F-75

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(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 is due on demand after September 26, 2021. The Note is convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share.

The Company determined that there was no derivative liability associated with the Note 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 feature would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion feature is not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2022, the conversion feature 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 amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the convertible note bears simple interest at 10% per annum. Pursuant to the amendments, 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 February 28, 2022, the Company has recorded accrued interest of $1,672, 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 is due on demand after September 26, 2021. The Note is convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share.

F-76

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable(continued)

The Company determined that there was no derivative liability associated with the Note 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 feature would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion feature is not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2022, the conversion feature 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 amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the convertible note bears simple interest at 10% per annum. Pursuant to the amendments, 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 February 28, 2022, the Company has recorded accrued interest of $9,288, 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 is due on demand after October 31, 2021. The Note is 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.

F-77

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company determined that there was no derivative liability associated with the Note 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 feature would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion feature is not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2022, the conversion feature 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 amendment to the convertible note. Pursuant to the amendments, beginning on April 1, 2021, the convertible 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 February 28, 2022, the Company has recorded accrued interest of $8,329, 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 is 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.

F-78

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company determined that there was no derivative liability associated with the Note 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 feature would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion feature is not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2022, the conversion feature 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 amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the convertible note bears simple interest at 10% per annum. Pursuant to the amendments, 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 February 28, 2022, the Company has recorded accrued interest of $15,041, 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. 

F-79

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company determined that there was no derivative liability associated with the Note 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 February 28, 2022, the conversion feature does not meet derivative classification. In addition, it was determined that there was no beneficial conversion feature (“BCF”) as the stock price at the issuance date was less than the conversion price.

Modification:

On November 1, 2021, the Company entered into amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the convertible note bears simple interest at 10% per annum. Pursuant to the amendments, 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 February 28, 2022, the Company has recorded accrued interest of $2,071, 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 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. 

F-80

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company determined that there was no derivative liability associated with the Note 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 February 28, 2022, the conversion feature does not meet derivative classification. In addition, it was determined that there was no beneficial conversion feature (“BCF”) as the stock price at the issuance date was less than the conversion price.

Modification:

On November 1, 2021, the Company entered into amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the convertible 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 February 28, 2022, the Company has recorded accrued interest of $887, 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 March 31, 2022. The Note was 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. 

F-81

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company determined that there was no derivative liability associated with the Note 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 feature would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion feature is not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2022, the conversion feature 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 amendment to the convertible note. Pursuant to the amendment, beginning on April 1, 2021, the convertible 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.

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 February 28, 2022, the Company has recorded accrued interest of $4,110, 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 was 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. 

F-82

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company determined that there was no derivative liability associated with the Note 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 feature would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion feature is not required to be separated from the host instrument and accounted for separately. As a result, at February 28, 2022, the conversion feature 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 February 28, 2022, the Company has recorded accrued interest of $3,452, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

o) On December 23, 2021, the Company issued a convertible note with a face value of $100,000 (the “Note). The Note bears interest at 10% per annum and is due on demand 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. 

The Company determined that there was no derivative liability associated with the Note 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 February 28, 2022, the conversion feature does not meet derivative classification.

It was determined that there was a beneficial conversion feature (“BCF”) as the stock price at the issuance date was greater than the effective conversion price. The Company recognized the relative fair value of the BCF of $40,800 as additional-paid-in capital and an equivalent discount that reduced the carrying value of the convertible debt to $59,200. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.

As at February 28, 2022, the Company has recorded accrued interest of $1,836, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

p) On December 23, 2021, the Company issued a convertible note with a face value of $100,000 (the “Note). The Note bears interest at 10% per annum and is due on demand 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. 

F-83

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

The Company determined that there was no derivative liability associated with the Note 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 February 28, 2022, the conversion feature does not meet derivative classification.

It was determined that there was a beneficial conversion feature (“BCF”) as the stock price at the issuance date was greater than the effective conversion price. The Company recognized the relative fair value of the BCF of $40,800 as additional-paid-in capital and an equivalent discount that reduced the carrying value of the convertible debt to $59,200. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.

