Document and Entity Information
Document and Entity Information | 3 Months Ended |
Nov. 30, 2020 | |
Cover [Abstract] | |
Entity Registrant Name | Cannabics Pharmaceuticals Inc. |
Entity Central Index Key | 0001343009 |
Document Type | S-1 |
Amendment Flag | false |
Entity Filer Category | Non-accelerated Filer |
Document Fiscal Period Focus | Q1 |
Document Fiscal Year Focus | 2020 |
Small Business Entity | true |
Entity Emerging Growth | false |
Entity Incorporation State Code | NV |
Consolidated Balance Sheets (Au
Consolidated Balance Sheets (Audited) - USD ($) | Nov. 30, 2020 | Aug. 31, 2020 | Aug. 31, 2019 |
Current assets | |||
Cash and cash equivalents | $ 184,031 | $ 777,611 | $ 265,982 |
Prepaid expenses and other receivables | 168,574 | 152,299 | 284,496 |
Held for trading Investments | 0 | 3,256,456 | |
Current royalties | 0 | 500,000 | |
Total current assets | 352,605 | 929,910 | 4,306,934 |
Available for sale Investment | 539,609 | 426,522 | 6,010,946 |
Long term royalties | 0 | 3,863,000 | |
Equipment, net | 806,317 | 862,879 | 1,002,286 |
Total assets | 1,698,531 | 2,219,311 | 15,183,166 |
Current liabilities: | |||
Accounts payable and accrued liabilities | 219,042 | 231,142 | 215,229 |
Due to a related party | 223,645 | 223,645 | 223,645 |
Total current liabilities | 442,687 | 454,787 | 438,874 |
Stockholders' Equity (Deficit) | |||
Preferred stock | 0 | 0 | 0 |
Common stock | 13,524 | 13,508 | 13,450 |
Addtional paid-in capital | 15,405,295 | 15,372,311 | 15,300,250 |
Issuance of warrants | 2,784,387 | 2,784,387 | 2,784,387 |
Other comprehensive income | (2,661,324) | (2,774,411) | 2,810,013 |
Accumulated deficit | (14,386,038) | (13,631,271) | (6,163,807) |
Total stockholders' equity (deficit) | 1,255,844 | 1,764,524 | 14,744,292 |
Total liabilities and stockholders' equity | $ 1,698,531 | $ 2,219,311 | $ 15,183,166 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Audited) (Parenthetical) - $ / shares | Nov. 30, 2020 | Aug. 31, 2020 | Aug. 31, 2019 |
Statement of Financial Position [Abstract] | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 900,000,000 | 900,000,000 | 900,000,000 |
Common stock, shares issued | 135,237,584 | 135,080,441 | 134,498,775 |
Common stock, shares outstanding | 135,237,584 | 135,080,441 | 134,498,775 |
Preferred stock, par value | $ 0.0001 | $ .0001 | $ .0001 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Audited) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Nov. 30, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |
Income Statement [Abstract] | ||||
Net revenue | $ 0 | $ 0 | $ 7,157 | $ 9,843 |
Operating expenses: | ||||
Research and development expense | 433,730 | 466,033 | 1,682,462 | 1,543,759 |
Sales and marketing expenses | 7,551 | 24,117 | 59,997 | 288,163 |
General and administrative expenses | 218,451 | 326,460 | 1,308,150 | 1,481,528 |
Total operating expenses | 659,732 | 817,610 | 3,050,609 | 3,313,450 |
Loss from operations | (659,732) | (815,856) | (3,043,451) | (3,303,607) |
Other income | ||||
Financial (loss) income, net | 4,965 | (5,326,339) | (4,424,012) | 4,436,576 |
Net (loss) income | (654,767) | (5,142,195) | (7,467,464) | 1,132,970 |
(Loss) profit from available for sale assets | 113,087 | (3,550,813) | (5,584,424) | 2,810,013 |
Total comprehensive (loss) income | $ (541,680) | $ (8,693,008) | $ (13,051,887) | $ 3,942,983 |
Net (loss) per share - basic and diluted | $ (0.005) | $ (0.038) | $ (0.10) | $ 0.02 |
Weighted average number of shares outstanding - basic and diluted | 135,105,839 | 133,653,941 | 134,551,721 | 132,450,953 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Audited) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Nov. 30, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |
Cash flows from operating activities | ||||
Net (Loss) Profit | $ (654,767) | $ (5,142,195) | $ (7,467,464) | $ 1,132,970 |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation | 57,505 | 51,578 | 215,155 | 188,928 |
Royalties receivables valuation | 0 | 4,363,000 | 4,363,000 | (4,363,000) |
Stock issued for services | 33,000 | 72,120 | 247,307 | |
Stock issued for services | (30,000) | |||
Profit held for trading investments | 0 | (58,730) | (105,876) | (142,226) |
Changes in operating assets and liabilities | ||||
Accounts Receivable and prepaid expenses | (16,275) | 53,076 | 132,197 | (57,252) |
Accounts payable and accrued liabilities | (12,100) | 1,583 | 15,913 | (100,509) |
Net cash used in operating activities | (592,637) | (761,687) | (2,774,955) | (3,093,782) |
Cash flows from investing activities | ||||
Available for sale investments | 0 | (1,920,000) | ||
Held for trading Investments | 0 | 824,849 | 3,362,332 | (3,114,233) |
Acquisition of equipment | (943) | (9,800) | (75,748) | (216,882) |
Net cash used in investing activities | (943) | 815,049 | 3,286,584 | (5,251,115) |
Cash flows from financing activities | ||||
Proceeds from sale of common stock | 0 | 7,294,259 | ||
Costs of raising capital | 0 | (76,989) | ||
Net cash provided by financing activities | 0 | 0 | 0 | 7,217,270 |
Net increase (decrease) in cash | (593,580) | 53,362 | 511,629 | (1,127,626) |
Cash and cash equivalents at beginning of year | 777,611 | 265,982 | 265,982 | 1,393,608 |
Cash and cash equivalents at end of year | $ 184,031 | $ 319,344 | 777,611 | 265,982 |
Significant non-cash transactions | ||||
Issuance of Shares | $ 0 | $ 939,933 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) (Audited) - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Warrants | Other Comprehensive Income / Loss | Retained Earnings / Accumulated Deficit | Total |
Beginning balance, shares at Aug. 31, 2018 | 121,575,388 | |||||
Beginning balance, value at Aug. 31, 2018 | $ 12,158 | $ 9,840,420 | $ 89,722 | $ (7,296,777) | $ 2,645,523 | |
Issuance of shares of common stock for cash, shares | 10,277,777 | |||||
Issuance of shares of common stock for cash, value | $ 1,028 | 4,441,384 | 2,784,387 | 7,226,799 | ||
Issuance of shares of common stock for services, shares | 2,645,610 | |||||
Issuance of shares of common stock for services, value | $ 264 | 1,018,445 | 1,018,709 | |||
Expiration of warrants | (89,722) | |||||
Other comprehensive income | 2,810,013 | |||||
Net (Loss) Profit | 1,132,970 | 1,132,970 | ||||
Ending balance, shares at Aug. 31, 2019 | 134,498,775 | |||||
Ending balance, value at Aug. 31, 2019 | $ 13,450 | 15,300,249 | 2,784,387 | $ 2,810,013 | (6,163,807) | 14,744,292 |
