10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended February 29, 2024

Commission File Number 000-56002

ALLIED CORP.

(Exact name of registrant as specified in its charter)

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

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

(Address of principal executive offices) (Zip Code)

877-255-4337

(Registrant’s telephone number, including area code)

_____________________________________________

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

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

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

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

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

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

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

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

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

As of February 29, 2024, there were 105,816,904 shares of common stock issued and outstanding.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements.	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	51
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	60
Item 4.	Controls and Procedures.	60
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings.	61
Item 1A.	Risk Factors.	62
Item 2.	Unregistered Sales of Securities and Use of Proceeds.	62
Item 3.	Defaults Upon Senior Securities.	62
Item 4.	Mining Safety Disclosure.	62
Item 5.	Other Information.	62
Item 6.	Exhibits.

2

ALLIED CORP.

CONSOLIDATED FINANCIAL STATEMENTS

Condensed consolidated interim balance sheets at February 29, 2024 (unaudited) and August 31, 2023	4
Condensed consolidated interim statements of operations and comprehensive loss for the three and six months ended February 29, 2024 and February 28, 2023 (unaudited)	5
Condensed consolidated interim statements of stockholders’ deficit for the six months ended February 29, 2024 and February 28, 2023 (unaudited)	6
Condensed consolidated interim statements of cash flows for the six months ended February 29, 2024 and February 28, 2023 (unaudited)	7
Notes to the unaudited condensed consolidated interim financial statements	8

3

ALLIED CORP.

Condensed Consolidated Interim Balance Sheets

(Expressed in US Dollars)

	February 29, 2024			August 31, 2023
	(Unaudited)
Assets
Current assets
Cash	$	101,648		$	209,736
Inventory (Note 3)		443,690			107,510
Other receivables		171,001			134,482
Prepaid expenses		50,748			18,852
Total current assets		767,087			470,580
Deposits and advances (Note 4)		19,083			26,354
Right-of-use assets (Note 7)		108,566			109,301
Property, plant and equipment (Note 5)		1,350,193			1,417,192
Intangible assets (Note 6)		44,874			40,301
Total assets	$	2,289,803		$	2,063,728
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	2,627,129		$	2,393,359
Due to related parties (Note 11)		942,892			693,292
Current portion of lease liabilities (Note 7)		12,070			10,745
Loans payable (Note 8)		2,363,194			2,027,348
Secured convertible notes payable (Note 9)		3,774,891			3,724,891
Total current liabilities		9,720,176			8,849,635
Lease liabilities, net of current portion (Note 7)		96,496			98,556
Total liabilities	$	9,816,672		$	8,948,191
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; 105,816,904 shares issued and outstanding (101,592,914 – par value $0.0001 – August 31, 2023)		10,582			10,160
Additional paid in capital		40,610,375			39,404,667
Common stock issuable		30,000			80,000
Accumulated deficit		(47,310,835	)		(45,608,336	)
Accumulated other comprehensive loss		(866,991	)		(770,954	)
Total stockholders’ deficit		(7,526,869	)		(6,884,463	)
Total liabilities and stockholders’ deficit	$	2,289,803		$	2,063,728

Nature of operations and going concern (Note 1)

Commitments (Note 14)

Subsequent events (Note 19)

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

4

ALLIED CORP.

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss

(Expressed in US dollars)

(Unaudited)

	For the Three Months Ended February 29, 2024			For the Three Months Ended  February 28, 2023			For the Six Months Ended February 29, 2024			For the Six Months Ended February 28, 2023
Revenues
Sales	$	-		$	-		$	19,039		$	69,625
Cost of sales (Note 3)		-			-			(2,003	)		(25,958	)
Gross margin		-			-			17,036			43,667
Expenses
Amortization and depreciation		27,136			31,269			62,555			57,429
Consulting fees (Note 10 and 11)		481,829			813,878			923,316			1,660,535
Foreign exchange loss (gain)		(12,349	)		365			(60,670	)		(2,865	)
Interest expense and bank charges		118,826			121,304			237,472			240,046
Office and miscellaneous		32,927			887,106			183,902			957,112
Professional fees		124,003			119,906			184,792			297,096
Travel		429			2,588			2,276			10,029
Operating expenses		772,801			1,976,416			1,533,643			3,219,382
Loss before other items		(772,801	)		(1,976,416	)		(1,516,607	)		(3,175,715	)
Other income and expenses
Interest expense		(93,025	)		(87,821	)		(185,892	)		(171,020	)
Loss on debt extinguishment		-			-			-			(27,043	)
Total other expenses		(93,025	)		(87,821	)		(185,892	)		(198,063	)
Net loss		(865,826	)		(2,064,237	)		(1,702,499	)		(3,373,778	)
Other comprehensive loss
Foreign currency translation adjustments		(79,415	)		696,142			(96,037	)		542,142
Comprehensive loss	$	(945,241	)	$	(1,368,095	)	$	(1,798,536	)	$	(2,831,636	)
Basic and diluted loss per share	$	(0.01	)	$	(0.02	)	$	(0.02	)	$	(0.03	)
Weighted average number of common shares outstanding		105,792,245			97,038,154			104,205,478			96,529,807

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

5

ALLIED CORP.

Condensed Consolidated Interim Statements of Stockholders’ Deficit

(Expressed in US dollars)

(Unaudited)

	Common stock
	Number of shares		Amount		Additional paid in capital			Stock issuable			Accumulated deficit			Accumulated other comprehensive loss			Total
Balance, August 31, 2022		93,967,594	$	9,397	$	33,999,090		$	540,000		$	(34,932,665	)	$	(898,219	)	$	(1,282,397	)
Shares issued for cash		2,925,000		292		1,169,708			(540,000	)		-			-			630,000
Share issuance costs		-		-		(12,792	)		-			-			-			(12,792	)
Shares issued to settle debts		145,560		15		86,557			-			-			-			86,572
Stock-based compensation		-		-		545,171			-			-			-			545,171
Comprehensive loss for the year		-		-		-			-			(1,309,541	)		(154,000	)		(1,463,541	)
Balance, November 30, 2022		97,038,154		9,704		35,787,734			-			(36,242,206	)		(1,052,219	)		(1,496,987	)
Shares subscribed		-		-		-			240,952			-			-			240,952
Stock-based compensation		-		-		574,075			-			-			-			574,075
Comprehensive loss for the period		-		-		-			-			(2,064,237	)		696,142			(1,368,095	)
Balance, February 28, 2023		97,038,154		9,704		36,361,809			240,952			(38,306,443	)		(356,077	)		(2,050,055	)

	Common stock
	Number of shares		Amount		Additional paid in capital		Stock issuable			Accumulated deficit			Accumulated other comprehensive loss			Total
Balance, August 31, 2023		101,592,914	$	10,160	$	39,404,667	$	80,000		$	(45,608,336	)	$	(770,954	)	$	(6,884,463	)
Shares issued for cash		250,000		25		49,975		(50,000	)		-			-			-
Shares subscribed		-		-		-		346,000			-			-			346,000
Stock-based compensation		-		-		143,653		-			-			-			143,653
Comprehensive loss for the year		-		-		-		-			(836,673	)		(16,622	)		(853,295	)
Balance, November 30, 2023		101,842,914		10,185		39,598,295		376,000			(46,445,009	)		(787,576	)		(7,248,105	)
Shares issued for cash		3,931,990		393		786,005		(346,000	)		-			-			440,398
Share issuance costs		42,000		4		3,020		-			-			-			3,024
Stock-based compensation		-		-		223,055		-			-			-			223,055
Comprehensive loss for the period		-		-		-		-			(865,826	)		(79,415	)		(945,241	)
Balance, February 29, 2024		105,816,904		10,582		40,610,375		30,000			(47,310,835	)		(866,991	)		(7,526,869	)

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

6

ALLIED CORP.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in US dollars)

(Unaudited)

	For the  Six Months Ended February 29, 2024			For the  Six Months Ended February 28, 2023
Cash provided by (used in):
Operating activities
Net loss for the period	$	(1,702,499	)	$	(3,373,778	)
Adjustment to net loss for the period for non-cash items
Accrued interest		421,524			406,867
Amortization and depreciation		62,555			57,429
Loss on debt extinguishment		-			27,043
Stock-based compensation - options		366,708			1,119,246
Fair value of finder’s shares		3,024			-
Changes in non-cash working capital balance:
(Increase) decrease in other receivables		(30,232	)		85,993
(Increase) decrease in prepaid expenses		(31,896	)		7,038
Decrease in deposits and advances		8,214			24,086
(Decrease) increase in accounts payable and accrued liabilities		(43,690	)		266,810
Increase in due to related parties		249,600			113,303
Increase in inventory		(248,109	)		(459,605	)
		(944,801	)		(1,725,568	)
Investing activities
Purchase of intangible assets		(6,501	)		(3,964	)
Purchase of property, plant, and equipment		(2,038	)		(80,858	)
		(8,539	)		(84,822	)
Financing activities
Advance from related parties		55,600			-
Proceeds from loan payable		100,000			-
Proceeds from convertible notes payable		50,000			380,000
Proceeds from the issuance of common stock		786,398			617,208
Proceeds for subscriptions of stock issuable		-			240,952
		991,998			1,238,160
Increase (decrease) in cash		38,658			(572,230	)
Effect of exchange rate on changes of cash		(146,746	)		641,127
Cash, beginning of period		209,736			96,043
Cash, end of period	$	101,648		$	164,940
Supplemental cash flow disclosures:
Income taxes paid		-			-
Interest paid		-			-
Non-cash activities: See Note 17

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

7

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(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 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 29, 2024, Allied Colombia has a licensed cannabis farm in Colombia.

b) 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 29, 2024 of $1,702,499, has generated minimal revenue and as at February 29, 2024 has a working capital deficit of $8,953,089. 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.

c) 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. The Company plans to engage in cannabis-related activities in the United States, only if and when cannabis operations are federally legalized.

8

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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.

2. Significant accounting policies

Business Presentation

These unaudited condense 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, 2023, 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 29, 2024, and the results of its operations for the six months ended February 29, 2024, and cash flows for the six months ended February 29, 2024. The results of operations for the period ended February 29, 2024 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

These 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.

9

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024 and August 31, 2023.

c) Property, plant and equipment

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

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

d) Inventory

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

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

e) Intangible assets

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

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

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

10

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

f) Long-lived assets

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

g) Foreign currency translation and functional currency conversion

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

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

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

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

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

h) Share issuance costs

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

i) Research and development costs

Research and development costs are expensed as incurred. During the six months ended February 29, 2024, the Company incurred research and development costs of $nil (February 28, 2023 – $nil).

11

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

j) Advertising costs

Advertising costs are expensed as incurred. During the six months ended February 29, 2024, the Company incurred advertising costs of $631 (February 28, 2023 – $4,913).

k) 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.

l) 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.

m) 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.

n) 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.

12

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

o) 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.

p) Financial instruments

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

Level 1

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

Level 2

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

Level 3

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

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

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

The Company does not have any assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet as of February 29, 2024 and August 31, 2023 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.

13

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

q) 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.

r) Recent accounting pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective September 1, 2022. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.

The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the six months ended February 29, 2024, are of significance or potential significance to the Company.

3. Inventory

Inventory is comprised of the following items:

	February 29, 2024		August 31, 2023
Work in progress	$	47,163	$	80,094
Finished goods		396,527		27,416
Total inventory	$	443,690	$	107,510

14

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 production 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.

During the six months ended February 29, 2024, the Company recorded a $nil write-off of inventory costs to its net realizable value of $443,690.

During the year ended August 31, 2023, the Company recorded a $43,861 write-off of inventory costs for CBD isolates and other derivative products to reduce to its net realizable value of $nil. In addition, the Company recorded additional $1,463,157 write-off of inventory costs to its net realizable value of $107,510.

4. Deposits and advances

	February 29, 2024		August 31, 2023
Prepayments for construction facility in Colombia	$	19,083	$	26,354
Total deposits and advances	$	19,083	$	26,354

The Company paid certain vendors for the construction of farm facilities in Colombia in advance. At February 29, 2024, the prepayments totaled $19,083 (August 31, 2023 – $26,354).

5.   Property, plant and equipment

At February 29, 2024, property, plant and equipment consisted of:

	Construction in process		Farm facility and equipment		Office and computer equipment		Land equipment		Total
Cost
August 31, 2023	$	429,749	$	1,346,373	$	29,952	$	29,525	$	1,835,599
Additions		-		2,038		-		-		2,038
Foreign exchange		18,310		29,083		1,276		1,258		49,927
February 29, 2024	$	448,059	$	1,377,494	$	31,228	$	30,783	$	1,887,564
Accumulated depreciation
August 31, 2023	$	-	$	404,559	$	7,700	$	6,148	$	418,407
Additions		-		100,686		1,614		1,492		103,792
Foreign exchange		-		14,514		363		295		15,172
February 29, 2024	$	-	$	519,759	$	9,677	$	7,935	$	537,371
Net book value
August 31, 2023	$	429,749	$	941,814	$	22,252	$	23,377	$	1,417,192
February 29, 2024	$	448,059	$	857,735	$	21,551	$	22,848	$	1,350,193

As of February 29, 2024 and August 31, 2023, the construction in process has not been in use.

15

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

6. Intangible assets

At February 29, 2024, intangible assets consisted of:

	Cost $		Foreign exchange $			Accumulated amortization $			Accumulated impairment $			February 29, 2024 Net carrying value $		August 31, 2023 Net carrying value $
Cannabis licenses		5,457,911		(468,035	)		(1,143,335	)		(3,801,667	)		44,874		40,301
		5,457,911		(468,035	)		(1,143,335	)		(3,801,667	)		44,874		40,301

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. 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 29, 2024, the Company recorded amortization of $2,804 (COP 12,732,615) (February 28, 2023 - $5,683 (COP 26,881,413)).

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. Management has assessed the lease as an operating lease. Effective August 31, 2023, 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. 

16

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024, the Company did not have any finance leases.

At February 29, 2024, the weighted average remaining operating lease term was 6 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		8,201
Interest on lease liabilities		5,277
Total operating lease cost		13,478

The following table provides supplemental cash flow and other information related to leases for the six months ended February 29, 2024:

	$
Lease payments	13,478

Supplemental balance sheet information related to leases as of February 29, 2024 are as below:

	$
Cost	159,870
Accumulated amortization	(30,077	)
Foreign exchange	(21,227	)
Net carrying value at February 29, 2024	108,566

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

	$
2024	13,774
2025	27,547
2026	27,547
2027	27,547
2028	27,547
2029	27,547
2030	13,774
Total minimum lease payments	165,283
Less: amount of lease payments representing effects of discounting	(56,717	)
Present value of future minimum lease payments	108,566
Less: current obligations under leases	(12,070	)
Lease liabilities, net of current portion	96,496

17

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024, the Company paid interest in the amount of $nil (2023 - $nil). As of February 29, 2024, the Company has missed 20 monthly payments and the balance owing is $1,968,327 (August 31, 2023 - $1,742,648).

b) On December 17, 2021, the Company entered into a financing agreement to finance an equipment purchase. On March 31, 2022, the agreement was amended to remove shipping charges. Pursuant to the amended agreement, the Company financed $295,543 of the purchase price with an interest rate of 8% per annum. The Company will make 21 monthly principal and interest payments of $15,000 and a final payment of $633 in September 2023. During the six months ended February 29, 2024, the Company paid interest in the amount of $nil (2023 - $nil). As of February 29, 2024, the Company has missed 24 monthly payments and the balance owing is $294,867 (August 31, 2023 - $284,700).

c) On January 3, 2024, a holder of the Company’s convertible notes provided a short term loan of $100,000 (August 31, 2023 - $nil). The amount is unsecured, non-interest bearing, and due on demand.

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 29, 2024, the conversion features and warrants do not meet derivative classification.

18

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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, the convertible notes bear simple interest at 5% per annum. The maturity date of the convertible notes was amended to due on demand on or before October 31, 2020. In consideration for extending the maturity date, the Company issued to the convertible note holders 16,000 common shares of the Company and warrants to purchase additional 320,000 common shares of the Company at $1.25 per share expiring October 31, 2021. Each note holder received 8,000 common shares and 160,000 warrants.

The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting.

The extended convertible notes had a total carrying value of $400,000. As the common shares and warrants were issued as consideration for extending the convertible notes, the fair value of the common share and warrants of $218,397 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $220,065.

ii. Second Modification:

On November 1, 2020, the Company entered into amendments to the convertible notes. Pursuant to the amendments, the maturity date of the convertible notes was amended to due on demand on or before March 31, 2021. In consideration for extending the maturity date, the Company agreed to issue to the convertible note holders 100,000 common shares of the Company. Each note holder received 50,000 common shares.

The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting.

The extended convertible notes had a total carrying value of $400,000. As the common shares were issued as consideration for extending the convertible notes, the fair value of the common share of $110,000 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $110,000.

19

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

iii. Third Modification:

On March 31, 2021, the Company entered into amendments to the convertible notes. Pursuant to the amendments, 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, the convertible notes bear simple interest at 10% per annum. Pursuant to the amendments, the maturity date of the convertible notes was amended to due on demand on or after March 31, 2022 for no additional consideration.

