| Convertible Note Payable | Note
11. Convertible Notes Payable On
March 19, 2020, we issued a convertible promissory note, payable in tranches, having an aggregate principal amount of $150,000, aggregate
original issue discount (OID) of $15,000, and an aggregate of 468,750 three-year warrants exercisable at $0.48/share, which contain certain
exercise price reset provisions in the event of dilutive issuances. The notes mature one year from the respective issuance date of
each tranche and bear interest at the rate of 10% per annum, payable at maturity. Commencing immediately following the issuances, the
noteholder shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time,
into shares of common stock of the Company at a variable conversion price equal to the lower of 60% of the lowest closing trade price
of the Company’s common stock, subject to adjustment, during the 25 trading days prior to: (i) the issuance date; or (ii) the conversion
date. On March 19, 2020, the first tranche of $50,000, less OID of $5,000, was received, resulting in net proceeds to the Company of
$45,000, and the Company issued 156,250 three-year warrants exercisable at $0.48 per share. On May 4, 2020, the second tranche of $25,000,
less OID of $2,500, was received, resulting in net proceeds to the Company of $22,500, and the Company issued 78,125 three-year warrants
exercisable at $0.48 per share. On July 10, 2020, the third tranche of $25,000, less OID of $2,500 was received, resulting in net proceeds
to the Company of $22,500, and the Company issued 78,125 three year warrants exercisable at an initial price of $0.48 per share. As a
result of the OID and the variable conversion price, upon issuance, the Company recognized total debt discount of $75,000, which is being
amortized to interest expense over the respective term of the tranches. The Company is prohibited from effecting a conversion of the
note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than
4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares
of common stock upon conversion of the note. During the nine months ended May 31, 2021, the Company repaid all principal and accrued
interest in full. On
July 21, 2020, the Company issued a convertible promissory note with a principal amount of $78,750, with the Company receiving proceeds
of $71,250 after original issue discount of $3,750 and deferred finance costs of $3,750. The note matures on July 21, 2021 and bears
interest at 6% per annum. Commencing immediately following the issuances, the noteholder shall have the right to convert all or any part
of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a variable conversion
price equal to the 60% of the lowest closing trade price of the Company’s common stock, subject to adjustment, during the 30 trading
days prior to: the conversion date. As a result of the OID and the variable conversion price, upon issuance, the Company recognized total
debt discount of $78,750, which is being amortized to interest expense through the maturity date. The Company is prohibited from effecting
a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially
own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance
of shares of common stock upon conversion of the note. During the nine months ended May 31, 2021, the note and accrued interest were
repaid in full. In
August 2020, the Company issued two convertible promissory notes with an aggregate principal amount of $129,250, with the Company receiving
proceeds of $117,500 after original issue discount of $11,750. The notes mature in May 2021 and bear interest at 10% per annum. Commencing
immediately following the issuances, the noteholder shall have the right to convert all or any part of the outstanding and unpaid principal
balance of the note, at any time, into shares of common stock of the Company at a fixed price of $0.1005 per share of common stock. The
conversion price may reset to a lower price if the Company issues common stock to any suppliers or vendors. As a result of the OID and
the potential result for dilutive issuances, upon issuance, the Company recognized total debt discount of $129,250, which is being amortized
to interest expense through the maturity date. The Company is prohibited from effecting a conversion of the note to the extent that,
as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of
shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon
conversion of the note. During the nine months ended May 31, 2021, the two notes and accrued interest were repaid in full. The
Company also entered into common stock subscription agreements with this lender, totaling share issuances of 3,409,221 (of which 510,204
are to be issued as of August 31, 2020), for cash proceeds of $329,613. In connection with these subscriptions, the Company issued a
convertible promissory note of $50,000 for no consideration. The note matures on August 7, 2021 and bears interest at 10$% and is convertible
at a fixed price of $0.1631 per share, subject to potential rest in the event the Company issues shares to vendors or suppliers. The
Company recognized total debt discount of $50,000, which is being amortized to interest expense over the respective term of the tranches.