Issuance of shares of common stock for services, shares | 80,000 | |||||
Issuance of shares of common stock for services, value | (30,000) | (30,000) | ||||
Other comprehensive income | (3,550,813) | (3,550,813) | ||||
Net (Loss) Profit | (5,142,195) | (5,142,195) | ||||
Ending balance, shares at Nov. 30, 2019 | 134,498,775 | |||||
Ending balance, value at Nov. 30, 2019 | $ 13,450 | 15,270,250 | 2,784,387 | (740,800) | (11,306,003) | 6,021,284 |
Beginning balance, shares at Aug. 31, 2019 | 134,498,775 | |||||
Beginning balance, value at Aug. 31, 2019 | $ 13,450 | 15,300,249 | 2,784,387 | 2,810,013 | (6,163,807) | 14,744,292 |
Issuance of shares of common stock for services, shares | 581,666 | |||||
Issuance of shares of common stock for services, value | $ 58 | 72,062 | 72,120 | |||
Other comprehensive income | (5,584,424) | |||||
Net (Loss) Profit | (7,467,464) | (7,467,464) | ||||
Ending balance, shares at Aug. 31, 2020 | 135,080,441 | |||||
Ending balance, value at Aug. 31, 2020 | $ 13,508 | 15,372,311 | 2,784,387 | (2,774,411) | (13,631,271) | 1,764,524 |
Issuance of shares of common stock for services, shares | 157,143 | |||||
Issuance of shares of common stock for services, value | $ 16 | 32,984 | 33,000 | |||
Other comprehensive income | 113,087 | 113,087 | ||||
Net (Loss) Profit | (654,767) | (654,767) | ||||
Ending balance, shares at Nov. 30, 2020 | 135,237,584 | |||||
Ending balance, value at Nov. 30, 2020 | $ 13,524 | $ 15,405,295 | $ 2,784,387 | $ (2,661,324) | $ (14,286,038) | $ 1,255,844 |
1. Nature of Business, Presenta
1. Nature of Business, Presentation and Going Concern | 3 Months Ended | 12 Months Ended |
Nov. 30, 2020 | Aug. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Nature of Business, Presentation and Going Concern | Note 1– Nature of Business, Presentation and Going Concern Organization Cannabics Pharmaceuticals Inc. (the “Company”), was incorporated in the State of Nevada, on September 15, 2004, under the name of Thrust Energy Corp. On April 25, 2014, the Company experienced a change in control. Cannabics, Inc. (“Cannabics”) acquired a majority of the issued and outstanding common stock of the Company in accordance with stock purchase agreements. On the closing date, April 25, 2014, pursuant to the terms of the Stock Purchase Agreement, Cannabics purchased 41,000,000 shares of the Company’s outstanding restricted common stock for $198,000, representing 51%. On May 21, 2014, the Company changed its name, via merger in the state of Nevada, to Cannabics Pharmaceuticals Inc. The Company’s principle offices are in Bethesda, Maryland. The Company changed its course of business to laboratory research and development. On June 3, 2014, the Company’s Board of Directors declared a two-to-one forward stock split of all outstanding shares of common stock. The stock split was approved by FINRA on June 25, 2014. On August 25, 2014, the Company organized G.R.I.N. Ultra Ltd. (“GRIN”), an Israeli corporation, as a wholly-owned subsidiary. GRIN will provide research and development activities for the Company’s products in Israel. On July 24, 2017, the Company announced its establishment of a genetics laboratory to develop diagnostic tools based on human genome, tumor genetics and specific cannabinoids. On August 20 th in-vivo Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year. These unaudited financial statements should be read in conjunction with our August 31, 2020 annual financial statements included in our Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on November 4, 2020. Principles of Consolidation The consolidated financial statements include the accounts of the Company and GRIN. All significant inter-company balances and transactions have been eliminated in consolidation. Going Concern The accompanying unaudited 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. The Company has incurred a net loss of $654,767 for the three months ended November 30, 2020, and has incurred cumulative losses since inception of $14,286,038. These conditions raise substantial doubt about the ability of the Company to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its abilities to generate revenues, to continue to raise investment capital, and develop and implement its business plan. No assurance can be given that the Company will be successful in these efforts. Research and Development Costs The Company accounts for research and development costs in accordance with Accounting Standards Codification 730 “Research and Development” (“ASC 730”). ASC 730 requires that research and development costs be charged to expense when incurred. Research and development costs charged to expense were $433,730 and $466,033 for the three months ended November 30, 2020 and 2019, respectively. Reclassifications Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses, total assets, or stockholders’ equity as previously reported. | Note 1 – Nature of Business, Presentation and Going Concern Organization Cannabics Pharmaceuticals Inc. (the "Company"), was incorporated in the State of Nevada, on September 15, 2004, under the name of Thrust Energy Corp. The Company was originally engaged in the exploration, exploitation, development and production of oil and gas projects within North America, but was unable to operate profitably. In May 2011, the Company changed its name to American Mining Corporation, suspending its oil and gas operations and changing its business to toll milling and refining, mineral exploration and mine development. On April 25, 2014, the Company experienced a change in control. Cannabics, Inc. (“Cannabics”) acquired a majority of the issued and outstanding common stock of the Company in accordance with stock purchase agreements by and between Cannabics and Thomas Mills (“Mills”). On the closing date, April 25, 2014, pursuant to the terms of the Stock Purchase Agreement, Cannabics purchased from Mills 41,000,000 shares of the Company’s outstanding restricted common stock for $198,000, representing 51%. On May 21, 2014, the Company changed its name, via merger in the state of Nevada, to Cannabics Pharmaceuticals Inc. The Company’s principle offices are in Bethesda, Maryland. As of May 21, 2014, the Company has changed its course of business to laboratory research and development. On August 25, 2014, the Company organized G.R.I.N. Ultra Ltd. (“GRIN”), an Israeli corporation, as a wholly-owned subsidiary. GRIN will provide research and development activities for the Company’s products in Israel. Stock Split On June 3, 2014, the Company’s Board of Directors declared a two-to-one forward stock split of all outstanding shares of common stock. The stock split was approved by FINRA on June 25, 2014. The effect of the stock split increased the number of shares of common stock outstanding from 40,880,203 to 81,760,406. All common share and per common share data in these financial statements and related notes hereto have been retroactively adjusted to account for the effect of the stock split for all periods presented prior to June 3, 2014. The total number of authorized common shares and the par value thereof was not changed by the split. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission (“SEC”). Going Concern 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. The Company has incurred a net loss of $7,467,463 for the year ended August 31, 2020 and has incurred cumulative losses since inception of $13,631,271. These conditions raise substantial doubt about the ability of the Company to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate revenues, its ability to continue to raise investment capital, and implementing its business plan. No assurance can be given that the Company will be successful in these efforts. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. No assurance can be given that the Company will be successful in these efforts. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Aug. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Functional currency The currency of the primary economic environment in which the operations of the Company and its Subsidiary are conducted is the U.S. dollar (“$” or “dollar”). Therefore, the functional currency of the Company and its Subsidiary is the dollar. Transactions and balances denominated in dollars are presented at their original amounts. Non-dollar transactions and balances have been re-measured to dollars in accordance with the provisions of ASC 830-10 (formerly Statement of Financial Accounting Standard 52), "Foreign Currency Translation". All transaction gains and losses from re-measurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statement of operations as financial income or expenses, as appropriate. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, impairment valuation of intangible assets, valuation of share-based payments and the valuation allowance on deferred tax assets. Principles of Consolidation The consolidated financial statements include the accounts of Cannabics Pharmaceutical Inc. and its wholly-owned subsidiary, G.R.I.N. Ultra Ltd. All significant inter-company balances and transactions have been eliminated in consolidation. Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At August 31, 2020 and 2019, cash equivalents consisted of bank accounts held at financial institutions. Concentration of Credit Risk The Company places its cash and cash equivalents with high credit quality financial institutions. There is Federal Deposit Insurance on the Company’s U.S. bank accounts. Equipment, net Equipment at August 31, 2020 consists of computer equipment, office equipment and cars recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful lives of 3 years for computer equipment, 14 years for office equipment and 7 years for cars. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. Depreciation expense was $215,155 and $188,928 for the years ended August 31, 2020 and 2019, respectively. Revenue recognition Revenue is recognized when delivery has occurred, evidence of an arrangement exists, title and risks and rewards for the products are transferred to the customer, collection is reasonably assured and product returns can be reliably estimated. Revenue from license agreements is recognized over the periods from which the Company is entitled to the respective payments. The Company’s revenues are concentrated in a small number of customers. For the year ended August 31, 2020 the revenues were for license fees. Impairment or Disposal of Long-Lived Assets The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. Fair Value of Financial Instruments The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which fair value is observable: Level 1 - fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 - fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of August 31, 2020 and 2019. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements. As of August 31, 2020, the fair values of the Company’s level 1 financial instruments are in total of $426,522. And none of level 3 investments. As of August 31, 2020, the fair values of the Company’s financial instruments approximate their historical carrying amount. Research and development, net Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, employee benefits, the cost of supplies, the cost of services provided by outside contractors, including services related to the Company’s clinical trials, clinical trial expenses and the full cost of manufacturing product for use in research and preclinical development. All costs associated with research and developments are expensed as incurred. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as Contract Research Organizations, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, clinical trial costs are expensed immediately. Stock Based Compensation The Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options or warrants issued to non-employees are recorded in expense and additional paid-in capital in shareholders' deficit over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options or warrants at the end of each period. The Company issues stock to consultants for various services. The costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expense and a corresponding increase to additional paid-in-capital related to stock issued for services. Income Taxes Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized. The FASB has issued ASC 740 “Income Taxes”. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by ASC 740 and concluded that the tax position of the Company has not met the more-likely-than-not threshold as of August 31, 2020. Comprehensive Income The Company adopted ASC 220, Comprehensive Income Basic and Diluted Loss per Share The Company computes income (loss) per share in accordance with ASC 260, "Earnings per Share", which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of August 31, 2020, and 2019, the potentially dilutive shares were anti-dilutive. Segment Information In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. The Company does not consider itself to have any operating segments as of August 31, 2020 and 2019. Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. |