As at February 28, 2022, the Company has recorded accrued interest of $1,836, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

q) On January 11, 2022, the Company issued a convertible note with a face value of $150,000 (the “Note). The Note bears interest at 10% per annum and is due on demand 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. 

The Company determined that there was no derivative liability associated with the Note 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 February 28, 2022, the conversion feature does not meet derivative classification.

It was determined that there was a beneficial conversion feature (“BCF”) as the stock price at the issuance date was greater than the effective conversion price. The Company recognized the relative fair value of the BCF of $75,600 as additional-paid-in capital and an equivalent discount that reduced the carrying value of the convertible debt to $74,400. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.

As at February 28, 2022, the Company has recorded accrued interest of $1,973, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

r) On January 31, 2022, the Company issued a convertible note with a face value of $100,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after July 31, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to July 31, 2022 at a conversion price of $1.25 per share. 

The Company determined that there was no derivative liability associated with the Note 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 February 28, 2022, the conversion feature does not meet derivative classification.

F-84

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

9. Secured convertible notes payable (continued)

It was determined that there was a beneficial conversion feature (“BCF”) as the stock price at the issuance date was greater than the effective conversion price. The Company recognized the relative fair value of the BCF of $44,000 as additional-paid-in capital and an equivalent discount that reduced the carrying value of the convertible debt to $56,000. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan using effective interest rate method.

As at February 28, 2022, the Company has recorded accrued interest of $767, which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

10. Equity

During the six months ended February 28, 2021:

On September 21, 2020, the Company issued 80,000 shares of common stock at $1.25 per share for gross cash proceeds of $100,000.

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.

During the six months ended February 28, 2022:

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 expensed as a total of $4,585,425 for stock-based compensation – bonus shares.

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 six months ended February 28, 2022. The total $3,584,392 stock-based compensation – consulting services is comprised of this $3,371,892 share issuance plus the $212,500 described in the next paragraph below.

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 $212,500 was expensed during the six months ended February 28, 2022.

On October 20, 2021, the Company issued 3,853,121 units at $0.75 per unit for proceeds of $2,889,841, of which $865,467 was received during the year ended August 31, 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. In connection with the financing, the Company incurred brokerage commission fees and other share issuance costs of $210,736.

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 and other share issuance costs of $42,654.

On November 30, 2021, the Company issued 8,268 shares as consideration for extending the maturity date of a convertible note (Note 9 b)).

On January 20, 2022, the Company issued 75,000 units at $0.75 per unit for proceeds of $56,250 which was received during the year ended August 31, 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.

F-85

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

10. Equity (continued)

On January 20, 2022, the Company issued 46,834 units at $0.75 per unit for proceeds of $35,126 which was received during the period ended 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. The Company adjusted the effective issuance date to October 20, 2021.

On January 24, 2022, the Company issued 36,000 units at $0.75 per unit for proceeds of $27,000. 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. The Company adjusted the effective issuance date to October 20, 2021. The Company adjusted the effective issuance date to November 24, 2021.

On January 28, 2022, the Company issued 66,667 units at $0.75 per unit for proceeds of $50,000 which was received during the period ended 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.

On February 7, 2022, the Company issued 66,667 units at $0.75 per unit for proceeds of $50,000. 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.

On February 10, 2022, the Company issued 33,334 units at $0.75 per unit for proceeds of $25,000. 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.

On February 10, 2022, the Company issued 80,000 units at $1.25 per unit for proceeds of $100,000. 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 incurred finder’s fee of $8,000.

On February 20, 2022, the Company issued 40,000 units at $1.25 per unit for proceeds of $50,000. 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 incurred finder’s fee of $4,000.

On February 21, 2022, the Company issued 300,000 units at $1.25 per unit for proceeds of $375,000. 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 incurred finder’s fee of $30,000.

On February 22, 2022, the Company issued 80,000 units at $1.25 per unit for proceeds of $100,000. 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 incurred finder’s fee of $8,000.

On February 24, 2022, the Company issued 41,600 units at $0.75 per unit for proceeds of $31,200. 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.

On February 24, 2022, the Company issued 40,000 units at $1.25 per unit for proceeds of $50,000. 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 incurred finder’s fee of $4,000.