The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder,
together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding
immediately after giving effect to the issuance of shares of common stock upon conversion of the note. During the nine months ended May
31, 2021, the note and accrued interest was repaid in full. During
the nine months ended May 31, 2021, the Company issued four convertible promissory notes to a lender with an aggregate principal amount
of $279,500, with the Company receiving proceeds of $267,000 after deferred finance costs of $12,500. The notes mature in August, September,
October and December 2021 and bear interest at 8% per annum. Commencing one hundred eighty (180) days following the issuance date of
the note, the noteholder shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note,
at any time, into shares of common stock of the Company at variable conversion prices of 63% of the two lowest trading prices during
previous fifteen (15) trading day of the Company’s common stock, subject to adjustment. The Company is prohibited from effecting
a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially
own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance
of shares of common stock upon conversion of the note. As a result of the variable exercise price and deferred finance costs, the Company
recognized total debt discount of $279,500, which is being amortized to interest expense through the maturity date. The Company is prohibited
from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates,
would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving
effect to the issuance of shares of common stock upon conversion of the note. During the nine months ended May 31, 2021, the four notes
with principal of $279,500 and accrued interest of $11,007 were repaid in full. On
September 2, 2020, the Company issued a convertible promissory note with an aggregate principal amount of $107,000, with the Company
receiving proceeds of $100,000 after original issue discount of $5,000 and deferred finance costs of $2,000. The notes mature in September
2021 and bear interest at 12% per annum. Commencing one hundred eighty (180) days following the issuance date of the notes, the noteholders
shall have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares
of common stock of the Company at variable conversion price of 60% of the lowest previous twenty (20) trading day closing trade prices
of the Company’s common stock, subject to adjustment. The Company is prohibited from effecting a conversion of the note to the
extent that, as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of
the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common
stock upon conversion of the note. As a result of the variable exercise price and deferred finance costs, upon issuance, the Company
recognized total debt discount of $107,000, which is being amortized to interest expense through the maturity date. This note was repaid
in full during the nine months ended May 31, 2021, together with accrued interest of $5,101. On
January 5, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of a 10% convertible note with
the principal amount of $110,000, with an accredited investor. The note is convertible at a fixed conversion price of $0.005. In the
event of default by the Company, or after the public announcement of a change of control transaction as defined in the agreement, the
conversion price is $0.001. The Company received net proceeds of $97,500. As a result of the variable exercise price of the Company’s
convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $110,000, which is being amortized
to interest expense through the maturity date. As of May 31, 2021, the carrying value of the note was $58,828, net of discount of $51,172,
and accrued interest was $4,400. On
January 12, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of a 10% convertible note
with the principal amount of $115,500, with an accredited investor. The note is convertible beginning 61 days from issuance at a fixed
conversion price of $0.10 per share or 60% or the lowest trading price for ten days prior to conversion in the event that the Company’s
stock trades at less than $0.10 per share. The Company received net proceeds of $100,000. As a result of the variable exercise price
of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $115,500,
which is being amortized to interest expense through the maturity date. During the nine months ended May 31, 2021, the lender converted
principal and accrued interest of $57,750 and $585 into 583,354 shares of common stock. As of May 31, 2021, the carrying value of the
note was $101,735, net of discount of $13,765, and accrued interest was $3,813. On
January 26, 2021, the Company entered into a Securities Purchase Agreement in connection with the issuance of a 10% convertible note
with the principal amount of $243,875, with an accredited investor. The note is convertible at 70% of the average of the three lowest
trading prices for 20 days prior to conversion. The Company received net proceeds of $215,500. As a result of the variable exercise price
of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $243,875,
which is being amortized to interest expense through the maturity date. As of May 31, 2021, the carrying value of the note was $55,144,
net of discount of $160,356, and accrued interest was $8,352. On
January 26, 2021, the Company entered into a second Securities Purchase Agreement in connection with the issuance of a 10% convertible
note with the principal amount of $243,875, with an accredited investor. The note is convertible at 70% of the average of the three lowest