The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied.

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

v. Fifth Modification:

On March 31, 2022, the Company entered into amendments to the convertible notes. Pursuant to the amendments, 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 September 30, 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.

20

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024, the Company has recorded accrued interest of $117,041 (August 31, 2023 - $97,205), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $400,000 (August 31, 2023 - $400,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 29, 2024, 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, 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.

21

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

ii. Second Modification:

On June 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 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, 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.

iv. Fourth Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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.

22

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024, the Company has recorded accrued interest of $36,681 (August 31, 2023 - $33,540), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $63,341 (August 31, 2023 - $63,341).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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, 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.

23

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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, 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.

iii. Third Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $12,572 (August 31, 2023 - $10,706), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $37,613 (August 31, 2023 - $37,613).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

24

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024, 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, 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, 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.

25

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $28,348 (August 31, 2023 - $24,087), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $85,937 (August 31, 2023 - $85,937).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 29, 2024, the conversion feature and warrants do not meet derivative classification.

26

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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.

i. First 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $194,465 (August 31, 2023 - $164,712), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $600,000 (August 31, 2023 - $600,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

27

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024, 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.

i. First 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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.

28

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

As at February 29, 2024, the Company has recorded accrued interest of $67,397 (August 31, 2023 - $52,521), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $300,000 (August 31, 2023 - $300,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 was convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share.

The Company 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 29, 2024, 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.

i. First Modification:

On November 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 2022 for no additional consideration.

29

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024, the Company has recorded accrued interest of $5,272 (August 31, 2023 - $4,379), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $18,000 (August 31, 2023 - $18,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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.

i. First Modification:

On November 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.

30

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $29,233 (August 31, 2023 - $24,274), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, the conversion feature and warrants do not meet derivative classification.

31

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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.

i. First Modification:

On November 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $28,329 (August 31, 2023 - $23,370), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

32

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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.

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 29, 2024, 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.

i. First Modification:

On November 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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.

33

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024, the Company has recorded accrued interest of $50,942 (August 31, 2023 - $42,016), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $180,000 (August 31, 2023 - $180,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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

The Company 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 29, 2024, 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.

i. First Modification:

On November 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. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration.

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

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

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

34

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $9,071 (August 31, 2023 - $7,336), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $35,000 (August 31, 2023 - $35,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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.

i. First Modification:

On November 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. 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.

35

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $3,888 (August 31, 2023 - $3,144), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $15,000 (August 31, 2023 - $15,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, the conversion feature and warrants do not meet derivative classification.

36

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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.

i. First Modification:

On November 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. 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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.

37

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

As at February 29, 2024, the Company has recorded accrued interest of $24,082 (August 31, 2023 - $19,123), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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.

Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $23,425 (August 31, 2023 - $18,466), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

38

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024, 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 29, 2024, the Company has recorded accrued interest of $21,836 (August 31, 2023 - $16,877), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On June 23, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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 29, 2024, the Company has recorded accrued interest of $21,836 (August 31, 2023 - $16,877), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On June 23, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

39

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024, 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 29, 2024, the Company has recorded accrued interest of $31,973 (August 31, 2023 - $24,534), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $150,000 (August 31, 2023 - $150,000).

On July 10, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 29, 2024, 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 29, 2024, the Company has recorded accrued interest of $20,767 (August 31, 2023 - $15,808), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On July 31, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

40

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

s) On March 29, 2022, the Company issued a convertible note with a face value of $500,000 (the “Note). The Note bears interest at 10% per annum and is due on demand 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.

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 29, 2024, 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.

As at February 29, 2024, the Company has recorded accrued interest of $96,028 (August 31, 2023 - $71,233), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $500,000 (August 31, 2023 - $500,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

t) On June 16, 2022, the Company issued a convertible note with a face value of $250,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after December 16, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to December 16, 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 29, 2024, 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.

As at February 29, 2024, the Company has recorded accrued interest of $42,603 (August 31, 2023 - $30,206), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $250,000 (August 31, 2023 - $250,000).

On December 16, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

u) On November 28, 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 June 30, 2023. The Note is convertible into shares of the Company’s common stock at any time prior to June 30, 2023 at a conversion price equal to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

As at February 29, 2024, the Company has recorded accrued interest of $12,575 (August 31, 2023 - $7,616), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On June 30, 2023, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

41

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

v) On December 1, 2022, the Company issued a convertible note with a face value of $70,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after June 30, 2023. The Note is convertible into shares of the Company’s common stock at any time prior to June 30, 2023 at a conversion price equal to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

As at February 29, 2024, the Company has recorded accrued interest of $8,707 (August 31, 2023 - $5,236), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $70,000 (August 31, 2023 - $70,000).

On June 30, 2023, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

w) On December 7, 2022, the Company issued a convertible note with a face value of $60,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after June 30, 2023. The Note is convertible into shares of the Company’s common stock at any time prior to June 30, 2023 at a conversion price equal to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

As at February 29, 2024, the Company has recorded accrued interest of $7,364 (August 31, 2023 - $4,389), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $60,000 (August 31, 2023 - $60,000).

On June 30, 2023, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

x) On February 28, 2023, 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 April 30, 2023. The Note is convertible into shares of the Company’s common stock at any time prior to April 30, 2023 at a conversion price equal to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

As at February 29, 2024, the Company has recorded accrued interest of $15,000, (August 31, 2023 - $7,562), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $150,000 (August 31, 2023 - $150,000).

On April 30, 2023, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

42

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

y) On May 17, 2023, the Company issued a convertible note with a face value of $10,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after September 17, 2023. The Note is convertible into shares of the Company’s common stock at any time prior to September 17 at a conversion price equal to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

As at February 29, 2024, the Company has recorded accrued interest of $786 (August 31, 2023 - $504), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $10,000 (August 31, 2023 - $10,000).

On September 17, 2023, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

z) On December 4, 2023, the Company issued a convertible note with a face value of $50,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after December 31, 2024. The Note is convertible into shares of the Company’s common stock at any time prior to December 31, 2024 at a conversion price equal to $0.20 per share.

As at February 29, 2024, the Company has recorded accrued interest of $1,178 (August 31, 2023 - $nil), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $50,000 (August 31, 2023 - $nil).

10. Equity

During the six months ended February 28, 2023:

On September 21, 2022, the Company issued 1,350,000 shares of common stock at $0.40 per share for $540,000 subscriptions received during the year ended August 31, 2022.

On October 7, 2022, the Company issued 1,575,000 shares of common stock at $0.40 per share for proceeds of $630,000. In connection with the financing, the Company incurred finder’s fee of $10,000 and share issuance costs of $2,792.

On October 7, 2022, the Company issued 75,000 shares of common stock with a fair value of $44,606 to settle related party accounts payable of $30,000, resulting in a loss on settlement of $14,606.

On October 7, 2022, the Company issued 70,560 shares of common stock with a fair value of $41,966 to settle $29,529 in debt, resulting in a loss on settlement of $12,437.

During the six months ended February 28, 2024:

On September 5, 2023, the Company issued 150,000 shares of common stock at $0.20 per share for $30,000 subscriptions received during the year ended August 31, 2023.

On October 20, 2023, the Company issued 100,000 shares of common stock at $0.20 per share for $20,000 subscriptions received during the year ended August 31, 2023.

On December 1, 2023, the Company issued 1,730,000 shares of common stock at $0.20 per share for $346,000 subscriptions received during the year ended August 31, 2023.

On December 1, 2023, the Company issued 2,201,990 shares of common stock at $0.20 per share for proceeds of $440,398. In connection with the financing, the Company issued 42,000 shares with a fair value of $3,024 as a finder’s fee.

At February 29, 2024, the Company had received $30,000 in cash for shares subscriptions at $0.20 per share.

43

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(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:

	Six Months Ended February 29, 2024		Six Months Ended February 28, 2023
Consulting fees and benefits	$	245,597	$	195,231
Signing bonus		44,214		-
	$	289,811	$	195,231

b)  Amounts due to 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 due to related parties:

	February 29, 2024		August 31, 2023
Chief Executive Officer and Director	$	186,279	$	156,028
Chief Operating Officer and Director		224,403		201,612
An entity controlled by the Chief Financial Officer		109,919		84,962
Chief Business Development Officer		87,932		-
An entity controlled by a Director		239,690		159,690
Director		94,669		91,000
	$	942,892	$	693,292

As of February 29, 2024, the Company had $942,892 (August 31, 2023 - $693,292) payable to related parties. From this amount, $817,292 (August 31, 2023 - $623,292) was for expenses incurred or expensed paid on behalf of the Company by the parties and $125,600 (August 31, 2023 - $70,000) was for advances received from the parties.

12. Financial risk factors

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

a) Credit risk:

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

44

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

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 29, 2024			February 28, 2023
Balance in Canadian dollars:
Cash and cash equivalents	$	-		$	26,547
Accounts receivable		-			5,127
Accounts payable and accrued liabilities		(1,205,467	)		(769,347	)
Net exposure		(1,205,467	)		(737,673	)
Balance in US dollars:	$	(888,333	)	$	(542,048	)

A 10% change in the US dollar to the Canadian dollar exchange rate would impact the Company’s net loss by approximately $88,833 for the six months ended February 29, 2024 (February 28, 2023 – $54,205).

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

	February 29, 2024			February 28, 2023
Balance in Colombian Pesos dollars:
Cash and cash equivalents	$	505,576		$	684,128,157
Other receivables		660,410,427			139,323,503
Accounts payable		(3,557,034,154	)		(4,158,486,022	)
Net exposure		(2,896,118,151	)		(3,335,034,362	)
Balance in US dollars:	$	(738,710	)	$	(686,690	)

A 10% change in the US dollar to the Colombian Peso exchange rate would impact the Company’s net loss by approximately $73,871 for the six months ended February 29, 2024 (February 28, 2023 - $68,669).

45

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

13. Capital management

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

14. Commitments

a) As of February 29, 2024, 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 sheet.

b) The Company has entered into leases for farm land in Colombia. See Note 7 for details.

c) In June 2019, the Company’s wholly owned subsidiary, AM Biosciences, signed a production and manufacturing contract to begin the manufacturing of the full building initially intended for the Canada extraction and production facility. The Company had determined to utilize these building assets in connection with potential United States operations in the State of Nevada 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. In connection with that determination, on March 30, 2021, the Company’s wholly owned subsidiary, Allied US Products LLC, entered into a contingent asset purchase agreement (“Agreement”) 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. Concurrent with the execution of the Agreement, the Company’s wholly owned subsidiary, Tactical Relief LLC, agreed to enter into a 25-year land lease with the Fiore Subsidiary.

As the Company made payments towards the purchase of the prefabricated buildings, various parts of the building were delivered to the property on the land lease. In December 2022, the Company was advised that the Fiore Subsidiary had become insolvent and that a trustee’s sale had been scheduled for the property which the Company had agreed to lease. In order to protect the Company’s interests, the Company filed a complaint in the Eighth Judicial District Court in Clark County, Nevada seeking injunctive relief to terminate the trustee’s sale or alternatively money damages. The Company filed a lis pendens against the property to reflect this complaint and to protect its interests in the building. However, the trustee’s sale went forward and the successful bidder claimed that the buildings were part of the real property and that it became the owner of the buildings. As a result, the Company filed suit, seeking a declaration of the Company’s ownership of the buildings as the buildings were personal property and not a part of the real property. A status conference was held for December 13, 2023 and during a further status conference on April 3, 2024 the court strongly suggested to proceed with the litigation. As a consequence, further discussions are ongoing..

46

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

15. Share purchase warrants

The following table summarizes the continuity of share purchase warrants:

	Number of warrants			Weighted average exercise price $
Balance, August 31, 2023		5,459,000			1.06
Expired		(4,371,267	)		1.25
Balance, February 29, 2024		1,087,733			0.28

As at February 29, 2024, the following share purchase warrants were outstanding:

Number of warrants		Exercise price $		Expiry date
	20,000		1.25	March 7, 2024
	67,733		1.25	May 27, 2024
	1,000,000		0.20	July 30, 2025
	1,087,733

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, 2023		12,140,000		0.25		3.70		55,900
Granted		500,000		0.20		4.59		-
Unearned performance-based options		300,000		0.20		4.59		-
Outstanding, February 29, 2024		12,940,000		0.22		4.24		-
Exercisable, February 29, 2024		11,606,667		0.22		4.25		-

47

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

On December 20, 2024 the Company modified the exercise prices and maturity dates for previously granted and unexercised options as follows:

Number of stock options	Exercise price before modification	Maturity date before modification	Modified exercise price	Modified maturity date
1,500,000	$0.25	February 1, 2026	$0.20	January 1, 2029
600,000	$0.22	February 1, 2026	$0.20	January 1, 2029
300,000	$0.25	May 1, 2027	$0.20	January 1, 2029
450,000	$0.22	May 1, 2027	$0.20	January 1, 2029
6,000,000	$0.24	March 8, 2028	$0.20	January 1, 2029
140,000	$0.20	June 3, 2028	$0.20	January 1, 2029

There was no other modification to the vesting schedule of the previously issued options. As a result, 8,990,000 unexercised options originally granted to purchase common stock at prices ranging from $0.20 to $0.25 per share were repriced. The repricing was treated as a modification of the original awards and the additional compensation costs for the difference between the fair value of the modified award and the fair value of the original award on the modification date was calculated. The repricing resulted in incremental stock-based compensation expense of $56,964, which was valued with the Black-Scholes option pricing model with the following weighted average assumptions: the risk-free rate of 4.17%; expected life of 2.73 years; volatility of 180%; forfeiture rate and dividend yield of nil; and the exercise price of $0.20. Expense related to vested shares was expensed on the repricing date and expense related to unvested shares will be amortized over the remaining vesting period.

On January 1, 2024, the Company modified the exercise price and vesting terms for previously granted and unexercised options as follows:

Number of stock options	Exercise price before modification	Vesting terms before modification	Modified exercise price	Modified vesting terms
300,000	$0.22	100,000 on October 1, 2024 100,000 on October 1, 2025 100,000 on October 1, 2026	$0.20	150,000 on January 1, 2024 150,000 on September 30, 2024

In addition, the Company granted additional 500,000 performance-based options with an exercise price of $0.20 which will vest 2 years from the achievement of specified performance conditions. As a result, 300,000 unexercised options originally granted to purchase common stock $0.22 per share were repriced along with the grant of 500,000 performance-based options. The repricing was treated as a modification of the original awards and the additional compensation costs for the difference between the fair value of the modified award and the fair value of the original award on the modification date was calculated. The repricing resulted in incremental stock-based compensation expense of $39,413, which was valued with the Black-Scholes option pricing model with the following weighted average assumptions: the risk-free rate of 3.93%; expected life of 4.75 years; volatility of 178%; forfeiture rate and dividend yield of nil; and the exercise price of $0.20. Expense related to vested shares was expensed on the repricing date and expense related to unvested shares will be amortized over the remaining vesting period. As at February 29, 2024, conditions for 200,000 performance-based options have been met with 100,000 options vesting on January 28, 2026 and 100,000 vesting on February 13, 2026. The Company estimates that all 500,000 performance-based options will vest and elected to account for forfeitures as they occur.

During the six months ended February 29, 2024, the Company recorded stock-based compensation of $366,708 (2023 - $1,119,246) for options granted and vested during the period as consulting fees on the consolidated statement of operations. At February 29, 2024, there was $149,983 of unrecognized compensation costs related to non-vested stock-based compensation arrangements granted under the Plan.

48

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

17. Non-cash activities

	Six Months Ended February 29, 2024		Six Months Ended February 28, 2023
Non-cash activities:
Shares issued to settle debt		-		59,529
Shares issued as finder’s fee		3,024		-

18. Segment disclosure

The Company has two operating segments including:

a) Allied Colombia, a Colombian based company through which the Company intends to commence commercial production in Colombia. (Allied Colombia)

b) Allied Corp. which consists of the rest of the Company’s operations. (Allied)

Factors used to identify the Company’s reportable segments include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance. The Company’s operating segments have been broken out based on similar economic and other qualitative criteria. The Company operates the Allied reporting segment in one geographical area (Canada), and the Allied Colombia reporting segment in one geographical area (Colombia).

Financial statement information by operating segment for the six months ended February 29, 2024 is presented below:

	Allied $			Allied Colombia $			Total $
Gross margin		-			17,036			17,036
Net loss		(1,428,786	)		(273,713	)		(1,702,499	)
Depreciation and amortization		33,242			29,313			62,555
Total assets as of February 29, 2024		692,889			1,596,914			2,289,803

Geographic information for the six months ended and as at February 29, 2024 is presented below:

	Gross Margin $		Total Assets $
Canada		-		692,889
Colombia		17,036		1,596,914
Total		17,036		2,289,803

49

ALLIED CORP.