On February 25, 2022, the Company issued 96,000 units at $1.25 per unit for proceeds of $120,000. 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 incurred finder’s fee of $9,600.

On February 28, 2022, the Company issued 120,000 units at $1.25 per unit for proceeds of $150,000. 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 incurred finder’s fee of $12,000.

During the six months ended February 28, 2022, the Company issued 728,001 common shares to certain investors for no consideration by error. The Company is in the process of retracting the shares.

At February 28, 2022, the Company had received $20,800 in cash for share subscriptions. In connection with the financing, the Company incurred finder’s fee of $2,000.

F-86

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(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:

	February 28, 2022		February 28, 2021
Consulting fees and benefits	$	178,947	$	221,213

b)  Amounts due to/from related parties

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

	February 28, 2021			August 31, 2021
CEO and Director	$	(82,462	)	$	(65,254	)
COO and Director		(89,480	)		(76,574	)
An entity controlled by the CFO		(49,405	)		(34,655	)
	$	(221,347	)	$	(176,483	)

As of February 28, 2022, the Company had $221,347 (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

A $2,447,925 portion of the stock-based compensation – bonus shares (See Note 10) recorded in the six months ended February 28, 2022 was for bonus shares issued to the CFO and COO described as follows:

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:

F-87

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

12. Financial risk factors (continued)

a) Credit risk:

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

b) Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to meet liabilities when due. Accounts payable are due within the current operating period. The Company has a working capital deficit and requires additional financing to meet its current obligations (see Note 1).

c) Market risk:

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The Company is not exposed to market risk.

d) Interest rate risk:

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk, from time to time, on its cash balances. Surplus cash, if any, is placed on call with financial institutions and management actively negotiates favorable market related interest rates.

e) Foreign exchange risk:

Foreign currency risk is limited to the portion of the Company’s business transactions denominated in currencies other than the Canadian dollar. The Company has not entered into any foreign currency contracts to mitigate risk, but manages the risk my minimizing the value of financial instruments denominated in foreign currency. The Company is exposed to foreign currency risk to the extent that the following monetary assets and liabilities are denominated in Canadian dollars:

	February 28, 2022
Balance in Canadian dollars:
Cash and cash equivalents	$	194,499
Accounts payable		(487,640	)
Net exposure		(293,141	)
Balance in US dollars:	$	(230,856	)

A 10% change in the US dollar to the Canadian dollar exchange rate would impact the Company’s net loss by approximately $23,086 for the six months ended February 28, 2022 (February 28, 2021 – $30,881).

F-88

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

12. Financial risk factors (continued)

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

	February 28, 2022
Balance in Colombian Pesos dollars:
Cash and cash equivalents	$	466,486,269
Other receivables		90,476,468
Accounts payable		(3,196,515,142	)
Net exposure		(2,639,552,405	)
Balance in US dollars:	$	(671,128	)

A 10% change in the US dollar to the Colombian Peso exchange rate would impact the Company’s net loss by approximately $67,113 for the six months ended February 28, 2022 (February 28, 2021 - $74,072).

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 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 $446,820 (COP$1,757,345,976). As at February 28, 2022, the weighted average percentage of completion is 88% or $393,523 (COP$1,547,728,700), of the work related to the construction agreement, which has been capitalized as construction in process and transferred to farm facility and equipment. As at February 28, 2022, the Company held deposits of $29,384 (COP$115,566,891) and is obligated to pay the remaining $45,282 (COP$178,093,930) prior to completion of the construction.

F-89

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

14. Commitments (continued)

c) 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.

d) 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 February 28, 2022, $90,000 remained outstanding and was included in accounts payable and accrued liabilities in the consolidated balance sheet.

e) The Company has entered into leases for farm land in Colombia. See Note 7 for details.