trading prices for 20 days prior to conversion. The Company received net proceeds of $215,500. As a result of the variable exercise price
of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $243,875,
which is being amortized to interest expense through the maturity date. As of May 31, 2021, the carrying value of the note was $55,144,
net of discount of $160,356, and accrued interest was $6,102. On
February 28, 2021 the Company filed a Certificate of Designation of Preferences, Rights of Series B Preferred Stock. The Series B
Convertible Preferred stock has 1,000,000 shares authorized, has a par value of $0.001 per share and a stated value of $1.00. Each share
of Series B Preferred Stock will carry an annual dividend in the amount of eight percent (8%) of the Stated Value (the “Divided
Rate”), which shall be cumulative, payable solely upon redemption, liquidation or conversion. Upon the occurrence of an Event of
Default (as defined herein), the Dividend Rate shall automatically increase to twenty two percent (22%). Based on the terms of the Series
B Preferred Stock Purchase Agreement, and in accordance with ASC 480-10, the instruments are accounted for as a liability. During the
nine months ended May 31, 2021, the Company entered into four Series B Preferred Stock Purchase Agreements for an aggregate amount of
$329,500, with an accredited investor. As of May 31, 2021, the carrying value of the liability was $60,660, net of discount of $268,840,
and accrued interest was $4,852. On
March 8, 2021, the Company entered into a second Securities Purchase Agreement in connection with the issuance of a 10% convertible note
with the principal amount of $215,000, with an accredited investor. The note is convertible at 70% of the average of the three lowest
trading prices for 20 days prior to conversion. The Company received net proceeds of $191,000. As a result of the variable exercise price
of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $215,000,
which is being amortized to interest expense through the maturity date. As of May 31, 2021, the carrying value of the notes was $49,479,
net of discount of $165,521, and accrued interest was $4,948. On
March 16, 2021, the Company entered into a second Securities Purchase Agreement in connection with the issuance of a 10% convertible
note with the principal amount of $215,000, with an accredited investor. The note is convertible at 70% of the average of the three lowest
trading prices for 20 days prior to conversion. The Company received net proceeds of $191,000. As a result of the variable exercise price
of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $215,000,
which is being amortized to interest expense through the maturity date. As of May 31, 2021, the carrying value of the note was $44,767,
net of discount of $170,233, and accrued interest was $4,477. On
May 20, 2021, the Company entered into a second Securities Purchase Agreement in connection with the issuance of a 8% convertible note
with the principal amount of $130,000, with an accredited investor. The note is convertible at 60% of the average of the three lowest
trading prices for 15 days prior to conversion. The Company received net proceeds of $108,000. As a result of the variable exercise price
of the Company’s convertible notes and deferred finance costs, upon issuance, the Company recognized total debt discount of $130,000,
which is being amortized to interest expense through the maturity date. As of May 31, 2021, the carrying value of the note was $3,918,
net of discount of $126,082, and accrued interest was $313. Related
Parties During
the three months ended February 29, 2020, the Company issued two convertible promissory notes having an aggregate principal amount of
$133,101 in exchange for accrued expenses owed to related parties, of which $79,333 is payable to the Company’s Chief Executive
Officer and $53,768 is payable to the Robert L. Hymers III. The notes mature two years from the respective issuance date and bear
interest at the rate of 10% per annum, payable at maturity. The noteholders shall have the right to convert all or any part of the outstanding
and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a variable conversion price of 50%
of the average of the previous twenty (20) trading day closing prices of the Company’s common stock, subject to adjustment. As
a result of the variable conversion prices, upon issuance, the Company recognized total debt discount of $133,101, which is being amortized
to interest expense over the term of the notes. On May 22, 2020, the Chief Executive Officer converted $79,333 in principal and $2,608
of accrued interest into 694,902 shares of common stock to be issued having a fair value of $232,792. The conversion resulted in the
elimination of $70,313 of remaining debt discount, the elimination of $231,632 of derivative liabilities, and a $10,468 gain on conversion
that resulted from a related party and was therefore included in Additional paid-in capital. On December 9, 2020, Mr. Hymers converted
all principal of $53,768 and all accrued interest of $4,626 into 878,190 shares of common stock. On
April 30, 2020, the Company entered into a settlement agreement with its former Chief Financial Officer (Robert L. Hymers III, hereinafter
referred to as the “CFO”) whereby the CFO resigned and the Company issued a promissory note for $30,000, which represented
the remaining amount owed to the CFO for services rendered. The note matures December 31, 2020 and bears interest at the rate of
10% per annum, payable at maturity. The noteholder has the right to convert all or any part of the outstanding and unpaid principal balance
of the note, at any time, into shares of common stock of the Company at a fixed conversion price of $0.02 per share, subject to adjustment.