3. Recent Accounting Pronouncem
3. Recent Accounting Pronouncements | 12 Months Ended |
Aug. 31, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Pronouncements | Note 3 – Recent Accounting Pronouncements In February 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis”, which provides guidance in evaluating entities for inclusion in consolidations. ASU 2015-02 is effective for fiscal years beginning after December 15, 2015. The Company does not believe the adoption of ASU 2015-02 will have a material effect on its consolidated financial statements. In June 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-10 (“ASU 2014-10”), Development Stage Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendment eliminating the exception to the sufficiency-of-equity-at-risk criterion for development stage entities in paragraph 810-10-15-16 should be applied retrospectively for annual reporting periods beginning after December 15, 2015 and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued. The Company has adopted ASU 2014-10 in the fourth quarter of 2014 and does not expect this adoption to have a material impact on its consolidated financial condition, results of operations or cash flows. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-16 (ASU 2015-16) "Simplifying the Accounting for Measurement Period Adjustments". ASU 2015-16 require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in ASU 2015-16 require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in ASU 2015-16 require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. For public business entities, the amendments in ASU 2015-16 are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in ASU 2015-16 should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update with earlier application permitted for financial statements that have not been issued. For all other entities, the amendments in ASU 2015-16 are effective for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2017. The amendments in ASU 2015-16 should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update with earlier application permitted for financial statements that have not yet been made available for issuance. |
4. Related Party Transactions
4. Related Party Transactions | 3 Months Ended | 12 Months Ended |
Nov. 30, 2020 | Aug. 31, 2020 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | Note 2 – Related Party Transactions During the three months ending November 30, 2020, the Company paid $105,000 in salaries, including socials benefits, to two directors, compared to $125,000 for the three months ending November 30, 2019. The Company had a balance outstanding at November 30, 2020 and at November 30, 2019 of $223,645 payable to Cannabics, Inc. The advance is due on demand and bears no interest. | Note 4 – Related Party Transactions During the year ended August 31, 2020 and August 31 2019, the Company paid approximately of $595,000 and $515,555 as salary to three of its directors. Cannabics Inc. (the parent company) balance at August 31, 2020 and at August 31, 2019 was $223,645. The advance is due on demand and bears no interest. |
5. Commitments and Contingencie
5. Commitments and Contingencies | 3 Months Ended | 12 Months Ended |
Nov. 30, 2020 | Aug. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | Note 4 – Commitments and Contingencies The company leases its office in Tel Aviv. In May, 2019, the Company extended its lease agreement for an additional twelve-month extension which expires on April 1 st Effective June 1, 2018, the Company entered into a 36-month car lease for one of its executive officers. As security for its obligation under a property lease agreement, car lease and credit cards, the Company’s subsidiary provided a bank guarantee in the amount of $50,000. | Note 5 – Commitments and Contingencies As security for its obligation under a property lease agreement, cars lease and credit cards of the Company’s subsidiary provided a bank guarantee in the amount of $45,000. |
6. Stockholders' Equity (Defici
6. Stockholders' Equity (Deficit) | 3 Months Ended | 12 Months Ended |
Nov. 30, 2020 | Aug. 31, 2020 | |
Equity [Abstract] | ||
Stockholders' Equity (Deficit) | Note 3 – Stockholders’ Equity (Deficit) Authorized Shares The Company is authorized to issue up to 900,000,000 shares of common stock, par value $0.0001 per share. Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights. | Note 6 – Stockholders’ Equity (Deficit) Authorized Shares The Company is authorized to issue up to 900,000,000 shares of common stock par value $0.0001 per share. Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights. The Company’s initial Articled authorized 5,000,000 preferred shares at .0001 par value, no other attributes have been assigned and no such shares have ever been issued. Common Stock During the year ended August 31, 2020, the Company issued 581,666 shares of its common stock to 2 consultants and an advisor for services rendered at a fair value of $72,120 or an average of $0.124 per share. |
7. Warrants
7. Warrants | 12 Months Ended |
Aug. 31, 2020 | |
Warrants Abstract | |
Warrants | Note 7 – Warrants Since August 31 st th 1. On September 24, 2018, as part of a securities purchase agreement the company issued 5,000,000 Warrants, to purchase common shares of the Company at $1.00 per share; said Warrants are valid for five years, expiring on August 24 th The fair value of each warrant is approximately $0.556 and the total value of the 5,000,000 warrants is $2,784,387 The fair value of the warrants are estimated using the Black Scholes option-pricing model with the following assumptions: PV of exercise Share price $1 Expected Volatility 102.0% Risk Free Interest Rate 1.58% Expected Term (years) 5 Expected Dividend Yield 0% 2 . On December 12, 2018 the company granted 50,000 Warrants to an advisor, to purchase 50,000 common shares of the Company at $1 per share; said Warrants are valid for one year, expiring on December 12, 2019. The fair value of each warrant is approximately $0.0.0874 and the total value of the 50,000 warrants issued was $4,370. The fair value of the warrants are estimated using the Black Scholes option-pricing model with the following assumptions: PV of exercise Share price $1 Expected Volatility 112.72 % Risk Free Interest Rate 2.7% Expected Term (years) 1 Expected Dividend Yield 0% The said Warrants expired on December 12, 2019. 