Notes to the unaudited condensed consolidated interim financial statements

February 29, 2024

(Expressed in US dollars)

19. Subsequent events

a) On March 1, 2024, the Chief Executive Officer transferred his 2,500,000 shares back to treasury and forgave accrued consulting fees payable of $75,336.

b) On March 20, 2024, the Vice President Corporate Development and Director resigned.

c) On April 9, 2024, the Company entered into a securities purchase agreement and agreed to sell 2,500,000 shares of common stock at $0.20 per share for gross proceeds of $500,000. Pursuant to the agreement, the purchaser shall have the option to designate a member of the Board of Directors upon an additional investment of $750,000 over a period of twelve months. 

d) Subsequent to the period ended February 29, 2024, the Company amended the maturity dates of all convertible notes in default to December 31, 2024, and the conversion prices to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

50

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

The following discussion relates to the historical operations and financial statements of Allied Corp. for the six months ended February 29, 2024 and February 28, 2023.

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.

We focus on the development of Colombian produced medicinal cannabis 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).

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

Given the average cost of production in North America being approximately $1.00 to $2.00 per gram, we believe our anticipated direct agricultural cost of raw flower to be in the range of $0.05 – $0.075 per gram 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.

In addition to what we consider as our demonstrated ability to cultivate low-cost and high margin cannabis in Colombia primarily for international distribution, we have received commercial approval for sale of medical cannabis being produced in Colombia for export internationally. Allied Corp’s commitment to building and maintaining strong relationships with its partners and customers around the world has been a driving force behind its recent successes. The Company is dedicated to meeting the evolving needs of patients and healthcare professionals with its high-quality medical cannabis products, underpinned by rigorous quality standards and ethical cultivation & processing practices. 

51

Critical Accounting Policies

Business Presentation

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

The unaudited condensed consolidated interim financial statements have been prepared in accordance with US GAAP for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by US GAAP for complete financial statements. Therefore, the unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended August 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC.

The unaudited condensed consolidated interim financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at February 29, 2024, and the results of its operations for the six months ended February 29, 2024, and cash flows for the six months ended February 29, 2024. The results of operations for the period ended February 29, 2024 are not necessarily indicative of the results to be expected for future quarters or the full year.

The significant accounting policies followed are:

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.

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 29, 2024 and August 31, 2023.

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:

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

Inventory

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

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

Intangible assets

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

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

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

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Long-lived assets

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

Foreign currency translation and functional currency conversion

Items included in 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.

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

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

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

Share issuance costs

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

Research and development costs

Research and development costs are expensed as incurred.

Advertising costs

Advertising costs are expensed as incurred.

Revenue recognition

The Company’s revenue is comprised of sales of cannabis and CBD 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.

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

Net income (loss) per common share

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

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

Income taxes

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

Related party transactions

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

Significant accounting estimates and judgments

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

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

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

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.

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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 29, 2024 and August 31, 2023 other than cash.

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

Leases

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.

Recent accounting pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective September 1, 2022. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.

The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the six months ended February 29, 2024, are of significance or potential significance to the Company.

Financial Condition and Results of Operations

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a net loss for the six months ended February 29, 2024 of $1,702,499, has generated minimal revenue and as at February 29, 2024 has a working capital deficit of $8,953,089. 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 develop a profitable business. Management intends on financing its operations and future development activities largely from the sale of equity securities and debt financing 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.

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Results of Operations

Comparison of Unaudited Results for the Three Months ended February 29, 2024 compared to the Three Months Ended February 28, 2023

Sales and gross margin

The Company did not have revenue for the three-month period ended February 29, 2024 and February 28, 2023.  

Expenses

For the three-month period ended February 29, 2024, the Company had total expenses of $865,826, compared to total expenses of $2,064,237 for the three-month period ended February 28, 2023. Of the total expenses for the three-month period ended February 29, 2024, a total of $772,801 (February 28, 2023 - $1,976,416) was operating expenses and the remainder was non-recurring expenses which included interest expense of $93,025 (February 28, 2023 - $87,821). The operating expenses consisted principally of consulting fees in the development of the Company’s cannabis business, general office expenses, professional fees and rent. The decrease in total expenses is primarily attributed to the decrease in consulting fees of $332,049 and decrease in office and miscellaneous expense of $854,179 from the three-month period ended February 28, 2023 to three-month period ended February 29, 2024.

Net Loss

For the three-month period ended February 29, 2024, the Company had a net loss of $865,826 compared to a net loss of $2,064,237 for the three-month period ended February 28, 2023. This was principally related to the expenses referenced in the previous paragraph.

Comparison of Unaudited Results for the Six Months ended February 29, 2024 compared to the Six Months Ended February 28, 2023

Sales

For the six-month period ended February 29, 2024, the Company had revenue of $19,039 compared to revenue of $69,625 for the six-month period ended February 28, 2023.

Gross margin

For the six-month period ended February 29, 2024, the Company had a gross margin of $17,036 compared to a gross margin of $43,667 for the six-month period ended February 28, 2023.

Expenses

For the six-month period ended February 29, 2024, the Company had total expenses of $1,719,535, compared to total expenses of $3,443,403 for the six-month period ended February 28, 2023. Of the total expenses for the six-month period ended February 29, 2024, a total of $1,533,643 (February 28, 2023 - $3,219,382) was operating expenses and the remainder was non-recurring expenses which included interest expense of $185,892 (February 28, 2023 - $171,020) and loss on debt extinguishment of $nil (February 28, 2023 - $27,043). The operating expenses consisted principally of consulting fees in the development of the Company’s cannabis business, general office expenses, professional fees and rent. The decrease in total expenses is primarily attributed to the decrease in consulting fees of $737,219 and decrease in office and miscellaneous expense of $773,210 from the six-month period ended February 28, 2023, to three-month period ended February 29, 2024.

Net Loss

For the six-month period ended February 29, 2024, the Company had a net loss of $1,702,499 compared to a net loss of $3,373,778 for the three-month period ended February 28, 2023. This was principally related to the expenses referenced in the previous paragraph.

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Liquidity and Capital Resources

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

	Six Months Ended February 29, 2024			Six Months Ended February 28, 2023
Cash used in operating activities	$	(944,801	)	$	(1,725,568	)
Cash used in investing activities	$	(8,539	)	$	(84,822	)
Cash from financing activities	$	991,998		$	1,238,160
Decrease in cash during the period	$	38,658		$	(572,230	)
Effect of exchange rate change	$	(146,746	)	$	641,127
Cash, beginning of period	$	209,736		$	96,043
Cash, end of period	$	101,648		$	164,940

As at February 29, 2024, we had working capital deficit of $8,953,089. Our primary cash flow needs are for the development of our cannabis products, operating costs, administrative expenses and for general working capital.

As of February 29, 2024, the Company had $767,087 in current assets, consisting of $101,648 in cash, $443,690 in inventory, $171,001 in other receivables, and $50,748 in prepaid expenses. Other assets mainly include property, plant and equipment of $1,350,193, right-of-use assets of $108,566 and intangible assets of $44,874.

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

Secured Convertible Notes

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. The following table summarizes the Company’s secured convertible notes payable as of February 29, 2024 and August 31, 2023.

Issuance date	Maturity date as amended	Interest rate	Conversion price per share	Principal as at February 29, 2024	Principal as at August 31, 2023	Accrued interest as at February 29, 2024	Accrued interest as at August 31, 2023
1/23/2020	9/30/2022	10%	$1.25	200,000	200,000	68,493	58,575
1/23/2020	9/30/2022	10%	$1.25	200,000	200,000	48,548	38,630
9/29/2020	9/30/2022	10%	$1.25	63,341	63,341	36,681	33,540
10/26/2020	9/30/2022	10%	$1.25	37,613	37,613	12,572	10,706
11/11/2020	9/30/2022	10%	$1.25	85,937	85,937	28,348	24,087
12/2/2020	9/30/2022	10%	$1.25	600,000	600,000	194,465	164,712
1/7/2021	9/30/2022	10%	$1.25	300,000	300,000	67,397	52,521
3/26/2021	9/30/2022	10%	$1.25	18,000	18,000	5,272	4,379
3/26/2021	9/30/2022	10%	$1.25	100,000	100,000	29,233	24,274
4/30/2021	9/30/2022	10%	$1.00	100,000	100,000	28,329	23,370
4/29/2021	9/30/2022	10%	$1.00	180,000	180,000	50,942	42,016
7/25/2021	9/30/2022	10%	$1.25	35,000	35,000	9,071	7,336
7/25/2021	9/30/2022	10%	$1.25	15,000	15,000	3,888	3,144
10/1/2021	9/30/2022	10%	$1.00	100,000	100,000	24,082	19,123
10/25/2021	9/30/2022	10%	$1.00	100,000	100,000	23,425	18,466
12/23/2021	6/23/2022	10%	$1.25	100,000	100,000	21,836	16,877
12/23/2021	6/23/2022	10%	$1.25	100,000	100,000	21,836	16,877
1/11/2022	7/10/2022	10%	$1.25	150,000	150,000	31,973	24,534
1/31/2022	7/31/2022	10%	$1.25	100,000	100,000	20,767	15,808
3/29/2022	9/30/2022	10%	$1.25	500,000	500,000	96,028	71,233
6/16/2022	12/16/2022	10%	$1.25	250,000	250,000	42,603	30,206
11/28/2022	6/30/2023	10%	*	100,000	100,000	12,575	7,616
12/1/2022	6/30/2023	10%	*	70,000	70,000	8,707	5,236
12/7/2022	6/30/2023	10%	*	60,000	60,000	7,364	4,389
2/28/2023	4/30/2023	10%	*	150,000	150,000	15,000	7,562
5/17/2023	9/17/2023	10%	*	10,000	10,000	786	504
12/4/2023	12/31/2024	10%	$0.20	50,000	-	1,178	-
Total				3,774,891	3,724,891	911,399	725,721

*Conversion price is the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

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The Company defaulted on all of the convertible notes above (except for the note issued on December 4, 2023). Subsequent to the period ended February 29, 2024, the Company amended the maturity dates of all convertible notes in default to December 31, 2024, and the conversion prices to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share. Refer to the consolidated financial statements for the history of modifications on each convertible note.

Equity Transactions during the six months ended February 28, 2023

On September 21, 2022, the Company issued 1,350,000 shares of common stock at $0.40 per share for $540,000 subscriptions received during the year ended August 31, 2022.

On October 7, 2022, the Company issued 1,575,000 shares of common stock at $0.40 per share for proceeds of $630,000. In connection with the financing, the Company incurred finder’s fee of $10,000 and share issuance costs of $2,792.

On October 7, 2022, the Company issued 75,000 shares of common stock with a fair value of $44,606 to settle related party accounts payable of $30,000, resulting in a loss on settlement of $14,606.

On October 7, 2022, the Company issued 70,560 shares of common stock with a fair value of $41,966 to settle $29,529 in debt, resulting in a loss on settlement of $12,437.

Equity Transactions during the six months ended February 29, 2024

On September 5, 2023, the Company issued 150,000 shares of common stock at $0.20 per share for $30,000 subscriptions received during the year ended August 31, 2023.

On October 20, 2023, the Company issued 100,000 shares of common stock at $0.20 per share for $20,000 subscriptions received during the year ended August 31, 2023.

On December 1, 2023, the Company issued 1,730,000 shares of common stock at $0.20 per share for $346,000 subscriptions received during the year ended August 31, 2023.

On December 1, 2023, the Company issued 2,201,990 shares of common stock at $0.20 per share for proceeds of $440,398. In connection with the financing, the Company issued 42,000 shares with a fair value of $3,024 as a finder’s fee.

At February 29, 2024, the Company had received $30,000 in cash for shares subscriptions at $0.20 per share.

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 2024. 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.

Capital Expenditures

As of February 29, 2024 the company had purchased property plant and equipment of $1,350,193 and paid net cash of $2,833,049 for an asset acquisition. As of August 31, 2023 the company had purchased property plant and equipment of $1,417,192 and paid net cash of $2,833,049 for an asset acquisition.

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MediColombias Acquisition (Colombia Licensed Producer)

On August 29, 2019, the Company entered into a Share Purchase Agreement (“Purchase Agreement”) with Dorson Commercial Corp. (“Dorson”) as the sole owner of Baleno Ltd. to purchase all of the issued and outstanding shares of Baleno Ltd., the sole owner of Medicolombia Cannabis S.A.S. (“Medicolombia”). Medicolombia is based in Colombia with a full set of licenses and a lease agreement in place to begin production on a 5 hectare parcel of land. We have the ability to scale production to over hundreds of hectares. This is located in the area of Bucamaranga, Colombia.

Pursuant to the agreement the Company acquired all of the issued and outstanding shares of Medicolombia in exchange for $700,000 and 4,500,000 shares of Allied. The Company closed and completed the acquisition on February 17, 2020. Medicolombia has subsequently changed its name to Allied Colombia S.A.S.

Natural Health Products Acquisition

In May 2019 the management team of AM Biosciences were able to negotiate the inclusion of a natural health products catalogue of products. This includes 50 products in the natural health vertical market. Three of these products are of particular interest as they have Natural Health Products registration numbers with Health Canada. AM Biosciences can add these to the product offerings both in Canada and the United States.

Since the Board of Directors of the Company has determined to currently focus on the cannabis product, this project is currently on hold.

Xtreme Cubes Building

In June 2019, AM Biosciences signed the production and manufacturing contract to begin the manufacturing of the full building initially intended for the Canada extraction and production facility.

In June 2019, AM Biosciences signed the production and manufacturing contract to begin the manufacturing of the full building for the Canada extraction and production facility. 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 August 31, 2022, Company had deposits of $2,656,695 to purchase prefabricated buildings. During the year ended August 31, 2023, the Company recorded a loss on impairment of deposit of $2,656,695 due to the legal proceedings described below.

In 2020, Allied signed a purchase agreement to acquire a Nevada state license and had the 9800 sq ft. modular building built in Nevada as well. Allied signed a 25 year lease with a publicly listed company called FIORE cannabis. In December 2022, FIORE cannabis went insolvent so the business assets were seized by the debt holders of that company. The Allied building was on that land. Needless to say the lease was cancelled and Allied submitted an application to gain possession of the building back and have it be excluded from the bankruptcy proceedings of FIORE. This is in process with the state of Nevada. We are not aware of any other legal proceedings contemplated by any governmental authority or any other party involving us or our properties.

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.

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Going Concern

As reflected in the accompanying financial statements, the Company had an accumulated deficit of $47,310,835 at February 29, 2024 and a net loss of $1,702,499 for the six months ended February 29, 2024.

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 minimal 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.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Chief Financial Officer and Chief Executive Officer concluded that our disclosure controls and procedures were effective.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

In June 2019, AM Biosciences signed the production and manufacturing contract to begin the manufacturing of the full building initially intended for the Canada extraction and production facility.

The Company had determined to utilize these building assets in connection with potential United States operations in the State of Nevada 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”). In connection with that determination, 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. (“Fiore Subsidiary”). We also entered into a 25 year land lease with the Fiory Subsidiary which we intended originally to use for this operation.

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.

As the Company made payments towards the purchase of the prefabricated buildings, various parts of the building were delivered to the property on the land lease. In December 2022, the Company was advised that the Fiore Subsidiary had become insolvent and that a trustee’s sale had been scheduled for the property which the Company had agreed to lease. In order to protect the Company’s interests, the Company filed a complaint in the Eighth Judicial District Court in Clark County, Nevada seeking injunctive relief to terminate the trustee’s sale or alternatively money damages. The Company filed a lis pendens against the property to reflect this complaint and to protect its interests in the building. However, the trustee’s sale went forward and the successful bidder claimed that the buildings were part of the real property and that it became the owner of the buildings. As a result, the Company filed suit, seeking a declaration of the Company’s ownership of the buildings as the buildings were personal property and not a part of the real property. A status conference was held for December 13, 2023 and during a further status conference on April 3, 2024 the court strongly suggested to proceed with the litigation.  As a consequence, further discussions are ongoing.

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

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

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

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

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

61

Item 1A. Risk Factors.

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

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

On September 5, 2023, the Company issued 150,000 shares of common stock at $0.20 per share for $30,000 subscriptions received during the year ended August 31, 2023.

On October 20, 2023, the Company issued 100,000 shares of common stock at $0.20 per share for $20,000 subscriptions received during the year ended August 31, 2023.

On December 1, 2023, the Company issued 1,730,000 shares of common stock at $0.20 per share for $346,000 subscriptions received during the year ended August 31, 2023.

On December 1, 2023, the Company issued 2,201,990 shares of common stock at $0.20 per share for proceeds of $440,398. In connection with the financing, the Company issued 42,000 shares with a fair value of $3,024 as a finder’s fee.

At February 29, 2024, the Company had received $30,000 in cash for shares subscriptions at $0.20 per share.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information.