As a result of the beneficial conversion price, upon issuance, the Company recognized debt discount of $30,000, which is being amortized
to interest expense over the term of the note. On October 9, 2020, Mr. Hymers converted the note payable into 1,500,000 shares of common
stock. On
August 21, 2020 the Company, issued a convertible note pursuant to a Stock Purchase Agreement (the “SPA) to acquire 266,667 shares
of common stock of Natural Plant Extract of California Inc., a California corporation (“NPE”), representing 18.8% of the
outstanding capital stock of NPE on a fully diluted basis. With the exception of the entry into the subject material definitive agreements,
no material relationship exists between the Registrant, or any of the Registrant’s affiliates or control persons and Hymers. Under
the terms of the SPA, the Registrant acquired all rights and responsibilities of the equity stake for a purchase price of Two Million
Forty Thousand United States Dollars ($2,040,000) (the “Purchase Price”). Relative to the payment of the Purchase Price,
the registrant agreed to: 1) pay Hymers Twenty Thousand United States Dollars ($20,000) each month for a period of twenty-seven (27)
months, with the first payment commencing September 1, 2020 and the remaining payments due and payable on the first day of each subsequent
month until Hymers has received Five Hundred Forty Thousand United Stated Dollars ($540,000), and 2) issue Hymers a convertible promissory
note in the amount of One Million Five Hundred Thousand United States Dollars ($1,500,000) (the “Note”). The Note bears interest
at ten percent (10%) per annum. The Holder shall have the right at any time six (6) months after the Issuance Date to convert all or
any part of the outstanding and unpaid principal, interest, fees, or any other obligation owed pursuant to the note. Conversion Price
shall be calculated as follows: 60% of the lowest Trading Price of the common shares during the ten (10) days preceding the date the
Company receive a notice of conversion. Unless permitted by the applicable rules and regulations of the principal securities market on
which the Common Stock is then listed or traded, in no event shall the Registrant issue upon conversion of or otherwise pursuant to the
note and the other notes issued more than the maximum number of shares of Common Stock that the Company can issue pursuant to any rule
of the principal United States securities market on which the Common Stock is then traded, which shall be 4.99% of the total shares outstanding
at any time. A debt discount of $54,212 on the note payable at issuance was calculated based on the present value of the note using an
implied interest rate of 10%. A debt discount of $270,886 was recognized. Accordingly, the Company recorded an initial value of its investment
in NPE of $1,714,903. At the time the note becomes convertible, the Company will recognize a derivative liability at fair value related
to the embedded conversion option at that time. Prior to these transactions, Robert Hymers III and Alan Tsai each sold equity interest
representing a total of 18.8% of the outstanding equity interest of NPE to Edward Manolos, a Director and preferred stockholder of the
Company in a private transaction. As a result of these transactions, the Company beneficially controls approximately 56.5% of the equity
of NPE. After this transaction, a Better World Ventures LLC controls 40% of the equity interests in NPE and one other entity controls
3.5%. During the three months ended May 31, 2021, Robert Hymers elected to converted $576,000 of the principal on the $1,500,000 note
into 9,600,000 shares of common stock in accordance with the terms of the agreement. As
of May 31, 2021, the Company was in default of the $540,000 note payable to Robert Hymers. On January 3, 2021, the Company entered into
a settlement agreement with Robert Hymers concerning five delinquent payments totaling $100,000, whereby 1,585,791 shares of common stock
were issued in settlement of those payments. As of February 28, 2021, the Company missed five additionally $20,000 payments, and remains
in default of this agreement. On June 11, 2021, subsequent to the closing of the reported fiscal period ending on May 31, 2021, the Company
entered into an agreement with Robert Hymers. As of the date of the amendment, the Company owed Mr. Hymers $440,000. The parties agreed
to exchange the Company’s obligations to make monthly payments under the stock purchase agreement for a Convertible Note for the
same amount. See Subsequent Events section. | Note
8. Convertible Notes Payable On
November 6, 2019, the Company issued a convertible promissory note in the principal amount of $20,000 along with 26,667 three-year
warrants exercisable at $3.50 per share in exchange for proceeds of $20,000. The note matures May 6, 2020 and bears interest
at the rate of 7% per annum, payable at maturity. Commencing thirty (30) days following the issuance date, the noteholder shall
have the right to convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares
of common stock of the Company at a conversion price equal to the lower of (i) $0.75 per share; or (ii) 80% of the average of
the previous twenty (20) trading day closing prices of the Company’s common stock, subject to adjustment. As a result of
the issuance of the warrants as well as the beneficial conversion feature, upon issuance, the Company recognized total debt discount
of $20,000, which is being amortized to interest expense over the term of the note. The Company is prohibited from effecting a
conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its affiliates, would
beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving
effect to the issuance of shares of common stock upon conversion of the note. At maturity, on May 6, 2020, the Company entered
into a settlement agreement with the noteholder whereby the Company paid the entire principal balance of $20,000 and accrued interest
of $712 in cash and the warrants were canceled. There was no gain or loss recognized for the settlement. During
the three months ended February 29, 2020, the Company issued four convertible promissory notes having an aggregate principal amount
of $256,500, aggregate original issue discount (OID) of $10,500, and aggregate legal fees of $11,000, resulting in aggregate net
proceeds to the Company of $235,000. The notes mature in one year from the respective issuance date and bear interest at
the rate of 10% per annum, payable at maturity. Commencing one hundred eighty (180) days following the issuance date of $198,750
of the notes and commencing immediately following the issuance of $57,750 of the notes, the noteholders shall have the right to
convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock
of the Company at variable conversion prices ranging from 50% - 60% of the lowest previous fifteen (15) to twenty (20) trading
day closing trade prices of the Company’s common stock, subject to adjustment. As a result of the variable conversion prices,
upon issuance, the Company recognized total debt discount of $256,500, which is being amortized to interest expense over the term
of the notes. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion,
the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s
common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note.
In August 2020, the Company repaid the notes in full, consisting of principal of $256,500, accrued interest of $13,772, and early
repayment interest and penalties of $127,565. On
March 19, 2020, the Company issued a convertible promissory note, payable in tranches, having an aggregate principal amount of
$150,000, aggregate original issue discount (OID) of $15,000, and an aggregate of 468,750 three-year warrants exercisable at $0.48/share,
which contain certain exercise price reset provisions in the event of dilutive issuances. The notes mature one year from the respective
issuance date of each tranche and bear interest at the rate of 10% per annum, payable at maturity. Commencing immediately
following the issuances, the noteholder shall have the right to convert all or any part of the outstanding and unpaid principal
balance of the note, at any time, into shares of common stock of the Company at a variable conversion price equal to the lower
of 60% of the lowest closing trade price of the Company’s common stock, subject to adjustment, during the 25 trading days
prior to: (i) the issuance date; or (ii) the conversion date. On March 19, 2020, the first tranche of $50,000, less OID of $5,000,
was received, resulting in net proceeds to the Company of $45,000, and the Company issued 156,250 three-year warrants exercisable
at $0.48 per share. On May 4, 2020, the second tranche of $25,000, less OID of $2,500, was received, resulting in net proceeds
to the Company of $22,500, and the Company issued 78,125 three-year warrants exercisable at $0.48 per share. On July 10, 2020,
the third tranche of $25,000, less OID of $2,500 was received, resulting in net proceeds to the Company of $22,500, and the Company
issued 78,125 three year warrants exercisable at an initial price of $0.48 per share. As a result of the OID and the variable
conversion price, upon issuance, the Company recognized total debt discount of $75,000, which is being amortized to interest expense
over the respective term of the tranches. The Company is prohibited from effecting a conversion of the note to the extent that,
as a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number
of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common
stock upon conversion of the note. As of August 31, 2020, the carrying value of these notes was $37,088, net of debt discount
of $62,912 and accrued interest was $3,431. On
July 21, 2020, the Company issued a convertible promissory note with a principal amount of $78,750, with the Company receiving
proceeds of $71,250 after original issue discount of $3,750 and deferred finance costs of $3,750. The note matures on July 21,
2021 and bears interest at 6% per annum. Commencing immediately following the issuances, the noteholder shall have the right to