3 . On June 19, 2019 the company granted 125,000 Warrants each to two of its directors totaling 250,000 Warrants, to purchase common shares of the Company at $0.30 per share; said Warrants are valid for one year, expiring on June 19, 2020. The fair value of each warrant is approximately $0.1224 and the total value of the 250,000 warrants issued was $30,600. The fair value of the warrants are estimated using the Black Scholes option-pricing model with the following assumptions: PV of exercise Share price $0.3 Expected Volatility 100.34% Risk Free Interest Rate 1.96% Expected Term (years) 1 Expected Dividend Yield 0% The said Warrants expired on June 19, 2020. The following table presents the warrant activity for the years ended August 31, 2020 and 2019. 2020 2019 2018 Weighted Average Exercise Weighted Average Exercise Weighted Average Exercise Warrants Price Warrants Price Warrants Price Warrants outstanding as of September 1 5,300,000 $ 1.00 500,000 $ 1.00 1,566,671 $ 0.02 Issued – $ – 5,300,000 $ 0.97 1,000,000 $ 2.00 Exercised – $ – – $ – (500,000 ) $ 0.02 Expired (300,000 ) $ 0.42 (1,000,000 ) $ 2.00 (1,066,671 ) $ 0.20 Warrants outstanding as of August 31 5,000,000 $ 1.00 5,300,000 $ 0.97 1,000,000 $ 2.00 Warrants exercisable as of August 31 5,000,000 $ 1.00 5,300,000 $ 0.97 1,000,000 $ 2.00 The weighted average remaining contractual life for the options outstanding as of August 31, 2020 was 3 years. |
8. Income Taxes
8. Income Taxes | 12 Months Ended |
Aug. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8 – Income Taxes Taxes on income included in the consolidated statements of operations represent current taxes due to taxable income of the Company and its Subsidiary. Corporate taxation in the U.S. The applicable corporate tax rate for the Company is 21%. No provision for income tax was made for the period from September 15, 2004 (Inception) to August 31, 2020 as the Company had cumulative operating losses. For the years ended August 31, 2020 and 2019, the Company incurred net losses for tax purposes of $2,229,392 and $1,114,659, respectively. Under U.S. tax laws, subject to certain limitations, carry forward tax losses expire 20 years after the year in which incurred. In the case of the Company, subject to potential limitations in accordance with the relevant law, the net loss carry forward will expire in the years 2032 through 2036. Corporate taxation in Israel: The Subsidiary is taxed in accordance with Israeli tax laws. The corporate tax rate applicable to 2020 is 23%. In December 2016, the Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2020 and 2019 Budget Years), which further reduces the corporate income tax rate to 24% (instead of 25%) effective from January 1, 2017 and to 23% effective from January 1, 2020. As of August 31, 2020, the Subsidiary has an accumulated tax loss carry forward of approximately $7,833,000 (as of August 31, 2019, approximately $5,600,000). Under the Israeli tax laws, carry forward tax losses have no expiration date. The income tax expense (benefit) differs from the amount computed by applying the United States Statutory corporate income tax rate as follows: For the Year Ended August 31, 2020 2019 United States statutory corporate income tax rate 21.0 % 21.0 % Change in valuation allowance on deferred tax assets -21.0 % -21.0 % Provision for income tax – % – % Deferred income taxes reflect the tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The components of the net deferred income tax assets are approximately as follows: August 31, 2020 2019 US Deferred income tax assets: Net operating loss carry forwards benefit $ 1,800,098 $ 785,628 Valuation allowance (1,800,098 ) (785,628 ) Net deferred income tax assets $ – $ – Outside US Deferred income tax assets: Net operating loss carry forwards benefit $ 1,845,645 $ 1,209,215 Valuation allowance (1,845,645 ) (1,209,215 ) $ – $ – August 31, 2020 2019 Consolidated Deferred income tax assets: Net operating loss carry forwards benefit $ 3,615,744 $ 1,994,843 Valuation allowance (3,615,744 ) (1,994,843 ) Net deferred income tax assets $ – $ – The amount taken into income as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely than not to be realized from future operations. The Company has established a full valuation allowance on its net deferred tax assets because of a lack of sufficient positive evidence to support its realization. The valuation allowance increased by $1,670,901 and decreased $234,549 for the years ended August 31, 2020 and 2019, respectively. No provision for income taxes has been provided in these financial statements due to the net loss for the years ended August 31, 2020 and 2019. At August 31, 2020, the Company has net operating loss carry forwards of approximately $13,631,270 which expire commencing 2032. The potential tax benefit of these losses may be limited due to certain change in ownership provisions under Section 382 of the Internal Revenue Code (“IRS”) and similar state provisions. IRS Section 382 places limitations (the “Section 382 Limitation”) on the amount of taxable income which can be offset by net operating loss carry forwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. Generally, after a change in control, a loss corporation cannot deduct operating loss carry forwards in excess of the Section 382 Limitation. Due to these “change in ownership” provisions, utilization of the net operating loss and tax credit carry forwards may be subject to an annual limitation regarding their utilization against taxable income in future periods. The Company has not concluded its analysis of Section 382 through August 31, 2020, but believes the provisions will not limit the availability of losses to offset future income. The Company is subject to income taxes in the U.S. federal jurisdiction and is subject to examination for a period of three years for current filings and indefinitely for any delinquent filings. The tax regulations within each jurisdiction are subject to interpretation of related tax laws and regulations and require significant judgment to apply. The Company estimates that the amount of penalties, if any, will not have a material effect on the results of operations, cash flows or financial position. No provisions have been made in the financial statements for such penalties, if any. |