Not applicable

62

SIGNATURES*

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

	Allied Corp.
	(Registrant)
Date: April 19, 2024	By:	/s/ Calum Hughes
		Calum Hughes
		Chief Executive Officer and Director {Principal and Executive Officer}
Date: April 19, 2024	By:	/s/ Ryan Maarschalk
		Ryan Maarschalk
		Chief Financial Officer
		(Principal Financial Officer Principal Accounting Officer)

63

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

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

1.	I have reviewed this quarterly report of Allied Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and,
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 19, 2024	By:	/s/ Calum Hughes
		Calum Hughes
		Chief Executive Officer and Director (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

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

1.	I have reviewed this quarterly report of Allied Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and,
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 19, 2024	By:	/s/ Ryan Maarschalk
		Ryan Maarschalk Chief Financial Officer,
		(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

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

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended February 29, 2024 of Allied Corp., a Nevada corporation (the "Company"), as filed with the Securities and Exchange Commission on the date hereof (the "Quarterly Report"), I, Calum Hughes, Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

Date: April 19, 2024	By:	/s/ Calum Hughes
		Calum Hughes
		Chief Executive Officer and Director

EX-32.2

EXHIBIT 32.2

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

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended February 29, 2024 of Allied Corp., a Nevada corporation (the "Company"), as filed with the Securities and Exchange Commission on the date hereof (the "Quarterly Report"), I, Ryan Maarschalk, Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

Date: April 19, 2024	By:	/s/ Ryan Maarschalk
		Ryan Maarschalk
		Chief Financial Officer,
		(Principal Financial Officer)

XML

Cover	6 Months Ended
	Feb. 29, 2024 shares
Cover [Abstract]
Entity Registrant Name	ALLIED CORP.
Entity Central Index Key	0001575295
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--08-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Current Reporting Status	Yes
Document Period End Date	Feb. 29, 2024
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Entity Ex Transition Period	false
Entity Common Stock Shares Outstanding	105,816,904
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-56002
Entity Incorporation State Country Code	NV
Entity Tax Identification Number	33-1227173
Entity Address Address Line 1	1405 St. Paul St.
Entity Address Address Line 2	Suite 201
Entity Address City Or Town	Kelowna
Entity Address State Or Province	BC
Entity Address Country	CA
Entity Address Postal Zip Code	V1Y 9N2
City Area Code	877
Local Phone Number	255-4337
Entity Interactive Data Current	Yes

XML

Condensed Consolidated Interim Balance Sheets - USD ($)	Feb. 29, 2024	Aug. 31, 2023
Current assets
Cash	$ 101,648	$ 209,736
Inventory (Note 3)	443,690	107,510
Other receivables	171,001	134,482
Prepaid expenses	50,748	18,852
Total current assets	767,087	470,580
Deposits and advances (Note 4)	19,083	26,354
Right-of-use assets (Note 7)	108,566	109,301
Property, plant and equipment (Note 5)	1,350,193	1,417,192
Intangible assets (Note 6)	44,874	40,301
Total assets	2,289,803	2,063,728
Current liabilities
Accounts payable and accrued liabilities	2,627,129	2,393,359
Due to related parties (Note 11)	942,892	693,292
Current portion of lease liabilities (Note 7)	12,070	10,745
Loans payable (Note 8)	2,363,194	2,027,348
Secured convertible notes payable (Note 9)	3,774,891	3,724,891
Total current liabilities	9,720,176	8,849,635
Lease liabilities, net of current portion (Note 7)	96,496	98,556
Total liabilities	9,816,672	8,948,191
Stockholders' deficiency
Preferred stock - 50,000,000 shares authorized, $0.0001 par value Nil shares issued and outstanding	0	0
Common stock - 300,000,000 shares authorized, $0.0001 par value; 105,816,904 shares issued and outstanding (101,592,914 - par value $0.0001 - August 31, 2023)	10,582	10,160
Additional paid in capital	40,610,375	39,404,667
Common stock issuable	30,000	80,000
Accumulated deficit	(47,310,835)	(45,608,336)
Accumulated other comprehensive loss	(866,991)	(770,954)
Total stockholders' deficit	(7,526,869)	(6,884,463)
Total liabilities and stockholders' deficit	$ 2,289,803	$ 2,063,728

XML

Condensed Consolidated Interim Balance Sheets (Parenthetical) - $ / shares	Feb. 29, 2024	Aug. 31, 2023
Stockholders' equity (deficit)
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares par value	$ 0.0001	$ 0.0001
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares par value	$ 0.0001	$ 0.0001
Common stock, shares issued	105,816,904	101,592,914
Common stock, shares outstanding	105,816,904	101,592,914

XML

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Feb. 29, 2024	Feb. 28, 2023	Feb. 29, 2024	Feb. 28, 2023
Revenues
Sales	$ 0	$ 0	$ 19,039	$ 69,625
Cost of sales (Note 3)	0	0	(2,003)	(25,958)
Gross margin	0	0	17,036	43,667
Expenses
Amortization and depreciation	27,136	31,269	62,555	57,429
Consulting fees (Note 10 and 11)	481,829	813,878	923,316	1,660,535
Foreign exchange loss (gain)	(12,349)	365	(60,670)	(2,865)
Interest expense and bank charges	118,826	121,304	237,472	240,046
Office and miscellaneous	32,927	887,106	183,902	957,112
Professional fees	124,003	119,906	184,792	297,096
Travel	429	2,588	2,276	10,029
Operating expenses	772,801	1,976,416	1,533,643	3,219,382
Loss before other items	(772,801)	(1,976,416)	(1,516,607)	(3,175,715)
Other income and expenses
Interest expense	(93,025)	(87,821)	(185,892)	(171,020)
Loss on debt extinguishment	0	0	0	(27,043)
Total other expenses	(93,025)	(87,821)	(185,892)	(198,063)
Net loss	(865,826)	(2,064,237)	(1,702,499)	(3,373,778)
Other comprehensive loss
Foreign currency translation adjustments	(79,415)	696,142	(96,037)	542,142
Comprehensive loss	$ (945,241)	$ (1,368,095)	$ (1,798,536)	$ (2,831,636)
Basic and diluted loss per share	$ (0.01)	$ (0.02)	$ (0.02)	$ (0.03)
Weighted average number of common shares outstanding	105,792,245	97,038,154	104,205,478	96,529,807

XML

Condensed Consolidated Interim Statements of Stockholders Deficit (Unaudited) - USD ($)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Stock Issuable [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]
Balance, shares at Aug. 31, 2022		93,967,594
Balance, amount at Aug. 31, 2022	$ (1,282,397)	$ 9,397	$ 33,999,090	$ 540,000	$ (34,932,665)	$ (898,219)
Shares issued for cash, shares		2,925,000
Shares issued for cash, amount	630,000	$ 292	1,169,708	(540,000)	0	0
Share issuance costs	(12,792)	$ 0	(12,792)	0	0	0
Shares issued to settle debts, shares		145,560
Shares issued to settle debts, amount	86,572	$ 15	86,557	0	0	0
Stock-based compensation	545,171	0	545,171	0	0	0
Comprehensive loss for the year	(1,463,541)	$ 0	0	0	(1,309,541)	(154,000)
Balance, shares at Nov. 30, 2022		97,038,154
Balance, amount at Nov. 30, 2022	(1,496,987)	$ 9,704	35,787,734	0	(36,242,206)	(1,052,219)
Balance, shares at Aug. 31, 2022		93,967,594
Balance, amount at Aug. 31, 2022	(1,282,397)	$ 9,397	33,999,090	540,000	(34,932,665)	(898,219)
Stock-based compensation	1,119,246
Balance, shares at Feb. 28, 2023		97,038,154
Balance, amount at Feb. 28, 2023	(2,050,055)	$ 9,704	36,361,809	240,952	(38,306,443)	(356,077)
Balance, shares at Nov. 30, 2022		97,038,154
Balance, amount at Nov. 30, 2022	(1,496,987)	$ 9,704	35,787,734	0	(36,242,206)	(1,052,219)
Stock-based compensation	574,075	0	574,075	0	0	0
Comprehensive loss for the year	(1,368,095)	0	0	0	(2,064,237)	696,142
Shares subscribed	240,952	$ 0	0	240,952	0	0
Balance, shares at Feb. 28, 2023		97,038,154
Balance, amount at Feb. 28, 2023	(2,050,055)	$ 9,704	36,361,809	240,952	(38,306,443)	(356,077)
Balance, shares at Aug. 31, 2023		101,592,914
Balance, amount at Aug. 31, 2023	(6,884,463)	$ 10,160	39,404,667	80,000	(45,608,336)	(770,954)
Shares issued for cash, shares		250,000
Shares issued for cash, amount	0	$ 25	49,975	(50,000)	0	0
Stock-based compensation	143,653	0	143,653	0	0	0
Comprehensive loss for the year	(853,295)	0	0	0	(836,673)	(16,622)
Shares subscribed	346,000	$ 0	0	346,000	0	0
Balance, shares at Nov. 30, 2023		101,842,914
Balance, amount at Nov. 30, 2023	(7,248,105)	$ 10,185	39,598,295	376,000	(46,445,009)	(787,576)
Balance, shares at Aug. 31, 2023		101,592,914
Balance, amount at Aug. 31, 2023	(6,884,463)	$ 10,160	39,404,667	80,000	(45,608,336)	(770,954)
Stock-based compensation	366,708
Balance, shares at Feb. 29, 2024		105,816,904
Balance, amount at Feb. 29, 2024	(7,526,869)	$ 10,582	40,610,375	30,000	(47,310,835)	(866,991)
Balance, shares at Nov. 30, 2023		101,842,914
Balance, amount at Nov. 30, 2023	(7,248,105)	$ 10,185	39,598,295	376,000	(46,445,009)	(787,576)
Shares issued for cash, shares		3,931,990
Shares issued for cash, amount	440,398	$ 393	786,005	(346,000)	0	0
Stock-based compensation	223,055	0	223,055	0	0	0
Comprehensive loss for the year	(945,241)	$ 0	0	0	(865,826)	(79,415)
Share issuance costs, shares		42,000
Share issuance costs, amount	3,024	$ 4	3,020	0	0	0
Balance, shares at Feb. 29, 2024		105,816,904
Balance, amount at Feb. 29, 2024	$ (7,526,869)	$ 10,582	$ 40,610,375	$ 30,000	$ (47,310,835)	$ (866,991)

XML

Condensed Consolidated Interim Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Feb. 29, 2024	Feb. 28, 2023
Condensed Consolidated Interim Statements of Cash Flows (Unaudited)
Net loss for the period	$ (1,702,499)	$ (3,373,778)
Adjustment to net loss for the period for non-cash items
Accrued interest	421,524	406,867
Amortization and depreciation	62,555	57,429
Loss on debt extinguishment	0	27,043
Stock-based compensation - options	366,708	1,119,246
Fair value of finder's shares	3,024	0
Changes in non-cash working capital balance:
(Increase) decrease in other receivables	(30,232)	85,993
(Increase) decrease in prepaid expenses	(31,896)	7,038
Decrease in deposits and advances	8,214	24,086
(Decrease) increase in accounts payable and accrued liabilities	(43,690)	266,810
Increase in due to related parties	249,600	113,303
Increase in inventory	(248,109)	(459,605)
Net cash provided by used in operating activities	(944,801)	(1,725,568)
Investing activities
Purchase of intangible assets	(6,501)	(3,964)
Purchase of property, plant, and equipment	(2,038)	(80,858)
Net cash provided by used in investing activities	(8,539)	(84,822)
Financing activities
Advance from related parties	55,600	0
Proceeds from loan payable	100,000	0
Proceeds from convertible notes payable	50,000	380,000
Proceeds from the issuance of common stock	786,398	617,208
Proceeds for subscriptions of stock issuable	0	240,952
Net cash provided by used in financing activities	991,998	1,238,160
Increase (decrease) in cash	38,658	(572,230)
Effect of exchange rate on changes of cash	(146,746)	641,127
Cash, beginning of period	209,736	96,043
Cash, end of period	101,648	164,940
Supplemental cash flow disclosures:
Income taxes paid	0	0
Interest paid	$ 0	$ 0

XML

Nature of operations reverse takeover transaction and going concern

6 Months Ended

Feb. 29, 2024

Nature of operations reverse takeover transaction and going concern

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

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

a) Nature of operations

Allied Corp. (the “Company or Allied”) was incorporated in the State of Nevada on February 3, 2013. On July 1, 2019, the Company changed its name to Allied Corp. The head office and the registered office of the Company are located at 1405 St. Paul Street, Kelowna BC V1Y 2E4.

The Company’s business plan is to discover new medical technologies some of which are cannabis derived to target full scope therapy and support for trauma survivors, military veterans and first responders, however the Company has not begun such operations nor obtained the required permits to begin such operations.

On September 10, 2019, the Company was acquired in a reverse takeover (“RTO”) transaction 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 29, 2024, Allied Colombia has a licensed cannabis farm in Colombia.

b) 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 29, 2024 of $1,702,499, has generated minimal revenue and as at February 29, 2024 has a working capital deficit of $8,953,089. 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.

c) 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. 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.

XML

Significant accounting policies

6 Months Ended

Feb. 29, 2024

Significant accounting policies

Significant accounting policies

2. Significant accounting policies

Business Presentation

These unaudited condense 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, 2023, 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 29, 2024, and the results of its operations for the six months ended February 29, 2024, and cash flows for the six months ended February 29, 2024. The results of operations for the period ended February 29, 2024 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

These 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 29, 2024 and August 31, 2023.

c) Property, plant and equipment

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

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

d) Inventory

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

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

e) Intangible assets

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

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

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

f) Long-lived assets

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

g) Foreign currency translation and functional currency conversion

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

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

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

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

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

h) Share issuance costs

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

i) Research and development costs

Research and development costs are expensed as incurred. During the six months ended February 29, 2024, the Company incurred research and development costs of $nil (February 28, 2023 – $nil).

j) Advertising costs

Advertising costs are expensed as incurred. During the six months ended February 29, 2024, the Company incurred advertising costs of $631 (February 28, 2023 – $4,913).

k) 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.

l) 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.

m) 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.

n) 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.

o) 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.

p) Financial instruments

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

Level 1

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

Level 2

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

Level 3

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

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

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

The Company does not have any assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet as of February 29, 2024 and August 31, 2023 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.

q) 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.

r) Recent accounting pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective September 1, 2022. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.

The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the six months ended February 29, 2024, are of significance or potential significance to the Company.

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Inventory

6 Months Ended

Feb. 29, 2024

Inventory

Inventory

3. Inventory

Inventory is comprised of the following items:

	February 29, 2024		August 31, 2023
Work in progress	$	47,163	$	80,094
Finished goods		396,527		27,416
Total inventory	$	443,690	$	107,510

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 production 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.

During the six months ended February 29, 2024, the Company recorded a $nil write-off of inventory costs to its net realizable value of $443,690.

During the year ended August 31, 2023, the Company recorded a $43,861 write-off of inventory costs for CBD isolates and other derivative products to reduce to its net realizable value of $nil. In addition, the Company recorded additional $1,463,157 write-off of inventory costs to its net realizable value of $107,510.

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Deposits and advances

6 Months Ended

Feb. 29, 2024

Deposits and advances

Deposits and advances

4. Deposits and advances

	February 29, 2024		August 31, 2023
Prepayments for construction facility in Colombia	$	19,083	$	26,354
Total deposits and advances	$	19,083	$	26,354

The Company paid certain vendors for the construction of farm facilities in Colombia in advance. At February 29, 2024, the prepayments totaled $19,083 (August 31, 2023 – $26,354).

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Property plant and equipment

6 Months Ended

Feb. 29, 2024

Property plant and equipment

Property plant and equipment

5.   Property, plant and equipment

At February 29, 2024, property, plant and equipment consisted of:

	Construction in process		Farm facility and equipment		Office and computer equipment		Land equipment		Total
Cost
August 31, 2023	$	429,749	$	1,346,373	$	29,952	$	29,525	$	1,835,599
Additions		-		2,038		-		-		2,038
Foreign exchange		18,310		29,083		1,276		1,258		49,927
February 29, 2024	$	448,059	$	1,377,494	$	31,228	$	30,783	$	1,887,564
Accumulated depreciation
August 31, 2023	$	-	$	404,559	$	7,700	$	6,148	$	418,407
Additions		-		100,686		1,614		1,492		103,792
Foreign exchange		-		14,514		363		295		15,172
February 29, 2024	$	-	$	519,759	$	9,677	$	7,935	$	537,371
Net book value
August 31, 2023	$	429,749	$	941,814	$	22,252	$	23,377	$	1,417,192
February 29, 2024	$	448,059	$	857,735	$	21,551	$	22,848	$	1,350,193

As of February 29, 2024 and August 31, 2023, the construction in process has not been in use.

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Intangible assets

6 Months Ended

Feb. 29, 2024

Intangible assets

Intangible assets

6. Intangible assets

At February 29, 2024, intangible assets consisted of:

	Cost $		Foreign exchange $			Accumulated amortization $			Accumulated impairment $			February 29, 2024 Net carrying value $		August 31, 2023 Net carrying value $
Cannabis licenses		5,457,911		(468,035	)		(1,143,335	)		(3,801,667	)		44,874		40,301
		5,457,911		(468,035	)		(1,143,335	)		(3,801,667	)		44,874		40,301

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. 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 29, 2024, the Company recorded amortization of $2,804 (COP 12,732,615) (February 28, 2023 - $5,683 (COP 26,881,413)).

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Leases

6 Months Ended

Feb. 29, 2024

Leases

Leases

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. Management has assessed the lease as an operating lease. Effective August 31, 2023, 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. 

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 29, 2024, the Company did not have any finance leases.