convert all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock
of the Company at a variable conversion price equal to the 60% of the lowest closing trade price of the Company’s common
stock, subject to adjustment, during the 30 trading days prior to: the conversion date. As a result of the OID and the variable
conversion price, upon issuance, the Company recognized total debt discount of $78,750, which is being amortized to interest expense
through the maturity date. The Company is prohibited from effecting a conversion of the note to the extent that, as a result of
such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number of shares
of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon
conversion of the note. As of August 31, 2020, the carrying value of these notes was $8,846, net of debt discount of $69,904 and
accrued interest was $531. In
August 2020, the Company issued two convertible promissory notes with an aggregate principal amount of $129,250, with the Company
receiving proceeds of $117,500 after original issue discount of $11,750. The notes mature in May 2021 and bear interest at 10%
per annum. Commencing immediately following the issuances, the noteholder shall have the right to convert all or any part of the
outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a fixed price
of $0.1005 per share of common stock. The conversion price may reset to a lower price if the Company issues common stock to any
suppliers or vendors. As a result of the OID and the potential result for dilutive issuances, upon issuance, the Company recognized
total debt discount of $129,250, which is being amortized to interest expense through the maturity date. The Company is prohibited
from effecting a conversion of the note to the extent that, as a result of such conversion, the noteholder, together with its
affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately
after giving effect to the issuance of shares of common stock upon conversion of the note. As of August 31, 2020, the carrying
value of these notes was $8,452, net of debt discount of $120,798 and accrued interest was $632. The
Company also entered into common stock subscription agreements with this lender, totaling share issuances of 3,409,221 (of which
510,204 are to be issued as of August 31, 2020), for cash proceeds of $329,613. In connection with these subscriptions, the Company
issued a convertible promissory note of $50,000 for no consideration. The note matures on August 7, 2021 and bears interest at
10$% and is convertible at a fixed price of $0.1631 per share, subject to potential rest in the event the Company issues shares
to vendors or suppliers. The Company recognized total debt discount of $50,000, which is being amortized to interest expense over
the respective term of the tranches. The Company is prohibited from effecting a conversion of the note to the extent that, as
a result of such conversion, the noteholder, together with its affiliates, would beneficially own more than 4.99% of the number
of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common
stock upon conversion of the note. As of August 31, 2020, the carrying value of these notes was $3,288, net of debt discount of
$46,712 and accrued interest was $329. Related
Parties During
the three months ended February 29, 2020, the Company issued two convertible promissory notes having an aggregate principal amount
of $133,101 in exchange for accrued expenses owed to related parties, of which $79,333 is payable to the Company’s Chief
Executive Officer and $53,768 is payable to the Robert L. Hymers III. The notes mature two years from the respective issuance
date and bear interest at the rate of 10% per annum, payable at maturity. The noteholders shall have the right to convert
all or any part of the outstanding and unpaid principal balance of the note, at any time, into shares of common stock of the Company
at a variable conversion price of 50% of the average of the previous twenty (20) trading day closing prices of the Company’s
common stock, subject to adjustment. As a result of the variable conversion prices, upon issuance, the Company recognized total
debt discount of $133,101, which is being amortized to interest expense over the term of the notes. On May 22, 2020, the Chief
Executive Officer converted $79,333 in principal and $2,608 of accrued interest into 694,902 shares of common stock to be issued
having a fair value of $232,792. The conversion resulted in the elimination of $70,313 of remaining debt discount, the elimination
of $231,632 of derivative liabilities, and a $10,468 gain on conversion that resulted from a related party and was therefore included
in Additional paid-in capital. As of August 31, 2020, the carrying value of the remaining note with the former chief financial
officer was $15,884, net of debt discount of $37,884 and accrued interest was $3,138. On
April 30, 2020, the Company entered into a settlement agreement with its former Chief Financial Officer (Robert L. Hymers III,
