11. CONVERTIBLE NOTES PAYABLE 

As of May 31, 2024 and August 31, 2023, the Company had the following in outstanding convertible notes payable:

*The notes have no interest rate. The notes mature at the earlier of (i) September 30, 2024 or (ii) the date the Company’s shares are listed for trading on a National Securities Exchange. The holder has the option to convert the notes at any time at conversion price per share shall be equal to the Closing Price for the Company’s Common Stock as reported by its Principal Market on the trading day immediately prior to date which the Initial Advance is deposited with the Escrow Agent. The notes will automatically convert on the date the Company’s shares are listed for trading on a National Securities Exchange at the lower of (x) 80% of the opening price for the Shares on the first day of trading on a National Securities Exchange or if the Company is not trading on a National Securities Exchange at per share price equal to 80% of the average closing prices for the company’s common stock for the 10 trading days preceding the Conversion Date and (y) the Optional Conversion Price. The conversion option is not clearly and closely related to the debt host and as a result, it is required to be recorded as a derivative liability.

** On January 30, 2024, the Company entered into an exchange agreement with multiple debt holders whereby the Company and holders agreed to exchange debt principal and accrued interest and accrued default interest for new notes (“Exchange Notes”). The Exchange Notes have no interest rate but contain conversion options. Whenever an exchange of debt instruments adds a substantive conversion option or eliminates a conversion option that was substantive at the date of the modification or exchange, it results in recording an extinguishment gain or loss. As a result, the extinguishment charge was calculated as follows:

The loss on exchange of debt is the difference between the reacquisition price and the carrying value of the old debt.

The notes mature at the earlier of (i) December 31, 2025 or (ii) the date the Company’s shares are listed for trading on a National Securities Exchange. The holder has the option to convert the notes at a conversion price per equal to the closing price for the company’s common stock as reported by its Principal Market on the trading day immediately prior to the day the Company’s shares are listed for trading on a National Securities Exchange. If the holder converts at any time prior to the day the Company’s shares are listed for trading on a National Securities Exchange, the conversion price is equal to the closing price closing price for the company’s common stock as reported by its Principal Market on the trading day immediately prior to the day of conversion. The conversion option is not clearly and closely related to the debt host and as a result, it is required to be recorded as a derivative liability.

*** The notes have no interest rate. The notes mature at the earlier of (i) December 31, 2025 or (ii) the date the Company’s shares are listed for trading on a National Securities Exchange. The holder has the option to convert the notes at a conversion price per equal to the closing price for the company’s common stock as reported by its Principal Market on the trading day immediately prior to the day the Company’s shares are listed for trading on a National Securities Exchange. If the holder converts at any time prior to the day the Company’s shares are listed for trading on a National Securities Exchange, the conversion price is equal to the closing price closing price for the company’s common stock as reported by its Principal Market on the trading day immediately prior to the day of conversion. The conversion option is not clearly and closely related to the debt host and as a result, it is required to be recorded as a derivative liability.