At February 29, 2024, the weighted average remaining operating lease term was 6 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		8,201
Interest on lease liabilities		5,277
Total operating lease cost		13,478

The following table provides supplemental cash flow and other information related to leases for the six months ended February 29, 2024:

	$
Lease payments	13,478

Supplemental balance sheet information related to leases as of February 29, 2024 are as below:

	$
Cost	159,870
Accumulated amortization	(30,077	)
Foreign exchange	(21,227	)
Net carrying value at February 29, 2024	108,566

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

	$
2024	13,774
2025	27,547
2026	27,547
2027	27,547
2028	27,547
2029	27,547
2030	13,774
Total minimum lease payments	165,283
Less: amount of lease payments representing effects of discounting	(56,717	)
Present value of future minimum lease payments	108,566
Less: current obligations under leases	(12,070	)
Lease liabilities, net of current portion	96,496

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Loans payable

6 Months Ended

Feb. 29, 2024

Loans payable

Loans payable

8. Loans payable

a) In June 2020, the Company entered into a financing agreement to finance the buildings described in Note 4(a). Pursuant to the agreement, the Company financed $1,253,772 of the purchase price. The Company paid $71,023 at commencement date on May 29, 2020 and would make six monthly interest payments of $37,613 commencing June 20, 2020 and repay the principal of $1,253,772 on November 20, 2020. The loan was extended after the initial maturity date. 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 29, 2024, the Company paid interest in the amount of $nil (2023 - $nil). As of February 29, 2024, the Company has missed 20 monthly payments and the balance owing is $1,968,327 (August 31, 2023 - $1,742,648).

b) On December 17, 2021, the Company entered into a financing agreement to finance an equipment purchase. On March 31, 2022, the agreement was amended to remove shipping charges. Pursuant to the amended agreement, the Company financed $295,543 of the purchase price with an interest rate of 8% per annum. The Company will make 21 monthly principal and interest payments of $15,000 and a final payment of $633 in September 2023. During the six months ended February 29, 2024, the Company paid interest in the amount of $nil (2023 - $nil). As of February 29, 2024, the Company has missed 24 monthly payments and the balance owing is $294,867 (August 31, 2023 - $284,700).

c) On January 3, 2024, a holder of the Company’s convertible notes provided a short term loan of $100,000 (August 31, 2023 - $nil). The amount is unsecured, non-interest bearing, and due on demand.

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Secured convertible notes payable

6 Months Ended

Feb. 29, 2024

Secured convertible notes payable

Secured convertible notes payable

9. Secured convertible notes payable

The Company has granted each and every of the secured convertible note holders a continuing security interest in, a general lien upon, and 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 29, 2024, 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, the convertible notes bear simple interest at 5% per annum. The maturity date of the convertible notes was amended to due on demand on or before October 31, 2020. In consideration for extending the maturity date, the Company issued to the convertible note holders 16,000 common shares of the Company and warrants to purchase additional 320,000 common shares of the Company at $1.25 per share expiring October 31, 2021. Each note holder received 8,000 common shares and 160,000 warrants.

The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting.

The extended convertible notes had a total carrying value of $400,000. As the common shares and warrants were issued as consideration for extending the convertible notes, the fair value of the common share and warrants of $218,397 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $220,065.

ii. Second Modification:

On November 1, 2020, the Company entered into amendments to the convertible notes. Pursuant to the amendments, the maturity date of the convertible notes was amended to due on demand on or before March 31, 2021. In consideration for extending the maturity date, the Company agreed to issue to the convertible note holders 100,000 common shares of the Company. Each note holder received 50,000 common shares.

The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was substantially different which resulted in extinguishment accounting.

The extended convertible notes had a total carrying value of $400,000. As the common shares were issued as consideration for extending the convertible notes, the fair value of the common share of $110,000 were expensed under extinguishment accounting. The fair value of these costs were included in the calculation of the loss on extinguishment of $110,000.

iii. Third Modification:

On March 31, 2021, the Company entered into amendments to the convertible notes. Pursuant to the amendments, 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, the convertible notes bear simple interest at 10% per annum. Pursuant to the amendments, the maturity date of the convertible notes was amended to due on demand on or after March 31, 2022 for no additional consideration.

The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor has granted a concession, the guidance contained in ASC 470-60-35 was applied.

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

v. Fifth Modification:

On March 31, 2022, the Company entered into amendments to the convertible notes. Pursuant to the amendments, 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $117,041 (August 31, 2023 - $97,205), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $400,000 (August 31, 2023 - $400,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 29, 2024, 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, 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.

ii. Second Modification:

On June 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 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, 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.

iv. Fourth Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $36,681 (August 31, 2023 - $33,540), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $63,341 (August 31, 2023 - $63,341).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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, 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, 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.

iii. Third Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $12,572 (August 31, 2023 - $10,706), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $37,613 (August 31, 2023 - $37,613).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 29, 2024, 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, 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, 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.

iii. Third Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $28,348 (August 31, 2023 - $24,087), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $85,937 (August 31, 2023 - $85,937).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 29, 2024, 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.

i. First 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $194,465 (August 31, 2023 - $164,712), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $600,000 (August 31, 2023 - $600,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 29, 2024, 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.

i. First 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $67,397 (August 31, 2023 - $52,521), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $300,000 (August 31, 2023 - $300,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 was convertible into shares of the Company’s common stock at any time prior to September 26, 2021 at a conversion price of $1.25 per share.

The Company 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 29, 2024, 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.

i. First Modification:

On November 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $5,272 (August 31, 2023 - $4,379), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $18,000 (August 31, 2023 - $18,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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.

i. First Modification:

On November 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $29,233 (August 31, 2023 - $24,274), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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.

i. First Modification:

On November 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $28,329 (August 31, 2023 - $23,370), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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.

i. First Modification:

On November 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $50,942 (August 31, 2023 - $42,016), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $180,000 (August 31, 2023 - $180,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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

The Company 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 29, 2024, 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.

i. First Modification:

On November 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. Pursuant to the amendment, the maturity date of the convertible note was amended to due on demand on or after March 31, 2022 for no additional consideration.

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

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

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

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $9,071 (August 31, 2023 - $7,336), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $35,000 (August 31, 2023 - $35,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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.

i. First Modification:

On November 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. 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $3,888 (August 31, 2023 - $3,144), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $15,000 (August 31, 2023 - $15,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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.

i. First Modification:

On November 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. 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.

ii. Second Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $24,082 (August 31, 2023 - $19,123), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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.

Modification:

On March 31, 2022, the Company entered into amendment to the convertible note. Pursuant to the amendment, the convertible note bear 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 September 30, 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 29, 2024, the Company has recorded accrued interest of $23,425 (August 31, 2023 - $18,466), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 29, 2024, 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 29, 2024, the Company has recorded accrued interest of $21,836 (August 31, 2023 - $16,877), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On June 23, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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.

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 29, 2024, 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 29, 2024, the Company has recorded accrued interest of $21,836 (August 31, 2023 - $16,877), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On June 23, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 29, 2024, 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 29, 2024, the Company has recorded accrued interest of $31,973 (August 31, 2023 - $24,534), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $150,000 (August 31, 2023 - $150,000).

On July 10, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

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 29, 2024, 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 29, 2024, the Company has recorded accrued interest of $20,767 (August 31, 2023 - $15,808), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On July 31, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

s) On March 29, 2022, the Company issued a convertible note with a face value of $500,000 (the “Note). The Note bears interest at 10% per annum and is due on demand 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.

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 29, 2024, 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.

As at February 29, 2024, the Company has recorded accrued interest of $96,028 (August 31, 2023 - $71,233), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $500,000 (August 31, 2023 - $500,000).

On September 30, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

t) On June 16, 2022, the Company issued a convertible note with a face value of $250,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after December 16, 2022. The Note is convertible into shares of the Company’s common stock at any time prior to December 16, 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 29, 2024, 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.

As at February 29, 2024, the Company has recorded accrued interest of $42,603 (August 31, 2023 - $30,206), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $250,000 (August 31, 2023 - $250,000).

On December 16, 2022, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

u) On November 28, 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 June 30, 2023. The Note is convertible into shares of the Company’s common stock at any time prior to June 30, 2023 at a conversion price equal to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

As at February 29, 2024, the Company has recorded accrued interest of $12,575 (August 31, 2023 - $7,616), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $100,000 (August 31, 2023 - $100,000).

On June 30, 2023, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

v) On December 1, 2022, the Company issued a convertible note with a face value of $70,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after June 30, 2023. The Note is convertible into shares of the Company’s common stock at any time prior to June 30, 2023 at a conversion price equal to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

As at February 29, 2024, the Company has recorded accrued interest of $8,707 (August 31, 2023 - $5,236), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $70,000 (August 31, 2023 - $70,000).

On June 30, 2023, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

w) On December 7, 2022, the Company issued a convertible note with a face value of $60,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after June 30, 2023. The Note is convertible into shares of the Company’s common stock at any time prior to June 30, 2023 at a conversion price equal to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

As at February 29, 2024, the Company has recorded accrued interest of $7,364 (August 31, 2023 - $4,389), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $60,000 (August 31, 2023 - $60,000).

On June 30, 2023, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

x) On February 28, 2023, 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 April 30, 2023. The Note is convertible into shares of the Company’s common stock at any time prior to April 30, 2023 at a conversion price equal to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

As at February 29, 2024, the Company has recorded accrued interest of $15,000, (August 31, 2023 - $7,562), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $150,000 (August 31, 2023 - $150,000).

On April 30, 2023, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

y) On May 17, 2023, the Company issued a convertible note with a face value of $10,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after September 17, 2023. The Note is convertible into shares of the Company’s common stock at any time prior to September 17 at a conversion price equal to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

As at February 29, 2024, the Company has recorded accrued interest of $786 (August 31, 2023 - $504), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $10,000 (August 31, 2023 - $10,000).

On September 17, 2023, the Company defaulted on the Note and is in process of amending the maturity date and conversion price.

z) On December 4, 2023, the Company issued a convertible note with a face value of $50,000 (the “Note). The Note bears interest at 10% per annum and is due on demand after December 31, 2024. The Note is convertible into shares of the Company’s common stock at any time prior to December 31, 2024 at a conversion price equal to $0.20 per share.

As at February 29, 2024, the Company has recorded accrued interest of $1,178 (August 31, 2023 - $nil), which is included in accounts payable and accrued liabilities on the consolidated balance sheets.

As of February 29, 2024, the outstanding principal owing is $50,000 (August 31, 2023 - $nil).

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Equity

6 Months Ended

Feb. 29, 2024

Equity

Equity

10. Equity

During the six months ended February 28, 2023:

On September 21, 2022, the Company issued 1,350,000 shares of common stock at $0.40 per share for $540,000 subscriptions received during the year ended August 31, 2022.

On October 7, 2022, the Company issued 1,575,000 shares of common stock at $0.40 per share for proceeds of $630,000. In connection with the financing, the Company incurred finder’s fee of $10,000 and share issuance costs of $2,792.

On October 7, 2022, the Company issued 75,000 shares of common stock with a fair value of $44,606 to settle related party accounts payable of $30,000, resulting in a loss on settlement of $14,606.

On October 7, 2022, the Company issued 70,560 shares of common stock with a fair value of $41,966 to settle $29,529 in debt, resulting in a loss on settlement of $12,437.

During the six months ended February 28, 2024:

On September 5, 2023, the Company issued 150,000 shares of common stock at $0.20 per share for $30,000 subscriptions received during the year ended August 31, 2023.

On October 20, 2023, the Company issued 100,000 shares of common stock at $0.20 per share for $20,000 subscriptions received during the year ended August 31, 2023.

On December 1, 2023, the Company issued 1,730,000 shares of common stock at $0.20 per share for $346,000 subscriptions received during the year ended August 31, 2023.

On December 1, 2023, the Company issued 2,201,990 shares of common stock at $0.20 per share for proceeds of $440,398. In connection with the financing, the Company issued 42,000 shares with a fair value of $3,024 as a finder’s fee.

At February 29, 2024, the Company had received $30,000 in cash for shares subscriptions at $0.20 per share.

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Related party transactions and balances

6 Months Ended

Feb. 29, 2024

Related party transactions and balances

Related party transactions and balances

11. Related party transactions and balances

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

a) Key management compensation and related party transactions

The Company has identified its directors and certain senior officers as its key management personnel. The compensation costs for key management personnel were as follows:

	Six Months Ended February 29, 2024		Six Months Ended February 28, 2023
Consulting fees and benefits	$	245,597	$	195,231
Signing bonus		44,214		-
	$	289,811	$	195,231

b)  Amounts due to 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 due to related parties:

	February 29, 2024		August 31, 2023
Chief Executive Officer and Director	$	186,279	$	156,028
Chief Operating Officer and Director		224,403		201,612
An entity controlled by the Chief Financial Officer		109,919		84,962
Chief Business Development Officer		87,932		-
An entity controlled by a Director		239,690		159,690
Director		94,669		91,000
	$	942,892	$	693,292

As of February 29, 2024, the Company had $942,892 (August 31, 2023 - $693,292) payable to related parties. From this amount, $817,292 (August 31, 2023 - $623,292) was for expenses incurred or expensed paid on behalf of the Company by the parties and $125,600 (August 31, 2023 - $70,000) was for advances received from the parties.

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Financial risk factors

6 Months Ended

Feb. 29, 2024

Financial risk factors

Financial risk factors

12. Financial risk factors

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

a) Credit risk:

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

b) Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to meet liabilities when due. Accounts payable are due within the current operating period. The Company has a working capital deficit and requires additional financing to meet its current obligations (see Note 1).

c) Market risk:

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The Company is not exposed to market risk.

d) Interest rate risk:

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk, from time to time, on its cash balances. Surplus cash, if any, is placed on call with financial institutions and management actively negotiates favorable market related interest rates.

e) Foreign exchange risk:

Foreign currency risk is limited to the portion of the Company’s business transactions denominated in currencies other than the Canadian dollar. The Company has not entered into any foreign currency contracts to mitigate risk, but manages the risk my minimizing the value of financial instruments denominated in foreign currency. The Company is exposed to foreign currency risk to the extent that the following monetary assets and liabilities are denominated in Canadian dollars:

	February 29, 2024			February 28, 2023
Balance in Canadian dollars:
Cash and cash equivalents	$	-		$	26,547
Accounts receivable		-			5,127
Accounts payable and accrued liabilities		(1,205,467	)		(769,347	)
Net exposure		(1,205,467	)		(737,673	)
Balance in US dollars:	$	(888,333	)	$	(542,048	)

A 10% change in the US dollar to the Canadian dollar exchange rate would impact the Company’s net loss by approximately $88,833 for the six months ended February 29, 2024 (February 28, 2023 – $54,205).

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

	February 29, 2024			February 28, 2023
Balance in Colombian Pesos dollars:
Cash and cash equivalents	$	505,576		$	684,128,157
Other receivables		660,410,427			139,323,503
Accounts payable		(3,557,034,154	)		(4,158,486,022	)
Net exposure		(2,896,118,151	)		(3,335,034,362	)
Balance in US dollars:	$	(738,710	)	$	(686,690	)

A 10% change in the US dollar to the Colombian Peso exchange rate would impact the Company’s net loss by approximately $73,871 for the six months ended February 29, 2024 (February 28, 2023 - $68,669).

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Capital management

6 Months Ended

Feb. 29, 2024

Capital management

Capital management

13. Capital management

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

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Commitments

6 Months Ended

Feb. 29, 2024

Commitments

Commitments

14. Commitments

a) As of February 29, 2024, 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 sheet.

b) The Company has entered into leases for farm land in Colombia. See Note 7 for details.

c) In June 2019, the Company’s wholly owned subsidiary, AM Biosciences, signed a production and manufacturing contract to begin the manufacturing of the full building initially intended for the Canada extraction and production facility. The Company had determined to utilize these building assets in connection with potential United States operations in the State of Nevada 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. In connection with that determination, on March 30, 2021, the Company’s wholly owned subsidiary, Allied US Products LLC, entered into a contingent asset purchase agreement (“Agreement”) 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. Concurrent with the execution of the Agreement, the Company’s wholly owned subsidiary, Tactical Relief LLC, agreed to enter into a 25-year land lease with the Fiore Subsidiary.

As the Company made payments towards the purchase of the prefabricated buildings, various parts of the building were delivered to the property on the land lease. In December 2022, the Company was advised that the Fiore Subsidiary had become insolvent and that a trustee’s sale had been scheduled for the property which the Company had agreed to lease. In order to protect the Company’s interests, the Company filed a complaint in the Eighth Judicial District Court in Clark County, Nevada seeking injunctive relief to terminate the trustee’s sale or alternatively money damages. The Company filed a lis pendens against the property to reflect this complaint and to protect its interests in the building. However, the trustee’s sale went forward and the successful bidder claimed that the buildings were part of the real property and that it became the owner of the buildings. As a result, the Company filed suit, seeking a declaration of the Company’s ownership of the buildings as the buildings were personal property and not a part of the real property. A status conference was held for December 13, 2023 and during a further status conference on April 3, 2024 the court strongly suggested to proceed with the litigation. As a consequence, further discussions are ongoing..