9. Subsequent Events
9. Subsequent Events | 3 Months Ended | 12 Months Ended |
Nov. 30, 2020 | Aug. 31, 2020 | |
Subsequent Events [Abstract] | ||
Subsequent Events | Note 5 – Subsequent Events On October 27 th On November 16 th th On December 16, 2020, the Company executed a Securities Purchase Agreement with 3i LP for a series of convertible notes for an aggregate funding total of $2,750,000, to be carried out over four tranches, the first of which having been received. Per the agreements between the companies, the underlying shares for said notes are to be registered with the SEC. Until such time, the Company has issued 3,913,663 shares on December 18, 2020. Any other shares are to be registered in the future. For complete and detailed information on the Agreements with 3i LP, please see our 8-K for this event, filed December 21, 2020. On December 21 st The Company has evaluated subsequent events through the date the financial statements were issued and filed with the SEC and has determined that there are no other such events that warrant disclosure or recognition in the financial statements. | Note 9 – Subsequent Events On September 2 nd The Company has evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission and has determined that there are no other such events that warrant disclosure or recognition in the financial statements. |
10. General and Administrative
10. General and Administrative Expenses | 12 Months Ended |
Aug. 31, 2020 | |
Other Income and Expenses [Abstract] | |
General and Administrative Expenses | Note 10 General & administrate expenses For the year Ended For the year Ended Salaries and related expenses $ 220,586 $ 97,060 Legal and professional fees 828,003 676,096 Consulting – Stock based compensation 72,120 247,307 Insurance 103,389 131,853 Other expenses 84,051 329,212 $ 1,308,150 $ 1,481,528 |
11. Financial (Income) expenses
11. Financial (Income) expenses | 12 Months Ended |
Aug. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Financial (Income) expenses | Note 11 Financial (Income) expenses For the year Ended For the year Ended Interest and bank charges $ 8,133 $ 18,348 Other financial expense 60,000 – Capital gain from selling of held for trading investments (69,974 ) (19,621 ) Loss (Gain) from Held for trading Investments – (54,077 ) Loss (Profit) from royalties valuation 4,363,000 (4,363,000 ) Currency exchange differences loss (profit) 62,852 (18,226 ) $ 4,424,011 $ (4,436,576 ) |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 3 Months Ended | 12 Months Ended |
Nov. 30, 2020 | Aug. 31, 2020 | |
Accounting Policies [Abstract] | ||
Functional currency | Functional currency The currency of the primary economic environment in which the operations of the Company and its Subsidiary are conducted is the U.S. dollar (“$” or “dollar”). Therefore, the functional currency of the Company and its Subsidiary is the dollar. Transactions and balances denominated in dollars are presented at their original amounts. Non-dollar transactions and balances have been re-measured to dollars in accordance with the provisions of ASC 830-10 (formerly Statement of Financial Accounting Standard 52), "Foreign Currency Translation". All transaction gains and losses from re-measurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statement of operations as financial income or expenses, as appropriate. | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, impairment valuation of intangible assets, valuation of share-based payments and the valuation allowance on deferred tax assets. | |
Basis of Presentation | Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year. These unaudited financial statements should be read in conjunction with our August 31, 2020 annual financial statements included in our Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on November 4, 2020. | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and GRIN. All significant inter-company balances and transactions have been eliminated in consolidation. | Principles of Consolidation The consolidated financial statements include the accounts of Cannabics Pharmaceutical Inc. and its wholly-owned subsidiary, G.R.I.N. Ultra Ltd. All significant inter-company balances and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Going Concern The accompanying unaudited 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. The Company has incurred a net loss of $654,767 for the three months ended November 30, 2020, and has incurred cumulative losses since inception of $14,286,038. These conditions raise substantial doubt about the ability of the Company to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its abilities to generate revenues, to continue to raise investment capital, and develop and implement its business plan. No assurance can be given that the Company will be successful in these efforts. | Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At August 31, 2020 and 2019, cash equivalents consisted of bank accounts held at financial institutions. |
Concentration of Credit Risk | Concentration of Credit Risk The Company places its cash and cash equivalents with high credit quality financial institutions. There is Federal Deposit Insurance on the Company’s U.S. bank accounts. | |
Equipment, net | Equipment, net Equipment at August 31, 2020 consists of computer equipment, office equipment and cars recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful lives of 3 years for computer equipment, 14 years for office equipment and 7 years for cars. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. Depreciation expense was $215,155 and $188,928 for the years ended August 31, 2020 and 2019, respectively. | |
Revenue Recognition | Revenue recognition Revenue is recognized when delivery has occurred, evidence of an arrangement exists, title and risks and rewards for the products are transferred to the customer, collection is reasonably assured and product returns can be reliably estimated. Revenue from license agreements is recognized over the periods from which the Company is entitled to the respective payments. The Company’s revenues are concentrated in a small number of customers. For the year ended August 31, 2020 the revenues were for license fees. | |