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		4,571,267			1.25
Expired		(320,000	)		1.25
Balance, February 28, 2022		7,914,402			1.23

F-90

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

15. Share purchase warrants (continued)

As at February 28, 2022, 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
	2,545,999		1.25	October 20, 2023
	100,000		1.25	October 25, 2023
	905,000		1.25	November 6, 2023
	36,000		1.25	November 24, 2023
	66,667		1.25	January 29, 2024
	66,667		1.25	February 7, 2024
	113,334		1.25	February 12, 2024
	40,000		1.25	February 20, 2024
	300,000		1.25	February 21, 2024
	177,600		1.25	February 26, 2024
	120,000		1.25	February 28, 2024
	7,914,402

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		850,000		1.68		4.73
Outstanding, February 28, 2022		5,300,000		0.92		4.06		4,515,250
Exercisable, February 28, 2022		3,066,667		0.78		3.95		3,022,833

F-91

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

16. Stock options (continued)

During the six months ended February 28, 2022, the Company recorded stock-based compensation of $1,233,938 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:

	Six Months Ended February 28, 2022			Six Months Ended February 28, 2021
Expected dividend yield		0	%	-%
Expected volatility		161	%	-%
Expected life (in years)		5			-
Risk-free interest rate		1.11	%	-%

At February 28, 2022, there was $1,445,210 of unrecognized compensation costs related to non-vested stock-based compensation arrangements granted under the Plan.

17. Non-cash activities

	For the Six Months Ended February 28, 2022		For the Six Months Ended February 28, 2021
Non-cash activities:
Shares issued from treasury for services		7,957,316		-
Beneficial conversion feature		281,447		176,328
Relative fair value of warrants issuable with convertible note		120,310		275,691
Debt settled with shares issuable		-		112,484
Relative fair value of shares issued on modification of convertible notes		-		110,000

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).

F-92

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

18. Segment disclosure (continued)

Financial statement information by operating segment for the six month period ended February 28, 2022 is presented below:

	Allied $			Allied Colombia $			Total $
Gross sales		2,346			40,209			42,556
Net loss		(11,461,902	)		(931,324	)		(12,393,226	)
Accretion		244,115			-			244,115
Depreciation and amortization		-			70,028			70,028
Total assets as of February 28, 2022		4,156,103			1,451,929			5,608,032

Geographic information for the six month period ended and as at February 28, 2022 is presented below:

	Revenues $		Total Assets $
Canada		2,346		4,156,103
Colombia		40,209		1,451,929
Total		42,556		5,608,032

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 February 28, 2022, 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 consideration under the APA. The Company has not received any assets outlined in the APA. The asset purchase has not 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.

F-93

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 28, 2022

(Expressed in US dollars)

19. Subsequent events (continued)

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.

b) On March 1, 2022, the Company granted 1,000,000 stock options to purchase the Company’s common stock for a period of 5 years at an exercise price of $1.75 per share, of which 33% of options will vest annually beginning March 1, 2022 until 100% are vested.

c) On March 29, 2022, the Company issued a secured convertible note with a face value of $500,000. The note bears interest at 10% per annum and is due on demand on or after September 30, 2022. The note is convertible into shares of the Company’s common stock at any time prior to September 30, 2022 at a conversion price of $1.25 per share.

d) On March 31, 2022, the Company entered into amendment agreements for the secured convertible notes as described in Note 11. Pursuant to the amendments, the secured convertible notes shall be payable with simple interest of 10% per annum, all on demand on or after September 31, 2022.

e) Subsequent to February 28, 2022, the Company issued 20,000 units at $1.25 per unit for proceeds of $25,000 and 27,733 units at $0.75 per unit for subscriptions received. 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.

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PART III - EXHIBITS

INDEX TO EXHIBITS

The following exhibits are filed as part of this Offering Statement.