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Share purchase warrants

6 Months Ended

Feb. 29, 2024

Share purchase warrants

Share purchase warrants

15. Share purchase warrants

The following table summarizes the continuity of share purchase warrants:

	Number of warrants			Weighted average exercise price $
Balance, August 31, 2023		5,459,000			1.06
Expired		(4,371,267	)		1.25
Balance, February 29, 2024		1,087,733			0.28

As at February 29, 2024, the following share purchase warrants were outstanding:

Number of warrants		Exercise price $		Expiry date
	20,000		1.25	March 7, 2024
	67,733		1.25	May 27, 2024
	1,000,000		0.20	July 30, 2025
	1,087,733

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Stock Options

6 Months Ended

Feb. 29, 2024

Stock Options

Stock Options

16. Stock options

A summary of the Company’s stock option activity is as follows:

	Number of Options		Weighted Average Exercise Price $		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value $
Balance, August 31, 2023		12,140,000		0.25		3.70		55,900
Granted		500,000		0.20		4.59		-
Unearned performance-based options		300,000		0.20		4.59		-
Outstanding, February 29, 2024		12,940,000		0.22		4.24		-
Exercisable, February 29, 2024		11,606,667		0.22		4.25		-

On December 20, 2024 the Company modified the exercise prices and maturity dates for previously granted and unexercised options as follows:

Number of stock options	Exercise price before modification	Maturity date before modification	Modified exercise price	Modified maturity date
1,500,000	$0.25	February 1, 2026	$0.20	January 1, 2029
600,000	$0.22	February 1, 2026	$0.20	January 1, 2029
300,000	$0.25	May 1, 2027	$0.20	January 1, 2029
450,000	$0.22	May 1, 2027	$0.20	January 1, 2029
6,000,000	$0.24	March 8, 2028	$0.20	January 1, 2029
140,000	$0.20	June 3, 2028	$0.20	January 1, 2029

There was no other modification to the vesting schedule of the previously issued options. As a result, 8,990,000 unexercised options originally granted to purchase common stock at prices ranging from $0.20 to $0.25 per share were repriced. The repricing was treated as a modification of the original awards and the additional compensation costs for the difference between the fair value of the modified award and the fair value of the original award on the modification date was calculated. The repricing resulted in incremental stock-based compensation expense of $56,964, which was valued with the Black-Scholes option pricing model with the following weighted average assumptions: the risk-free rate of 4.17%; expected life of 2.73 years; volatility of 180%; forfeiture rate and dividend yield of nil; and the exercise price of $0.20. Expense related to vested shares was expensed on the repricing date and expense related to unvested shares will be amortized over the remaining vesting period.

On January 1, 2024, the Company modified the exercise price and vesting terms for previously granted and unexercised options as follows:

Number of stock options	Exercise price before modification	Vesting terms before modification	Modified exercise price	Modified vesting terms
300,000	$0.22	100,000 on October 1, 2024 100,000 on October 1, 2025 100,000 on October 1, 2026	$0.20	150,000 on January 1, 2024 150,000 on September 30, 2024

In addition, the Company granted additional 500,000 performance-based options with an exercise price of $0.20 which will vest 2 years from the achievement of specified performance conditions. As a result, 300,000 unexercised options originally granted to purchase common stock $0.22 per share were repriced along with the grant of 500,000 performance-based options. The repricing was treated as a modification of the original awards and the additional compensation costs for the difference between the fair value of the modified award and the fair value of the original award on the modification date was calculated. The repricing resulted in incremental stock-based compensation expense of $39,413, which was valued with the Black-Scholes option pricing model with the following weighted average assumptions: the risk-free rate of 3.93%; expected life of 4.75 years; volatility of 178%; forfeiture rate and dividend yield of nil; and the exercise price of $0.20. Expense related to vested shares was expensed on the repricing date and expense related to unvested shares will be amortized over the remaining vesting period. As at February 29, 2024, conditions for 200,000 performance-based options have been met with 100,000 options vesting on January 28, 2026 and 100,000 vesting on February 13, 2026. The Company estimates that all 500,000 performance-based options will vest and elected to account for forfeitures as they occur.

During the six months ended February 29, 2024, the Company recorded stock-based compensation of $366,708 (2023 - $1,119,246) for options granted and vested during the period as consulting fees on the consolidated statement of operations. At February 29, 2024, there was $149,983 of unrecognized compensation costs related to non-vested stock-based compensation arrangements granted under the Plan.

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Non cash activities

6 Months Ended

Feb. 29, 2024

Non cash activities

Non-cash activities

17. Non-cash activities

	Six Months Ended February 29, 2024		Six Months Ended February 28, 2023
Non-cash activities:
Shares issued to settle debt		-		59,529
Shares issued as finder’s fee		3,024		-

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Segment disclosure

6 Months Ended

Feb. 29, 2024

Segment disclosure

Segment disclosure

18. Segment disclosure

The Company has two operating segments including:

a) Allied Colombia, a Colombian based company through which the Company intends to commence commercial production in Colombia. (Allied Colombia)

b) Allied Corp. which consists of the rest of the Company’s operations. (Allied)

Factors used to identify the Company’s reportable segments include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance. The Company’s operating segments have been broken out based on similar economic and other qualitative criteria. The Company operates the Allied reporting segment in one geographical area (Canada), and the Allied Colombia reporting segment in one geographical area (Colombia).

Financial statement information by operating segment for the six months ended February 29, 2024 is presented below:

	Allied $			Allied Colombia $			Total $
Gross margin		-			17,036			17,036
Net loss		(1,428,786	)		(273,713	)		(1,702,499	)
Depreciation and amortization		33,242			29,313			62,555
Total assets as of February 29, 2024		692,889			1,596,914			2,289,803

Geographic information for the six months ended and as at February 29, 2024 is presented below:

	Gross Margin $		Total Assets $
Canada		-		692,889
Colombia		17,036		1,596,914
Total		17,036		2,289,803

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Subsequent events

6 Months Ended

Feb. 29, 2024

Subsequent events

Subsequent events

19. Subsequent events

a) On March 1, 2024, the Chief Executive Officer transferred his 2,500,000 shares back to treasury and forgave accrued consulting fees payable of $75,336.

b) On March 20, 2024, the Vice President Corporate Development and Director resigned.

c) On April 9, 2024, the Company entered into a securities purchase agreement and agreed to sell 2,500,000 shares of common stock at $0.20 per share for gross proceeds of $500,000. Pursuant to the agreement, the purchaser shall have the option to designate a member of the Board of Directors upon an additional investment of $750,000 over a period of twelve months. 

d) Subsequent to the period ended February 29, 2024, the Company amended the maturity dates of all convertible notes in default to December 31, 2024, and the conversion prices to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share.

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Significant accounting policies (Policies)

6 Months Ended

Feb. 29, 2024

Significant accounting policies

Principles of consolidation

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

Cash and cash equivalents

Cash is comprised of cash on hand, cash held in trust accounts and demand deposits. Cash equivalents are short-term, highly liquid investments with maturities within three months when acquired. The Company did not have any cash equivalents as of February 29, 2024 and August 31, 2023.

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

Inventory

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

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

Intangible assets

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

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

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

Long-lived assets

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

Foreign currency translation and functional currency conversion

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

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

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

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

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

Share issuance costs

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

Research and development costs

Research and development costs are expensed as incurred. During the six months ended February 29, 2024, the Company incurred research and development costs of $nil (February 28, 2023 – $nil).

Advertising costs

Advertising costs are expensed as incurred. During the six months ended February 29, 2024, the Company incurred advertising costs of $631 (February 28, 2023 – $4,913).

Revenue Recognition

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

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

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

Net income (loss) per common share

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

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

Income taxes

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

Related party transactions

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

Significant accounting estimates and judgments

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

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

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

Financial instruments

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

Level 1

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

Level 2

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

Level 3

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

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

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

The Company does not have any assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet as of February 29, 2024 and August 31, 2023 other than cash.

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

Leases

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.

Recent accounting pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective September 1, 2022. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.

The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the six months ended February 29, 2024, are of significance or potential significance to the Company.

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Significant accounting policies (Tables)

6 Months Ended

Feb. 29, 2024

Significant accounting policies

Schedule of property plant and equipment estimated useful lives

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

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Inventory (Tables)

6 Months Ended

Feb. 29, 2024

Inventory

Schedule of Inventory

	February 29, 2024		August 31, 2023
Work in progress	$	47,163	$	80,094
Finished goods		396,527		27,416
Total inventory	$	443,690	$	107,510

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Deposits and advances (Tables)

6 Months Ended

Feb. 29, 2024

Deposits and advances

Schedule of deposits and advances

	February 29, 2024		August 31, 2023
Prepayments for construction facility in Colombia	$	19,083	$	26,354
Total deposits and advances	$	19,083	$	26,354

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Property plant and equipment (Tables)

6 Months Ended

Feb. 29, 2024

Property plant and equipment

Schedule of property plant and equipment

	Construction in process		Farm facility and equipment		Office and computer equipment		Land equipment		Total
Cost
August 31, 2023	$	429,749	$	1,346,373	$	29,952	$	29,525	$	1,835,599
Additions		-		2,038		-		-		2,038
Foreign exchange		18,310		29,083		1,276		1,258		49,927
February 29, 2024	$	448,059	$	1,377,494	$	31,228	$	30,783	$	1,887,564
Accumulated depreciation
August 31, 2023	$	-	$	404,559	$	7,700	$	6,148	$	418,407
Additions		-		100,686		1,614		1,492		103,792
Foreign exchange		-		14,514		363		295		15,172
February 29, 2024	$	-	$	519,759	$	9,677	$	7,935	$	537,371
Net book value
August 31, 2023	$	429,749	$	941,814	$	22,252	$	23,377	$	1,417,192
February 29, 2024	$	448,059	$	857,735	$	21,551	$	22,848	$	1,350,193

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Intangible assets (Tables)

6 Months Ended

Feb. 29, 2024

Intangible assets

Schedule of intangible assets

	Cost $		Foreign exchange $			Accumulated amortization $			Accumulated impairment $			February 29, 2024 Net carrying value $		August 31, 2023 Net carrying value $
Cannabis licenses		5,457,911		(468,035	)		(1,143,335	)		(3,801,667	)		44,874		40,301
		5,457,911		(468,035	)		(1,143,335	)		(3,801,667	)		44,874		40,301

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Leases (Tables)

6 Months Ended

Feb. 29, 2024

Leases

Schedule of components of lease expenses

	$
Operating lease cost:
Amortization of right-of-use assets		8,201
Interest on lease liabilities		5,277
Total operating lease cost		13,478

Schedule of supplemental cash flow and other information related to leases

	$
Lease payments	13,478

Schedule of supplemental balance sheet information related to leases

	$
Cost	159,870
Accumulated amortization	(30,077	)
Foreign exchange	(21,227	)
Net carrying value at February 29, 2024	108,566

Schedule of future minimum lease payments

	$
2024	13,774
2025	27,547
2026	27,547
2027	27,547
2028	27,547
2029	27,547
2030	13,774
Total minimum lease payments	165,283
Less: amount of lease payments representing effects of discounting	(56,717	)
Present value of future minimum lease payments	108,566
Less: current obligations under leases	(12,070	)
Lease liabilities, net of current portion	96,496

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Related party transactions and balances (Tables)

6 Months Ended

Feb. 29, 2024

Related party transactions and balances

Schedule of related party compensation costs

	Six Months Ended February 29, 2024		Six Months Ended February 28, 2023
Consulting fees and benefits	$	245,597	$	195,231
Signing bonus		44,214		-
	$	289,811	$	195,231

Schedule of due from related party

	February 29, 2024		August 31, 2023
Chief Executive Officer and Director	$	186,279	$	156,028
Chief Operating Officer and Director		224,403		201,612
An entity controlled by the Chief Financial Officer		109,919		84,962
Chief Business Development Officer		87,932		-
An entity controlled by a Director		239,690		159,690
Director		94,669		91,000
	$	942,892	$	693,292

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Financial risk factors (Tables)

6 Months Ended

Feb. 29, 2024

Financial risk factors

Schedule of foreign currency translation

	February 29, 2024			February 28, 2023
Balance in Canadian dollars:
Cash and cash equivalents	$	-		$	26,547
Accounts receivable		-			5,127
Accounts payable and accrued liabilities		(1,205,467	)		(769,347	)
Net exposure		(1,205,467	)		(737,673	)
Balance in US dollars:	$	(888,333	)	$	(542,048	)

	February 29, 2024			February 28, 2023
Balance in Colombian Pesos dollars:
Cash and cash equivalents	$	505,576		$	684,128,157
Other receivables		660,410,427			139,323,503
Accounts payable		(3,557,034,154	)		(4,158,486,022	)
Net exposure		(2,896,118,151	)		(3,335,034,362	)
Balance in US dollars:	$	(738,710	)	$	(686,690	)

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Share purchase warrants (Tables)

6 Months Ended

Feb. 29, 2024

Share purchase warrants

Schedule of share purchase warrants

	Number of warrants			Weighted average exercise price $
Balance, August 31, 2023		5,459,000			1.06
Expired		(4,371,267	)		1.25
Balance, February 29, 2024		1,087,733			0.28

Number of warrants		Exercise price $		Expiry date
	20,000		1.25	March 7, 2024
	67,733		1.25	May 27, 2024
	1,000,000		0.20	July 30, 2025
	1,087,733

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Stock Options (Tables)

6 Months Ended

Feb. 29, 2024

Stock Options

Schedule of Stock Options activity

	Number of Options		Weighted Average Exercise Price $		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value $
Balance, August 31, 2023		12,140,000		0.25		3.70		55,900
Granted		500,000		0.20		4.59		-
Unearned performance-based options		300,000		0.20		4.59		-
Outstanding, February 29, 2024		12,940,000		0.22		4.24		-
Exercisable, February 29, 2024		11,606,667		0.22		4.25		-

Schedule of modification of exericse prices and maturity dates

Number of stock options	Exercise price before modification	Maturity date before modification	Modified exercise price	Modified maturity date
1,500,000	$0.25	February 1, 2026	$0.20	January 1, 2029
600,000	$0.22	February 1, 2026	$0.20	January 1, 2029
300,000	$0.25	May 1, 2027	$0.20	January 1, 2029
450,000	$0.22	May 1, 2027	$0.20	January 1, 2029
6,000,000	$0.24	March 8, 2028	$0.20	January 1, 2029
140,000	$0.20	June 3, 2028	$0.20	January 1, 2029

Schedule of modification of exercise price and vesting terms

Number of stock options	Exercise price before modification	Vesting terms before modification	Modified exercise price	Modified vesting terms
300,000	$0.22	100,000 on October 1, 2024 100,000 on October 1, 2025 100,000 on October 1, 2026	$0.20	150,000 on January 1, 2024 150,000 on September 30, 2024

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Non cash activities (Tables)

6 Months Ended

Feb. 29, 2024

Non cash activities

Schedule of Non-cash activities

	Six Months Ended February 29, 2024		Six Months Ended February 28, 2023
Non-cash activities:
Shares issued to settle debt		-		59,529
Shares issued as finder’s fee		3,024		-

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Segment disclosure (Tables)

6 Months Ended

Feb. 29, 2024

Segment disclosure

Schedule of operating segment

	Allied $			Allied Colombia $			Total $
Gross margin		-			17,036			17,036
Net loss		(1,428,786	)		(273,713	)		(1,702,499	)
Depreciation and amortization		33,242			29,313			62,555
Total assets as of February 29, 2024		692,889			1,596,914			2,289,803

Schedule of geographical information

	Gross Margin $		Total Assets $
Canada		-		692,889
Colombia		17,036		1,596,914
Total		17,036		2,289,803

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Nature of operations reverse takeover transaction and going concern (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Feb. 29, 2024	Feb. 28, 2023	Feb. 29, 2024	Feb. 28, 2023
Nature of operations reverse takeover transaction and going concern
Net losses	$ (865,826)	$ (2,064,237)	$ (1,702,499)	$ (3,373,778)
Working capital deficit			$ (8,953,089)

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Significant accounting policies (Details)	6 Months Ended
	Feb. 29, 2024
Land Equipment [Member]
Estimated useful lives	10 years
Minimum [Member] | Farm facility and equipment [Member]
Estimated useful lives	1 year
Minimum [Member] | Office and Computer Equipment [Member]
Estimated useful lives	5 years
Maximum [Member] | Farm facility and equipment [Member]
Estimated useful lives	10 years
Maximum [Member] | Office and Computer Equipment [Member]
Estimated useful lives	10 years

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Significant accounting policies (Details Narrative) - USD ($)	6 Months Ended
	Feb. 29, 2024	Feb. 28, 2023
Significant accounting policies
Intangible asset estimated useful life	10 years
Research and development costs	$ 0	$ 0
Advertising costs	$ 631	$ 4,913

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Inventory (Details) - USD ($)	Feb. 29, 2024	Aug. 31, 2023
Inventory
Work-in-progress	$ 47,163	$ 80,094
Finished goods	396,527	27,416
Total inventory	$ 443,690	$ 107,510

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Inventory (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Feb. 29, 2024	Aug. 31, 2023
Inventory
Write-off of inventory	$ 0	$ 43,861
Write-off of inventory additional		1,463,157
Net realizable value		0
Net realizable value additional	$ 443,690	$ 107,510

