NOTE 9 – FAIR VALUE MEASUREMENTS

6 Months Ended

Feb. 28, 2022

Debt Disclosure [Abstract]

NOTE 9 – FAIR VALUE MEASUREMENTS

NOTE 9 – FAIR VALUE MEASUREMENTS

The Company applies ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 requires disclosures to be provided on fair value measurement.

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Include other inputs that are directly or indirectly observable in the marketplace.
Level 3 — Unobservable inputs which are supported by little or no market activity.

ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

Derivative liabilities of conversion features in convertible notes are classified within Level 3. We estimate the fair values of these liabilities at February 28, 2021 by using Monte Carlo simulation based on the remaining contractual terms, risk-free interest rates, and expected volatility of the stock prices, etc. The assumptions used, including the market value of stock prices in the future and the expected volatilities, were subjective unobservable inputs.

Liabilities measured at fair value on a recurring basis are summarized below:

		Fair value measurement using:
		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs   ( Level 2)		Unobservable inputs ( Level 3)		Total Fair value at February 28, 2022
Derivative liabilities	$	—	$	—	$	—	$	—

	Derivative liabilities embedded in convertible notes
Fair value at August 31, 2020	$	64,584
Increase from note issuances		74,187
Decrease from note conversions		(33,490	)
Changes in the fair value		58,090
Fair value at November 30, 2020	$	163,371
Increase from note issuances		—
Decrease from note prepayment		(136,320	)
Changes in the fair value		18,439
Fair value at February 28, 2021	$	45,490