Exhibit	Description
2.1	Articles of Incorporation of Registrant (incorporated by reference to Exhibit 3.1(i) of the Company’s Registration Statement filing on Form S-1 filed with the Securities and Exchange Commission on May 28, 2013)
2.2	Bylaws of Registrant (incorporated by reference to Exhibit 3.1(ii) of the Company’s Registration Statement filing on Form S-1 filed with the Securities and Exchange Commission on May 28, 2013)
2.3	Certificate of Amendment of Articles of Incorporation dated July 1, 2019 (incorporated by reference to Exhibit 3.3 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2019)
4	Subscription Agreement for Offering  (incorporated by reference to Exhibit 4 of the Company’s Filing on Form 1-A filed with the Securities and Exchange Commission on April 6, 2022.
6.1	Reorganization Agreement among Allied Corp., Pacific Capital Investment Group, Inc., SECFAC Exchange Corp., AM (Advanced Micro) Biosciences, Inc. and shareholders of AM (Advanced Micro) Biosciences, Inc. Dated as of July 25, 2019 and as amended effective August 27, 2019 (incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement filing on Form 8-K filed with the Securities and Exchange Commission on September 10, 2019)
6.2	Assumption of contract of purchase and sale of 8999 Jim Bailey Rd. between the Company and 1185710 B.C. Ltd. Dated November 6, 2018 (incorporated by reference to Exhibit 10.2 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2019)
6.3	Share Purchase Agreement between AM (Advanced Micro) Biosciences, Inc. and Maryls Wolfe and Grant Wolfe dated May 24, 2019. (incorporated by reference to Exhibit 10.3 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2019)
6.4	Escrow Agreement between AM (Advanced Micro) Biosciences, Inc., and Maryls Wolfe dated May 31, 2019 (incorporated by reference to Exhibit 10.4 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2019)
6.5	Xtreme Cubes – Purchase Proposal dated May 14, 2019 (incorporated by reference to Exhibit 10.5 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2019)
6.6	Vitalis Extraction Technology Sales Order dated August 30, 2019 (incorporated by reference to Exhibit 10.6 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2019)
6.7	Purchase Agreement between AM (Advanced Micro) Biosciences, Inc. and 1150641 BC Ltd., doing business as Activated Nano, dated May 22, 2019 (incorporated by reference to Exhibit 10.7 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2019)
6.8	Asset Purchase Agreement between AM (Advanced Micro) Biosciences, Inc. and Clifford Wade Lackie and Robin Dale Lackie for Bud’s Naturals dated February 13, 2019 (incorporated by reference to Exhibit 10.8 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2019)
6.9	Consulting Agreement between AM (Advanced Micro) Biosciences, Inc. and John Saric dated May 31, 2019 (incorporated by reference to Exhibit 10.9 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2019)
6.10	Convertible Promissory Note issued to CA Indosuez (Switzerland) S.A. January 23, 2020 (incorporated by reference to Exhibit 10.10 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)