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Deposits and advances (Details) - USD ($)	Feb. 29, 2024	Aug. 31, 2023
Total deposits and advances	$ 19,083	$ 26,354
Prepayments for construction facility in Colombia [Member]
Total deposits and advances	$ 19,083	$ 26,354

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Deposits and advances (Details Narrative) - USD ($)	Feb. 29, 2024	Aug. 31, 2023
Total deposits and advances	$ 19,083	$ 26,354
Prepayments for construction facility in Colombia [Member]
Total deposits and advances	$ 19,083	$ 26,354

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Property plant and equipment (Details)	6 Months Ended
	Feb. 29, 2024 USD ($)
Cost of asset, Beginning balance	$ 1,835,599
Cost of asset, Additions	2,038
Cost of asset, Foreign exchange	49,927
Cost of assets, Ending balance	1,887,564
Accumulated depreciation, Beginning balances	418,407
Accumulated depreciation, Additions	103,792
Accumulated depreciation, Foreign exchange	15,172
Accumulated depreciation, ending balance	537,371
Net book value, Beginning balance	1,417,192
Net book value , ending balance	1,350,193
Land Equipment [Member]
Cost of asset, Beginning balance	29,525
Cost of asset, Additions	0
Cost of asset, Foreign exchange	1,258
Cost of assets, Ending balance	30,783
Accumulated depreciation, Beginning balances	6,148
Accumulated depreciation, Additions	1,492
Accumulated depreciation, Foreign exchange	295
Accumulated depreciation, ending balance	7,935
Net book value, Beginning balance	23,377
Net book value , ending balance	22,848
Construction in progress [Member]
Cost of asset, Beginning balance	429,749
Cost of asset, Additions	0
Cost of asset, Foreign exchange	18,310
Cost of assets, Ending balance	448,059
Accumulated depreciation, Beginning balances	0
Accumulated depreciation, Additions	0
Accumulated depreciation, Foreign exchange	0
Accumulated depreciation, ending balance	0
Net book value, Beginning balance	429,749
Net book value , ending balance	448,059
Farm facility and equipment [Member]
Cost of asset, Beginning balance	1,346,373
Cost of asset, Additions	2,038
Cost of asset, Foreign exchange	29,083
Cost of assets, Ending balance	1,377,494
Accumulated depreciation, Beginning balances	404,559
Accumulated depreciation, Additions	100,686
Accumulated depreciation, Foreign exchange	14,514
Accumulated depreciation, ending balance	519,759
Net book value, Beginning balance	941,814
Net book value , ending balance	857,735
Office and Computer Equipment [Member]
Cost of asset, Beginning balance	29,952
Cost of asset, Additions	0
Cost of asset, Foreign exchange	1,276
Cost of assets, Ending balance	31,228
Accumulated depreciation, Beginning balances	7,700
Accumulated depreciation, Additions	1,614
Accumulated depreciation, Foreign exchange	363
Accumulated depreciation, ending balance	9,677
Net book value, Beginning balance	22,252
Net book value , ending balance	$ 21,551

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Intangible assets (Details) - USD ($)	6 Months Ended
	Feb. 29, 2024	Aug. 31, 2023
Cost	$ 5,457,911
Foreign Exchange	(468,035)
Accumulated amortization	(1,143,335)
Accumulated impairment	(3,801,667)
Net carrying value	44,874	$ 40,301
Cannabis Licenses [Member]
Cost	5,457,911
Foreign Exchange	(468,035)
Accumulated amortization	(1,143,335)
Accumulated impairment	(3,801,667)
Net carrying value	$ 44,874	$ 40,301

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Intangible assets (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Feb. 29, 2024	Feb. 28, 2023	Aug. 31, 2021	Feb. 17, 2020
Amortization of licenses	$ (1,143,335)
Other Intangible Assets [Licenses]
Impairment of intangible assets			$ 2,687,695
Amortization of licenses	$ 2,804	$ 5,683
Intangible Assets [Member] | Allied Colombia [Member]
Amortization of licenses			658,836
Acquisition of licenses				$ 5,435,334
Amortization included in inventory			$ 158,121

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Leases (Details)	6 Months Ended
	Feb. 29, 2024 USD ($)
Operating lease cost:
Amortization of right-of-use assets	$ 8,201
Interest on lease liabilities	5,277
Total operating lease cost	$ 13,478

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Leases (Details 1)	6 Months Ended
	Feb. 29, 2024 USD ($)
Leases
Lease payments	$ 13,478

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Leases (Details 2)	Feb. 29, 2024 USD ($)
Leases
Cost	$ 159,870
Accumulated amortization	(30,077)
Foreign exchange	(21,227)
Net carrying value	$ 108,566

XML

Leases (Details 3)	Feb. 29, 2024 USD ($)
Leases
2024	$ 13,774
2025	27,547
2026	27,547
2027	27,547
2028	27,547
2029	27,547
2030	13,774
Total minimum lease payments	165,283
Less: amount of lease payments representing effects of discounting	(56,717)
Present value of future minimum lease payments	108,566
Less current obligations under leases	(12,070)
Lease liabilities, net of current portion	$ 96,496

XML

Leases (Details Narrative) - USD ($)		6 Months Ended
	Aug. 10, 2021	Feb. 29, 2024	Aug. 31, 2021
Leases
Operating lease assets and liabilities		$ 82,398
Monthly payments	$ 2,647
Lease liabilities	$ 104,902		$ 70,705
Lease term	5 years
Weighted average remaining operating lease term		6 years

XML

Loans payable (Details Narrative) - USD ($)		1 Months Ended			6 Months Ended		12 Months Ended
	Jan. 03, 2024	Dec. 27, 2021	Nov. 20, 2020	Jun. 20, 2020	Feb. 29, 2024	Feb. 28, 2023	Aug. 31, 2023	May 29, 2020
Proceed from short term loan	$ 100,000						$ 0
Initialy payment for building								$ 71,023
Monthly interest payments				$ 37,613
Repayment of Principal Amount			$ 1,253,772
Debt repayment description		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
Compensation cost fair value					$ 633
June 2020 [Member]
Purchase price of Building					1,253,772
Balance owing amount					1,968,327		$ 1,742,648
Interest paid on loans for purchase of buildings					0	$ 0
December 17, 2021 [Member]
Final payment on promissory notes					$ 295,543
Interest rate					8.00%
Interest payment					$ 15,000
Balance owing					294,867	284,700
Interest paid					$ 0	$ 0

XML

Secured convertible notes payable (Details Narrative) - USD ($)										1 Months Ended																	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 04, 2023	Dec. 07, 2022	Dec. 02, 2022	Jan. 11, 2022	Nov. 02, 2021	Oct. 02, 2021	Jan. 07, 2021	Dec. 02, 2020	Nov. 11, 2020	May 17, 2023	Feb. 28, 2023	Nov. 28, 2022	Jun. 16, 2022	Mar. 31, 2022	Mar. 29, 2022	Jan. 31, 2022	Dec. 23, 2021	Oct. 25, 2021	Jul. 25, 2021	Apr. 30, 2021	Apr. 29, 2021	Mar. 26, 2021	Oct. 26, 2020	Sep. 29, 2020	Jun. 30, 2020	Jan. 23, 2020	Feb. 29, 2024	Feb. 28, 2023	Feb. 29, 2024	Feb. 28, 2023	Aug. 31, 2023	Dec. 01, 2022	Nov. 01, 2021	Oct. 01, 2021	Sep. 26, 2021
Relative fair value of convertible notes									$ 48,258														$ 20,176	$ 85,330					$ 0
Convertible notes payable	$ 50,000	$ 60,000		$ 150,000						$ 10,000	$ 150,000	$ 100,000	$ 250,000		$ 500,000	$ 100,000	$ 100,000	$ 100,000							$ 600,000			$ 150,000		$ 150,000		$ 70,000		$ 100,000
Simple interest rate	10.00%	10.00%	10.00%	10.00%	10.00%	10.00%				10.00%	10.00%	10.00%	10.00%		10.00%	10.00%	10.00%	10.00%
Beneficial conversion feature									48,258														20,176	85,330					$ 115,383
Conversion price	$ 0.20	$ 0.50		$ 1.25						$ 0.50	$ 0.50	$ 0.50	$ 1.25		$ 1.25	$ 1.25	$ 1.25	$ 1.25									$ 0.98	$ 0.50	$ 0.98	$ 0.50		$ 0.50		$ 1.25
Accrued interest included in accounts payable and accrued liabilities																											$ 36,681		$ 36,681		$ 33,540
Principal owing																											100,000		100,000		100,000
Warrants to purchase																		100,000																100,000
Convertible notes, Fair value																		$ 39,573																$ 40,117
Warrants, Fair value																																		$ 59,883
Relative fair value of warrants						$ 59,883			37,679									60,427					17,437	78,011					117,533
Relative fair value				$ 75,600		$ 40,117										$ 75,600	$ 40,800	$ 39,573
Warrant exercise price																		$ 1.25																$ 1.25
Additional paid in capital, fair value of warrants									$ 37,679							75,600		$ 60,427					$ 17,437	$ 78,011			108,100		108,100
Stock price																		$ 0.40																$ 0.40
Convertible debt				$ 74,400												$ 74,400	$ 59,200										364,517		364,517					$ 1,546
Original issue discount on beneficial conversion feature																											12,000		12,000
Convertible debt discounted																											108,100		108,100
Repayment Convertible notes payable																									200,000
Outstanding note payable																									200,000
Maturity date				Jul. 10, 2022		Mar. 31, 2022						Jun. 30, 2023	Dec. 16, 2022		Sep. 30, 2022	Jul. 10, 2022	Jun. 23, 2022	Mar. 31, 2022
Convertible notes payable																											3,774,891		3,774,891		3,724,891
Gain/Loss on extinguishment																											0	$ 0	0	$ (27,043)
Debt instrument, maturity term						1 year												1 year				1 year
January 11 2022 [Member]
Accrued interest																													31,973		24,534
Outstanding principal owing																											150,000		150,000		150,000
January 31 2022 [Member]
Accrued interest																													20,767		15,808
Outstanding principal owing																											100,000		100,000		100,000
March 29 2022 [Member]
Accrued interest																													96,028		71,233
Outstanding principal owing																											500,000		500,000		500,000
Two Convertible Notes [Member]
Convertible notes payable																										$ 200,000
Simple interest rate																										10.00%
Accrued interest																													28,329		23,370
Conversion price																										$ 1.25
Principal owing																											100,000		100,000		100,000
Accrued interests																											117,041		117,041		97,205
Warrant exercise price																										$ 1.25
Repayment Convertible notes payable																									$ 600,000	$ 600,000
Debt instrument, maturity term																										1 year
Warrants issued to purchase common shares																										240,000
Outstanding principal owing																											$ 400,000		$ 400,000		400,000
Debt discount																										$ 12,000
Eleven Convertible Notes Member
Convertible notes payable																				$ 180,000
Simple interest rate						10.00%															10.00%
Beneficial conversion feature																					$ 65,344
Conversion price																				$ 0.62							$ 1.00		$ 1.00
Relative fair value of warrants																					68,578
Warrant exercise price																				$ 1.00
Additional paid in capital, fair value of warrants								$ 22,564												$ 68,578
Original issue discount on beneficial conversion feature																				$ 46,078
Repayment Convertible notes payable																					$ 111,422
Debt instrument, maturity term																					1 year
Outstanding principal owing																											$ 180,000		$ 180,000		180,000
Accounts payable and accrued liabilities																											50,942		50,942		42,016
Warrants to purchase																					$ 180,000
Three Convertible Notes [Member]
Conversion price																								$ 1.25
Warrant exercise price																								$ 1.25
Repayment Convertible notes payable																								$ 163,341
Debt instrument, maturity term																								2 years
Warrants issued to purchase common shares																								130,673
Outstanding principal owing																											$ 63,341		63,341		63,341
Interest rate																								10.00%
Eaight Convertible Notes [Member]
Simple interest rate																						10.00%
Beneficial conversion feature																						$ 6,080
Accrued interest																													$ 67,397		52,521
Conversion price									$ 0.70													$ 1.25					$ 0.70		$ 0.70
Relative fair value of warrants																						$ 7,904
Relative fair value of convertible note																						$ 10,096
Warrant exercise price																						$ 0.50
Additional paid in capital, fair value of warrants																						$ 7,904
Repayment Convertible notes payable																						$ 18,000
Debt instrument, maturity term																						1 year
Outstanding principal owing																											$ 300,000		$ 300,000		300,000
Accounts payable and accrued liabilities																											5,272		5,272		4,379
Outstanding principal owing 1																											18,000		18,000		18,000
Warrants to purchase																						$ 18,000
Four Convertible Notes [Member]
Accrued interest																											12,572		12,572		10,706
Conversion price																							$ 1.25
Warrant exercise price																							$ 1.25
Repayment Convertible notes payable																							$ 37,613
Debt instrument, maturity term																							2 years
Warrants issued to purchase common shares																							30,090
Outstanding principal owing																											37,613		37,613		37,613
Interest rate																							10.00%
Five Convertible Notes [Member]
Accrued interest																											28,348		28,348		24,087
Conversion price									1.25
Warrant exercise price									$ 1.25
Repayment Convertible notes payable									$ 85,937
Debt instrument, maturity term									2 years
Warrants issued to purchase common shares									68,750
Outstanding principal owing																											85,937		85,937		85,937
Interest rate									10.00%					10.00%
One Convertible Notes [Member]
Convertible notes payable																										$ 400,000
Nine Convertible Notes [Member]
Convertible notes payable																											$ 35,000		$ 35,000
Simple interest rate																						10.00%
Beneficial conversion feature																						$ 33,772
Conversion price																						$ 1.25					$ 0.50		$ 0.50						$ 1.25
Relative fair value of warrants																						$ 43,914
Relative fair value of convertible note																						$ 56,086
Warrant exercise price																						$ 0.50
Additional paid in capital, fair value of warrants																						$ 43,914
Original issue discount on beneficial conversion feature																						22,314
Repayment Convertible notes payable																						$ 100,000
Debt instrument, maturity term																						1 year
Outstanding principal owing																											$ 35,000		$ 35,000
Warrants to purchase																						$ 100,000
Seven Convertible Notes [Member]
Simple interest rate							10.00%																						10.00%
Accrued interest																													$ 194,465		164,712
Conversion price							$ 1.25
Repayment Convertible notes payable							$ 300,000
Outstanding principal owing																											600,000		600,000		600,000
Ten Convertible Notes [Member]
Simple interest rate																				10.00%
Beneficial conversion feature																				$ 34,221
Conversion price																				$ 0.61
Relative fair value of warrants																				$ 38,507
Warrant exercise price																				$ 1.00
Additional paid in capital, fair value of warrants																				$ 38,507
Original issue discount on beneficial conversion feature																				27,272
Repayment Convertible notes payable																				61,493
Convertible notes payable																				$ 100,000
Debt instrument, maturity term																				1 year
Outstanding principal owing																											100,000		100,000		100,000
Accounts payable and accrued liabilities																											29,233		$ 29,233		24,274
Warrants to purchase																				$ 100,000
Six Convertible Notes [Member]
Simple interest rate								10.00%
Beneficial conversion feature								$ 457,436
Conversion price								$ 1.25
Relative fair value of warrants								$ 240,000
Warrant exercise price								$ 1.25
Repayment Convertible notes payable								$ 457,436
Convertible notes payable								$ 600,000
Debt instrument, maturity term								2 years
Relative fair values of convertible warrants								$ 142,564
On March 31, 2021 [Member] | Two Convertible Notes [Member]
Simple interest rate																													10.00%
Outstanding note payable																													$ 400,000
Description of debt instrument																													As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument
Gain/Loss on extinguishment																													$ 20,000
Shares received by each noteholder																													10,000
Fair value of debt amount extingushed																													$ 20,000
Common shares issued upon debt conversion																													20,000
On March 31, 2021 [Member] | Three Convertible Notes [Member]
Simple interest rate																													10.00%
Outstanding note payable																													$ 163,341
Description of debt instrument																													As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument
Gain/Loss on extinguishment																													$ 8,268
Shares received by each noteholder																													8,268
Fair value of debt amount extingushed																													$ 8,268
On March 31, 2022 [Member] | Two Convertible Notes [Member]
Simple interest rate																													10.00%
On March 31, 2022 [Member] | Eleven Convertible Notes Member
Simple interest rate																													10.00%
On March 31, 2022 [Member] | Eight Convertible Notes [Member]
Simple interest rate																													10.00%
On March 31, 2022 [Member] | Nine Convertible Notes [Member]
Simple interest rate																													10.00%
On March 31, 2022 [Member] | Ten Convertible Notes [Member]
Simple interest rate																													10.00%
On October 1, 2021 [Member] | Two Convertible Notes [Member]
Simple interest rate																													10.00%
On November 1, 2020 [Member] | Two Convertible Notes [Member]
Outstanding note payable																													$ 400,000
Description of debt instrument																													As present value of the cash flows under the new debt instrument differed by more than 10% from the present value of the remaining cash flows under the terms of the original debt instrument
Gain/Loss on extinguishment																													$ 110,000
Shares received by each noteholder																													50,000
Fair value of debt amount extingushed																													$ 110,000
Common shares issued upon debt conversion																													100,000
July 25 2021 [Member] | Convertible Note [Member]
Simple interest rate																			10.00%
Beneficial conversion feature					$ 1,090
Conversion price																			$ 1.25
Convertible debt																																	$ 33,910
Maturity date																			Jan. 25, 2022
Convertible notes payable																			$ 35,000
Outstanding principal owing																											35,000		$ 35,000		35,000
Accounts payable and accrued liabilities																											9,071		9,071		7,336
July 25 2021 [Member] | One Convertible Notes [Member]
Simple interest rate																			10.00%
Beneficial conversion feature					$ 467
Accrued interest																													3,888		3,144
Conversion price																			$ 1.25
Convertible debt																																	$ 14,533
Maturity date																			Jan. 25, 2022
Outstanding principal owing																											15,000		15,000		15,000
Convertible notes payable																			$ 15,000
December 23, 2021 [Member]
Convertible notes payable																	$ 100,000
Simple interest rate																	10.00%
Accrued interest																													21,836		16,877
Conversion price																	$ 1.25
Principal owing																											100,000		100,000		100,000
Relative fair value																	$ 40,800
Convertible debt																	$ 59,200
Maturity date																	Jun. 23, 2022
Outstanding principal owing																											$ 100,000		$ 100,000		100,000
On July 1, 2020 [Member] | Two Convertible Notes [Member]
Simple interest rate																													5.00%
Conversion price																											$ 1.25		$ 1.25
Outstanding note payable																													$ 400,000
Description of debt instrument																													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
Gain/Loss on extinguishment																													$ 220,065
Shares received by each noteholder																													8,000
Fair value of debt amount extingushed																													$ 218,397
Common shares issued upon debt conversion																													16,000
Purchase additional common shares																													320,000
Warrants issued upon debt conversion																													160,000
On November 1, 2021 [Member] | Eleven Convertible Notes Member
Simple interest rate					10.00%									10.00%															10.00%
On March 31, 2022 [Member] | Three Convertible Notes [Member]
Simple interest rate																													10.00%
On June 1, 2021 [Member] | Three Convertible Notes [Member]
Simple interest rate																													10.00%
December 23 2021 One [Member]
Accrued interest																													$ 24,082		19,123
Outstanding principal owing																											$ 100,000		100,000		100,000
October 25 2021 [Member]
Accrued interest																													23,425		18,466
Principal owing																											100,000		100,000		100,000
June 16 2022 [Member]
Accrued interest																													42,603		30,206
Outstanding principal owing																											250,000		250,000		250,000
November 28 2022 [Member]
Accrued interest																													12,575		7,616
Outstanding principal owing																											100,000		100,000		100,000
December 1 2022 [Member]
Accrued interest																													8,707		5,236
Principal owing																											70,000		70,000		70,000
December 7 2022 [Member]
Accrued interest																													7,364		4,389
Outstanding principal owing																											60,000		60,000		60,000
February 28 2023 [Member]
Accrued interest																													15,000		7,562
Outstanding principal owing																											150,000		150,000		150,000
May 17 2023 [Member]
Accrued interest																													786		50,000
Outstanding principal owing																											10,000		10,000		10,000
December 4 2023 [Member]
Accrued interest																													1,178		0
Outstanding principal owing																											$ 50,000		$ 50,000		$ 0