hereinafter referred to as the “CFO”) whereby the CFO resigned and the Company issued a promissory note for $30,000,
which represented the remaining amount owed to the CFO for services rendered. The note matures December 31, 2020 and bears
interest at the rate of 10% per annum, payable at maturity. The noteholder has the right to convert all or any part of the outstanding
and unpaid principal balance of the note, at any time, into shares of common stock of the Company at a fixed conversion price
of $0.02 per share, subject to adjustment. As a result of the beneficial conversion price, upon issuance, the Company recognized
debt discount of $30,000, which is being amortized to interest expense over the term of the note. As of August 31, 2020, the carrying
value of the note was $15,061, net of debt discount of $14,939 and accrued interest was $1,011. On
August 21, 2020 the Company, issued a convertible note pursuant to a Stock Purchase Agreement (the “SPA) to acquire 266,667
shares of common stock of Natural Plant Extract of California Inc., a California corporation (“NPE”), representing
18.8% of the outstanding capital stock of NPE on a fully diluted basis. With the exception of the entry into the subject material
definitive agreements, no material relationship exists between the Registrant, or any of the Registrant’s affiliates or
control persons and Hymers. Under the terms of the SPA, the Registrant acquired all rights and responsibilities of the equity
stake for a purchase price of Two Million Forty Thousand United States Dollars ($2,040,000) (the “Purchase Price”).
Relative to the payment of the Purchase Price, the registrant agreed to: 1) pay Hymers Twenty Thousand United States Dollars ($20,000)
each month for a period of twenty-seven (27) months, with the first payment commencing September 1, 2020 and the remaining payments
due and payable on the first day of each subsequent month until Hymers has received Five Hundred Forty Thousand United Stated
Dollars ($540,000), and 2) issue Hymers a convertible promissory note in the amount of One Million Five Hundred Thousand United
States Dollars ($1,500,000) (the “Note”). The Note bears interest at ten percent (10%) per annum. The Holder shall
have the right at any time six (6) months after the Issuance Date to convert all or any part of the outstanding and unpaid principal,
interest, fees, or any other obligation owed pursuant to the note. Conversion Price shall be calculated as follows: 60% of the
lowest Trading Price of the common shares during the ten (10) days preceding the date the Company receive a notice of conversion.
Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then
listed or traded, in no event shall the Registrant issue upon conversion of or otherwise pursuant to the note and the other notes
issued more than the maximum number of shares of Common Stock that the Company can issue pursuant to any rule of the principal
United States securities market on which the Common Stock is then traded, which shall be 4.99% of the total shares outstanding
at any time. A debt discount of $54,212 on the note payable at issuance was calculated based on the present value of the note
using an implied interest rate of 10%. A debt discount of $270,886 was recognized. Accordingly, the Company recorded an initial
value of its investment in NPE of $1,714,903. At the time the note becomes convertible, the Company will recognize a derivative
liability at fair value related to the embedded conversion option at that time. Prior to these transactions, Robert Hymers III
and Alan Tsai each sold equity interest representing a total of 18.8% of the outstanding equity interest of NPE to Edward Manolos,
a Director and preferred stockholder of the Company in a private transaction. As a result of these two transactions, the Company
beneficially controls approximately 37% of the equity of NPE. After this transaction, a venture capital company controls 40% of
the equity interests in NPE, the Company, Alan Tsai and Edward Manolos each control 18.8% and one other entity controls 3.5%. The
Company evaluated its interest in NPE as of August 31, 2020 under ASC 810. Management determined that it had a variable interest
in NPE, but that NPE does not meet the definition of a variable interest entity, and does not have an indirect voting interest
of greater than 50%. Based on these factors, the investment in NPE by the Company, the investment in NPE will be accounted for
as an equity method investment under the measurement alternative available under ASC 321 with the Company recording its share
of the profits and losses of NPE at each reporting period. The initial investment balance was $1,714,903 based on the initial
fair value estimate of the note payable and convertible note payable issued as consideration for the investment. For the three
months ended August 31, 2020, the Company recognized no equity method income or losses due and no impairment of the investment. See
Note 9 for further discussion of the accounting treatment of the embedded conversion options of the above promissory notes payable
as derivative liabilities. |