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6.11	Series A Warrant issued to CA Indosuez (Switzerland) S.A. January 23, 2020 (incorporated by reference to Exhibit 10.11 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.12	Security Agreement dated as of January 23, 2020 between the Company and CA Indosuez (Switzerland) S.A. (incorporated by reference to Exhibit 10.12 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.13	Convertible Promissory Note issued to Parkward Holding Ltd. January 23, 2020 (incorporated by reference to Exhibit 10.13 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.14	Series A Warrant issued to Parkward Holding Ltd. January 23, 2020 (incorporated by reference to Exhibit 10.14 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.15	Security Agreement dated as of January 23, 2020 between the Company and Parkward Holding Ltd. (incorporated by reference to Exhibit 10.15 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.16	Convertible Promissory Note issued to Allied Special Opportunities Limited February 25, 2020 (incorporated by reference to Exhibit 10.16 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.17	Series A Warrant issued to Allied Special Opportunities Limited February 25, 2020 (incorporated by reference to Exhibit 10.17 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.18	Security Agreement dated as of January 23, 2020 between the Company and Allied Special Opportunities Lit.. (incorporated by reference to Exhibit 10.18 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.19	Loan and Security Agreement dated May 14, 2020 between the Company and SLCI1, LLC. (incorporated by reference to Exhibit 10.19 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6,20	Promissory Note issued May 14, 2020 from the Company to SLCI1, LLC. (incorporated by reference to Exhibit 10.20 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.21	2020 Long term Incentive Plan (incorporated by reference to Exhibit 10.21 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.22	Share Purchase Agreement between Dorson Commercial Corp. and AD (Advanced Micro) Biosciences, Inc. dated August 29, 2019 (incorporated by reference to Exhibit 10.1 of the Company’s Report filing on Form 8-K filed with the Securities and Exchange Commission on October 7, 2020)
6.23	License for Medicolombia Cannabis A.S. from Republic of Columbia, Ministry of Justice and Law, dated August 3, 2018 (incorporated by reference to Exhibit 10.2 of the Company’s Report filing on Form 8-K filed with the Securities and Exchange Commission on October 7, 2020)
6.24	License for Medicolombia Cannabis A.S. from Republic of Columbia, Ministry of Health and Social Protection, dated December 4, 2018 (incorporated by reference to Exhibit 10.3 of the Company’s Report filing on Form 8-K filed with the Securities and Exchange Commission on October 7, 2020)
6.25	License for Medicolombia Cannabis A.S. from Republic of Columbia, Ministry of Justice and Law, dated July 31, 2019 (incorporated by reference to Exhibit 10.4 of the Company’s Report filing on Form 8-K filed with the Securities and Exchange Commission on October 7, 2020)
6.26	License for Medicolombia Cannabis A.S. from Republic of Columbia, Ministry of Justice and Law, dated February 20, 2019 (incorporated by reference to Exhibit 10.5 of the Company’s Report filing on Form 8-K filed with the Securities and Exchange Commission on October 7, 2020)
6.27	License for Medicolombia Cannabis A.S. from Republic of Columbia, Ministry of Health and Social Protection, dated November 29, 2019 (incorporated by reference to Exhibit 10.6 of the Company’s Report filing on Form 8-K filed with the Securities and Exchange Commission on October 7, 2020)
6.28	License for Medicolombia Cannabis A.S. from Republic of Columbia, National Narcotics Fund U.A.E., Ministry of Health and Social Protection dated January 13, 2020 (incorporated by reference to Exhibit 10.7 of the Company’s Report filing on Form 8-K filed with the Securities and Exchange Commission on October 7, 2020)

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6.29	Settlement and Release Agreement between the Company and Anthony Zelen dated September 17, 2020 (incorporated by reference to Exhibit 10.29 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.30	Settlement and Release Agreement between the Company and David Weinkauf dated September 21, 2020 (incorporated by reference to Exhibit 10.30 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.31	Settlement and Release Agreement between the Company and Malcolm Davidson dated September 16, 2020 (incorporated by reference to Exhibit 10.31 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.32	Convertible Promissory Note issued to Sawasawa Inc. September 30, 2020 (incorporated by reference to Exhibit 10.32 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.33	Convertible Promissory Note issued to Sawasawa Inc. November 7, 2020 (incorporated by reference to Exhibit 10.33 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
6.34	Convertible Promissory Note issued to Sawasawa, Inc. November 30, 2020 (incorporated by reference to Exhibit 10.34 of the Company’s Report filing on Form 10-K filed with the Securities and Exchange Commission on August 31, 2020)
11.1	Consent of Manning Elliott LLP
11.2	Consent of Cutler Law Group, P.C. (included in exhibit 12)
12	Opinion of Cutler Law Group, P.C. as to the legality of the securities being registered

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ALLIED CORP.

SIGNATURES

Pursuant to the requirements of Regulation A, the registrant duly caused this Amendment No. 1 to the Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Kelowna, Canada on April 22, 2022.

Allied Corp.
By:	/s/ Calum Hughes
Name:	Calum Hughes
Title:	Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints each of Calum Hughes and Ryan Maarschalk, or any of them individually, as such person’s true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for such person and in such person’s name, place and stead, in any and all capacities, to sign this offering statement and any and all further amendments thereto, and to file or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of Regulation A, this Offering Statement was signed by the following persons in the capacities and on the dates stated.

Signature	Title	Date
/s/ Calum Hughes	Director and Chief Executive	April 22, 2022
Calum Hughes	Officer (Principal Executive Officer)
/s/ Ryan Maarschalk	Chief Financial Officer	April 22, 2022
Ryan Maarschalk	(Principal Financial and Accounting Officer)
/s/ Paul Bullock	Director	April 22, 2022
Paul Bullock
/s/ Jim Smeeding	Director	April 22, 2022
Jim Smeeding

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