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Equity (Detail Narrative) - USD ($)	6 Months Ended
	Feb. 29, 2024	Feb. 28, 2023
Proceeds from issuanse of share	$ 786,398	$ 617,208
Price per share	$ 0.20
Cash received from share subscrptions	$ 30,000
Issue of common share [Member] | September 21, 2022
Share issue price per share		$ 0.40
Common stock share issued		1,350,000
Subscription receive during period from issue of share		$ 540,000
Issue of common share [Member] | October 7, 2022
Share issue price per share		$ 0.40
Common stock share issued		1,575,000
Subscription receive during period from issue of share		$ 630,000
Share issue cost		2,792
finder fee		$ 10,000
Issue of common share [Member] | October 7, 2022 One
Common stock share issued		75,000
Fair value of issued of common stock		$ 44,606
Loss on settlement of related party account		14,606
Related party accounts payable		$ 30,000
Issue of common share [Member] | October 7, 2022 Two
Common stock share issued		70,560
Fair value of issued of common stock		$ 41,966
Loss on settlement of related party account		12,437
Debt		$ 29,529
Issue of common share [Member] | September 5, 2023
Share issue price per share	$ 0.20
Common stock share issued	150,000
Subscription receive during period from issue of share	$ 30,000
Issue of common share [Member] | October 20, 2023
Share issue price per share	$ 0.20
Common stock share issued	100,000
Subscription receive during period from issue of share	$ 20,000
Issue of common share [Member] | December 1, 2023 [Member]
Share issue price per share	$ 0.20
Common stock share issued	1,730,000
Subscription receive during period from issue of share	$ 346,000
Issue of common share [Member] | December 1, 2023 One [Member]
Share issue price per share	$ 0.20
Common stock share issued	2,201,990
Common stock share issued for finder's fee, shares	42,000
Common stock share issued for finder's fee, value	$ 3,024
Proceeds from issuanse of share	$ 440,398

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Related party transactions and balances (Details) - USD ($)	6 Months Ended
	Feb. 29, 2024	Feb. 28, 2023
Related party transactions and balances
Consulting fees and benefits	$ 245,597	$ 195,231
Signing bonus	44,214	0
Total compensation costs	$ 289,811	$ 195,231

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Related party transactions and balances (Details 1) - USD ($)	Feb. 29, 2024	Aug. 31, 2023
Amounts due from related party	$ 942,892	$ 693,292
Director [Member]
Amounts due from related party	94,669	91,000
CEO and Director [Member]
Amounts due from related party	186,279	156,028
COO and Director [Member]
Amounts due from related party	224,403	201,612
CFO [Member]
Amounts due from related party	109,919	84,962
An Entity Controlled By A Director [Member]
Amounts due from related party	239,690	159,690
Chief Business Development Officer [Member]
Amounts due from related party	$ 87,932	$ 0

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Related party transactions and balances (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Feb. 29, 2024	Aug. 31, 2023
Related party transactions and balances
Due to related party	$ 942,892	$ 693,292
Advances received from related parties	125,600	70,000
Expensed paid to related parties	$ 817,292	$ 623,292

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Financial risk factors (Details) - USD ($)	Feb. 29, 2024	Aug. 31, 2023	Feb. 28, 2023
Accounts payable and accrued liabilities	$ 2,627,129	$ 2,393,359
Foreign Currency Exchange Member
Cash and cash equivalents	0		$ 26,547
Accounts receivable	0		5,127
Accounts payable and accrued liabilities	1,205,467		769,347
Net exposure	(1,205,467)		(737,673)
Balance in US dollars	$ (888,333)		$ (542,048)

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Financial risk factors (Details 1) - Colombian Peso exchange rate [Member] - USD ($)	Feb. 29, 2024	Feb. 28, 2023
Cash and cash equivalents	$ 505,576	$ 684,128,157
Other receivables	660,410,427	139,323,503
Accounts payable	(3,557,034,154)	(4,158,486,022)
Net exposure	(2,896,118,151)	(3,335,034,362)
Balance in US dollars	$ (738,710)	$ (686,690)

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Financial risk factors (Details Narrative) - USD ($)	6 Months Ended
	Feb. 29, 2024	Feb. 28, 2023
Net losses	$ (1,702,499)	$ (3,373,778)
Foreign Currency Exchange Rate Member
Net losses	$ 88,833	$ 54,205
Exchange rate	10.00%	10.00%
Colombian Peso exchange rate [Member]
Net losses	$ 73,871	$ 68,669
Exchange rate	10.00%	10.00%

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Commitments (Details Narrative) - USD ($)	6 Months Ended
	Feb. 29, 2024	Feb. 28, 2023
Contingent liability	$ 547,190
Promissory note	100,000	$ 0
June 2019 [Member]
Company paid	150,000
Promissory note	$ 1,350,000

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Share purchase warrants (Details) - Warrants [Member]	6 Months Ended
	Feb. 29, 2024 $ / shares shares
Number of warrants, Beginning balance | shares	5,459,000
Number of warrants, expired | shares	(4,371,267)
Ending balance | shares	1,087,733
Weighted average exercise price, Beginning balance | $ / shares	$ 1.06
Weighted average exercise price, expired | $ / shares	1.25
Weighted average exercise price, Ending balance | $ / shares	$ 0.28

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Share purchase warrants (Details 1) - $ / shares	Feb. 29, 2024	Oct. 25, 2021	Oct. 01, 2021
Number of warrant	1,087,733
Weighted average exercise price		$ 1.25	$ 1.25
Warrant 1 [Member]
Number of warrant	20,000
Weighted average exercise price	$ 1.25
Expiry date	Mar. 07, 2024
Warrant 2 [Member]
Number of warrant	67,733
Weighted average exercise price	$ 1.25
Expiry date	May 27, 2024
Warrant 3 [Member]
Number of warrant	1,000,000
Weighted average exercise price	$ 0.20
Expiry date	Jul. 30, 2025

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Stock options (Details)	6 Months Ended
	Feb. 29, 2024 USD ($) $ / shares shares
Stock Options
Number of warrants, Beginning balance | shares	12,140,000
Number of options, granted | shares	500,000
Number of options, unearned performance-based options | shares	300,000
Ending balance | shares	12,940,000
Number of options, Exercisable balance | shares	11,606,667
Weighted Average exercise price, Beginnning balance | $ / shares	$ 0.25
Weighted Average exercise price, granted | $ / shares	0.20
Weighted Average exercise price, unearned performance-based options | $ / shares	0.20
Weighted Average exercise price, exercisable balance | $ / shares	0.22
Weighted average exercise price, Ending balance | $ / shares	$ 0.22
Weighted average contractual term, beginning	3 years 8 months 12 days
Weighted average contractual term, granted	4 years 7 months 2 days
Weighted average contractual term, unearned performance-based options	4 years 7 months 2 days
Weighted average contractual term, outstanding	4 years 2 months 26 days
Weighted average contractual term, exercisable	4 years 3 months
Aggregate Intrinsic value, Beginning | $	$ 55,900
Aggregate Intrinsic value, outstanding balance | $	0
Aggregate Intrinsic value, Granted | $	0
Aggregate Intrinsic value, unearned performance-based options | $	0
Aggregate Intrinsic value, exercisable balance | $	$ 0

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Stock options (Details 1)	1 Months Ended
	Dec. 20, 2024 $ / shares
Before Modification Stock Option 600,000 [Member]
Maturity date after modification	February 1, 2026
Exercise price before modification	$ 0.22
After Modification stock option 600,000 [Member]
Maturity date after modification	January 1, 2029
Exercise price before modification	$ 0.20
Before Modification Stock Option 300,000 [Member]
Maturity date after modification	May 1, 2027
Exercise price before modification	$ 0.25
After Modification stock option 300,000 [Member]
Maturity date after modification	January 1, 2029
Exercise price before modification	$ 0.20
Before Modification Stock Option 450,000 [Member]
Maturity date after modification	May 1, 2027
Exercise price before modification	$ 0.22
After Modification stock option 450,000 [Member]
Maturity date after modification	January 1, 2029
Exercise price before modification	$ 0.20
Before Modification Stock Option 6,000,000 [Member]
Maturity date after modification	March 8, 2028
Exercise price before modification	$ 0.24
After Modification stock option 6,000,000 [Member]
Maturity date after modification	January 1, 2029
Exercise price before modification	$ 0.20
Before Modification Stock Option 140,000 [Member]
Maturity date after modification	June 3, 2028
Exercise price before modification	$ 0.20
After Modification stock option 140,000 [Member]
Maturity date after modification	January 1, 2029
Exercise price before modification	$ 0.20
Before Modification Stock Option 1,500,000 [Member]
Maturity date after modification	February 1, 2026
Exercise price before modification	$ 0.25
After Modification stock option 1,500,000 [Member]
Maturity date after modification	January 1, 2029
Exercise price before modification	$ 0.20

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Stock options (Details 2) - $ / shares	Jan. 01, 2024	Oct. 25, 2021	Oct. 01, 2021
Number of stock options for modification of exercise price		$ 1.25	$ 1.25
Stock Option For Modification [Member]
Number of stock options for modification of exercise price and vesting term	300,000
Number of stock options for modification of exercise price	$ 0.22
Number of stock options for modified exercise price	$ 0.20
Stock Option For Modification [Member] | October 1, 2024 [Member]
Number of stock options for modification of vesting terms before modification	100,000
Stock Option For Modification [Member] | October 1, 2025 [Member]
Number of stock options for modification of vesting terms before modification	100,000
Stock Option For Modification [Member] | October 1, 2026 [Member]
Number of stock options for modification of vesting terms before modification	100,000
Stock Option For Modification [Member] | September 30, 2024 [Member]
Number of stock options for modified of vesting terms	150,000
Stock Option For Modification [Member] | January 1, 2024 [Member]
Number of stock options for modified of vesting terms	150,000

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Stock options (Details Narrative) - USD ($)	3 Months Ended				6 Months Ended
	Feb. 29, 2024	Nov. 30, 2023	Feb. 28, 2023	Nov. 30, 2022	Feb. 29, 2024	Feb. 28, 2023	Oct. 25, 2021	Oct. 01, 2021
Stock-based compensation	$ 223,055	$ 143,653	$ 574,075	$ 545,171	$ 366,708	$ 1,119,246
Unrecognized compensation costs- related to non-vested stock-based compensation	$ 149,983				$ 149,983
Number of stock options for modification of exercise price							$ 1.25	$ 1.25
Additional Stock option [Member]
Number of stock options for modification of exercise price	$ 0.20				$ 0.20
Grant number of share					500,000
Vesting period					2 years
Granted Stock option [Member]
Stock-based compensation					$ 39,413
Expected dividend yield					0.00%
Expected volatility					178.00%
Expected life (in years)					4 years 9 months
Risk-free interest rate					3.93%
Number of stock options for modification of exercise price	0.22				$ 0.22
Grant number of share					300,000
Grant number of share performance-based options					500,000
Description related to performance-based options					As at February 29, 2024, conditions for 200,000 performance-based options have been met with 100,000 options vesting on January 28, 2026 and 100,000 vesting on February 13, 2026. The Company estimates that all 500,000 performance-based options will vest and elected to account for forfeitures as they occur
Stock Option One [Member]
Stock-based compensation					$ 56,964
Expected dividend yield					0.00%
Expected volatility					180.00%
Expected life (in years)					2 years 8 months 23 days
Risk-free interest rate					4.17%
Number of stock options for modification of exercise price	$ 0.20				$ 0.20
Unexercised options originally granted to purchase common stock					8,990,000
Exercise price of common stock					from $0.20 to $0.25

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Noncash activities (Details) - Non-Cash Activities [Member] - shares	6 Months Ended
	Feb. 29, 2024	Feb. 28, 2023
Shares issued to settle debt		59,529
Shares issued as finder's fee	3,024

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Segment disclosure (Details) - USD ($)	3 Months Ended		6 Months Ended
	Feb. 29, 2024	Feb. 28, 2023	Feb. 29, 2024	Feb. 28, 2023	Aug. 31, 2023
Gross margin	$ 0	$ 0	$ 17,036	$ 43,667
Net losses	(865,826)	$ (2,064,237)	(1,702,499)	(3,373,778)
Depreciation and amortization			62,555	$ 57,429
Total assets	2,289,803		2,289,803		$ 2,063,728
Allied [Member]
Gross margin			0
Net losses			(1,428,786)
Depreciation and amortization			33,242
Total assets	692,889		692,889
Allied Colombia [Member]
Gross margin			17,036
Net losses			(273,713)
Depreciation and amortization			29,313
Total assets	$ 1,596,914		$ 1,596,914

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Segment disclosure (Details 1) - USD ($)	3 Months Ended		6 Months Ended
	Feb. 29, 2024	Feb. 28, 2023	Feb. 29, 2024	Feb. 28, 2023	Aug. 31, 2023
Gross margin	$ 0	$ 0	$ 17,036	$ 43,667
Total assets	2,289,803		2,289,803		$ 2,063,728
Canada [Member]
Gross margin			0
Total assets	692,889		692,889
Colombia [Member]
Gross margin			17,036
Total assets	$ 1,596,914		$ 1,596,914

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Subsequent events (Details Narrative) - Subsequent Event [Member] - Chief Executive Officer [Member] - USD ($)		1 Months Ended
	Apr. 09, 2024	Mar. 31, 2024	Mar. 01, 2024
Number of shars transfer to treasury			2,500,000
Number of common stock sale	2,500,000
Accrued consulting fees payable			$ 75,336
Gross proceeds from sale of stock	$ 500,000
Description related to Board of Director	additional investment of $750,000 over a period of twelve months.
Description related to maturity date of convertible note		convertible notes in default to December 31, 2024, and the conversion prices to the lesser of 80% of the twenty-day average closing price per share (but not less than $0.20 per share) or $0.50 per share
Number of common stock sale price	$ 0.20