Impairment or Disposal of Long-Lived Assets | Impairment or Disposal of Long-Lived Assets The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which fair value is observable: Level 1 - fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 - fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of August 31, 2020 and 2019. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements. As of August 31, 2020, the fair values of the Company’s level 1 financial instruments are in total of $426,522. And none of level 3 investments. As of August 31, 2020, the fair values of the Company’s financial instruments approximate their historical carrying amount. | |
Research and development, net | Research and Development Costs The Company accounts for research and development costs in accordance with Accounting Standards Codification 730 “Research and Development” (“ASC 730”). ASC 730 requires that research and development costs be charged to expense when incurred. Research and development costs charged to expense were $433,730 and $466,033 for the three months ended November 30, 2020 and 2019, respectively. | Research and development, net Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, employee benefits, the cost of supplies, the cost of services provided by outside contractors, including services related to the Company’s clinical trials, clinical trial expenses and the full cost of manufacturing product for use in research and preclinical development. All costs associated with research and developments are expensed as incurred. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as Contract Research Organizations, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, clinical trial costs are expensed immediately. |
Stock Based Compensation | Stock Based Compensation The Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options or warrants issued to non-employees are recorded in expense and additional paid-in capital in shareholders' deficit over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options or warrants at the end of each period. The Company issues stock to consultants for various services. The costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expense and a corresponding increase to additional paid-in-capital related to stock issued for services. | |
Income Taxes | Income Taxes Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized. The FASB has issued ASC 740 “Income Taxes”. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by ASC 740 and concluded that the tax position of the Company has not met the more-likely-than-not threshold as of August 31, 2020. | |
Comprehensive Income | Comprehensive Income The Company adopted ASC 220, Comprehensive Income | |
Basic and Diluted Loss Per Share | Basic and Diluted Loss per Share The Company computes income (loss) per share in accordance with ASC 260, "Earnings per Share", which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of August 31, 2020, and 2019, the potentially dilutive shares were anti-dilutive. | |
Segment Information | Segment Information In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. The Company does not consider itself to have any operating segments as of August 31, 2020 and 2019. | |
Reclassification | Reclassifications Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses, total assets, or stockholders’ equity as previously reported. | Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. |
7. Warrants (Tables)
7. Warrants (Tables) | 12 Months Ended |
Aug. 31, 2020 | |
Warrants Abstract | |
Schedule of warrant activity | 2020 2019 2018 Weighted Average Exercise Weighted Average Exercise Weighted Average Exercise Warrants Price Warrants Price Warrants Price Warrants outstanding as of September 1 5,300,000 $ 1.00 500,000 $ 1.00 1,566,671 $ 0.02 Issued – $ – 5,300,000 $ 0.97 1,000,000 $ 2.00 Exercised – $ – – $ – (500,000 ) $ 0.02 Expired (300,000 ) $ 0.42 (1,000,000 ) $ 2.00 (1,066,671 ) $ 0.20 Warrants outstanding as of August 31 5,000,000 $ 1.00 5,300,000 $ 0.97 1,000,000 $ 2.00 Warrants exercisable as of August 31 5,000,000 $ 1.00 5,300,000 $ 0.97 1,000,000 $ 2.00 |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
Aug. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective income tax rate | For the Year Ended August 31, 2020 2019 United States statutory corporate income tax rate 21.0 % 21.0 % Change in valuation allowance on deferred tax assets -21.0 % -21.0 % Provision for income tax – % – % |
Schedule of deferred income tax assets | The components of the net deferred income tax assets are approximately as follows: August 31, 2020 2019 US Deferred income tax assets: Net operating loss carry forwards benefit $ 1,800,098 $ 785,628 Valuation allowance (1,800,098 ) (785,628 ) Net deferred income tax assets $ – $ – Outside US Deferred income tax assets: Net operating loss carry forwards benefit $ 1,845,645 $ 1,209,215 Valuation allowance (1,845,645 ) (1,209,215 ) $ – $ – August 31, 2020 2019 Consolidated Deferred income tax assets: Net operating loss carry forwards benefit $ 3,615,744 $ 1,994,843 Valuation allowance (3,615,744 ) (1,994,843 ) Net deferred income tax assets $ – $ – |
10. General and Administrativ_2
10. General and Administrative Expenses (Tables) | 12 Months Ended |
Aug. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Schedule of general and administrative expenses | For the year Ended For the year Ended Salaries and related expenses $ 220,586 $ 97,060 Legal and professional fees 828,003 676,096 Consulting – Stock based compensation 72,120 247,307 Insurance 103,389 131,853 Other expenses 84,051 329,212 $ 1,308,150 $ 1,481,528 |
11. Financial (Income) expens_2
11. Financial (Income) expenses (Tables) | 12 Months Ended |
Aug. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Schedule of financial income (expenses) | For the year Ended For the year Ended Interest and bank charges $ 8,133 $ 18,348 Other financial expense 60,000 – Capital gain from selling of held for trading investments (69,974 ) (19,621 ) Loss (Gain) from Held for trading Investments – (54,077 ) Loss (Profit) from royalties valuation 4,363,000 (4,363,000 ) Currency exchange differences loss (profit) 62,852 (18,226 ) $ 4,424,011 $ (4,436,576 ) |
1. Nature of Business (Details
1. Nature of Business (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Nov. 30, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net (Loss) Profit | $ (654,767) | $ (5,142,195) | $ (7,467,464) | $ 1,132,970 |
Accumulated losses | $ (14,386,038) | $ (13,631,271) | $ (6,163,807) |
2. Summary of Significant Acc_3
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Nov. 30, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |
Depreciation expense | $ 57,505 | $ 51,578 | $ 215,155 | $ 188,928 |
Antidilutive shares | 0 | 0 | ||
Level 1 [Member] | ||||
Fair value of financial instruments | $ 426,522 | |||
Level 3 [Member] | ||||
Fair value of financial instruments | $ 0 |
4. Related Party Transactions (
4. Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Three Directors [Member] | ||
Consulting fees | $ 595,000 | $ 515,555 |
Cannabics [Member] | ||
Due to related party | $ 223,645 | $ 223,645 |
5. Commitments and Contingenc_2
5. Commitments and Contingencies (Details Narrative) | Aug. 31, 2020USD ($) |
Technion Research [Member] | |
Bank guarantee | $ 45,000 |
6. Stockholders' Equity (Detail
6. Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2020 | Aug. 31, 2020 | Aug. 31, 2019 | |
Stock issued for services, value | $ 33,000 | $ 72,120 | $ 1,018,709 |
Two Consultants and Advisor [Member] | |||
Stock issued for services, shares issued | 581,666 | ||
Stock issued for services, value | $ 72,120 |
7. Warrants (Details - Fair Val
7. Warrants (Details - Fair Value) - USD ($) | 6 Months Ended | 9 Months Ended | 11 Months Ended |
Jun. 19, 2019 | Sep. 24, 2018 | Dec. 12, 2018 | |
Warrant 1 [Member] | |||
PV of exercise Share price | $ 1 | ||
Expected Volatility | 102.00% | ||
Risk Free Interest Rate | 1.58% | ||
Expected Term (years) | 5 years | ||
Expected Dividend Yield | 0.00% | ||
Warrant expiration date | Aug. 24, 2023 | ||
Fair value of warrants issued | $ 2,784,887 | ||
Warrants issued | 5,000,000 | ||
Warrant 2 [Member] | |||
PV of exercise Share price | $ 1 | ||
Expected Volatility | 112.72% | ||
Risk Free Interest Rate | 2.70% | ||
Expected Term (years) | 1 year | ||
Expected Dividend Yield | 0.00% | ||
Warrant expiration date | Dec. 12, 2019 | ||
Fair value of warrants issued | $ 4,370 | ||
Warrants issued | 50,000 | ||
Warrant 3 [Member] | |||
PV of exercise Share price | $ 0.30 | ||
Expected Volatility | 100.34% | ||
Risk Free Interest Rate | 1.96% | ||
Expected Term (years) | 1 year | ||
Expected Dividend Yield | 0.00% | ||
Warrant expiration date | Jun. 19, 2020 | ||
Fair value of warrants issued | $ 30,600 | ||
Warrants issued | 250,000 |
7. Warrants (Details - Warrant
7. Warrants (Details - Warrant activity) - Warrants [Member] - $ / shares | 12 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | Aug. 31, 2018 | |
Number of warrants | |||
Warrants outstanding, beginning balance | 5,300,000 | 1,000,000 | 1,566,671 |
Warrants issued | 0 | 5,300,000 | 1,000,000 |
Warrants exercised | 0 | 0 | (500,000) |
Warrants expired | (300,000) | (1,000,000) | (1,066,671) |
Warrants outstanding, ending balance | 5,000,000 | 5,300,000 | 1,000,000 |
Warrants exercisable | 5,000,000 | 5,300,000 | 1,000,000 |
Weighed Average Exercise Price | |||
Weighted average exercise price, warrants outstanding, beginning balance | $ 0.97 | $ 2 | $ 0.02 |
Weighted average exercise price, warrants issued | 0.97 | 2 | |
Weighted average exercise price, warrants exercised | 0.02 | ||
Weighted average exercise price, warrants expired | 0.42 | 2 | 0.20 |
Weighted average exercise price, warrants outstanding, ending balance | 1 | 0.97 | 2 |
Weighted average exercise price, warrants exercisable | $ 1 | $ 0.97 | $ 2 |
7. Warrants (Details Narrative)
7. Warrants (Details Narrative) | 12 Months Ended |
Aug. 31, 2020 | |
Warrants [Member] | |
Weighted average remaining contractual life | 3 years |
8. Income Taxes (Details - rate
8. Income Taxes (Details - rate) | 12 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
U.S. statutory income tax rate | 21.00% | 21.00% |
Change in valuation allowance on deferred tax assets | (21.00%) | (21.00%) |
Provision for income tax | 0.00% | 0.00% |
8. Income Taxes (Details - Defe
8. Income Taxes (Details - Deferred tax assets) - USD ($) | Aug. 31, 2020 | Aug. 31, 2019 |
Net operating loss carryforwards | $ 3,615,744 | $ 1,994,843 |
Valuation allowance | (3,615,744) | (1,994,843) |
Net deferred income tax assets | 0 | 0 |
United States [Member] | ||
Net operating loss carryforwards | 1,800,098 | 785,628 |
Valuation allowance | (1,800,098) | (785,628) |
Net deferred income tax assets | 0 | 0 |
Outside U.S. [Member | ||
Net operating loss carryforwards | 1,845,645 | 1,209,215 |
Valuation allowance | (1,845,645) | (1,209,215) |
Net deferred income tax assets | $ 0 | $ 0 |
8. Income Taxes (Details Narrat
8. Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Increase (decrease) in valuation allowance | $ 1,670,901 | $ (234,549) |
Net operating loss carryforwards | $ 13,631,270 | |
Net operating loss carryforward beginning expiration date | Dec. 31, 2032 | |
Effective tax rate | 21.00% | 21.00% |
United States [Member] | ||
Net operating loss carryforwards | $ 2,229,392 | $ 1,114,659 |
Net operating loss carryforward beginning expiration date | Dec. 31, 2032 | |
Effective tax rate | 21.00% | |
Israel Tax Authority [Member] | ||
Net operating loss carryforwards | $ 7,833,000 | $ 5,600,000 |
Effective tax rate, Israel | 23.00% |
10. General and Administrativ_3
10. General and Administrative Expenses (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Nov. 30, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |
Other Income and Expenses [Abstract] | ||||
Salaries and related expenses | $ 220,586 | $ 97,060 | ||
Legal and professional fees | 828,003 | 676,096 | ||
Consulting - Stock based compensation | 72,120 | 247,307 | ||
Insurance | 103,389 | 131,853 | ||
Other expenses | 84,051 | 329,212 | ||
Total general and administrative expenses | $ 218,451 | $ 326,460 | $ 1,308,150 | $ 1,481,528 |
11. Financial (Income) expens_3
11. Financial (Income) expenses (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Nov. 30, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |
Other Income and Expenses [Abstract] | ||||
Interest and bank charges | $ 8,133 | $ 18,348 | ||
Other financial expense | 60,000 | 0 | ||
Capital gain from selling of held for trading investments | (69,974) | (19,621) | ||
Loss (gain) from held for trading investments | 0 | (54,077) | ||
Loss (profit) from royalties valuation | 4,363,000 | (4,363,000) | ||
Currency exchange differences loss (profit) | 62,852 | (18,226) | ||
Total other income (expense) | $ (4,965) | $ 5,326,339 | $ 4,424,012 | $ (4,436,576) |