A variable interest entity (“VIE”) is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to control the entity’s activities or do not substantially participate in the gains and losses of the entity. Upon inception of a contractual agreement, and thereafter, if a reconsideration event occurs, the Company performs an assessment to determine whether the arrangement contains a variable interest in an entity and whether that entity is a VIE. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Under Accounting Standards Codification (“ASC”) 810 – Consolidations, where the Company concludes that it is the primary beneficiary of a VIE, the Company consolidates the accounts of that VIE. At February 28, 2022 and May 31, 2021, respectively, the Company has no VIE’s.

Investments accounted for using the equity method include those investments where the Company (i) can exercise significant influence over the other entity and (ii) holds common stock and/or in-substance common stock of the other entity. Under the equity method, investments are carried at cost, and subsequently adjusted for the Company’s share of net income (loss), comprehensive income (loss) and distributions received from the investee. If the current fair value of an investment falls below its carrying amount, this may indicate that an impairment loss should be recorded. Any impairment losses recognized are not reversed in subsequent periods. At February 28, 2022 and May 31, 2021, respectively, the Company has no equity method investments.

From time to time, the Company may advance funds to an entity (IDP Macedonia) that is 50% controlled by our Former Chairman and Chief Executive Officer. While management believes the advances are expected to be recoverable, the recoverability of these advances depends on, amongst other things, Instadouz’s ability to generate positive cash flows through operations. In the event that Instadouz does not generate sufficient cash flows to support ongoing operations, the Company may be required to fund additional expenses. As a result of this and other uncertainties, the Company may ultimately not be able to recover some, or all, of the value of these advances.

The IDP Macedonia collaboration is a revenue and expense sharing arrangement. Revenues generated from Instadouz’s sale of Medicinal Cannabis or Cannabinoid Oil is to be split 49% to the Company’s operating partner in the DRC (Instadouz DRC), 49% to the Company, and 2% to IDP Macedonia.

During the years ended May 31, 2021 and 2020, the Company has advanced IDP Macedonia a total of $929,313 and $150, respectively, of which all amounts were directly contributed by our Former Chairman and Chief Executive Officer, thereby, increasing loan payable – related party.

During the nine months ended February 28, 2022, the Company has advanced IDP Macedonia a total of $579,031, of which all amounts were directly contributed by our Chairman and Chief Executive Officer, thereby, increasing loan payable – related party.

Subsequent to February 28, 2022, the Company has not advanced any funds to IDP Macedonia. See Note 6.

In October 2020, the Company executed a joint venture in Portugal with a third party, which created an entity known as IDP Portugal. The purpose of this joint venture was to secure licenses to import Medicinal Cannabis into Portugal to be sold or processed into Cannabinoid Oil and then sold to pharmaceutical industry companies located predominantly in the European Union.

Effective March 1, 2021, under the terms of this arrangement, ownership of IDP Portugal is split 95% to the Company and 5% to the third party. IDP Portugal has not yet had any operations since its formation.

During the year ended May 31, 2021, the Company advanced $29,106, all of which was directly contributed by our Chairman and Chief Executive Officer, thereby, increasing loan payable – related party.

During the nine months ended February 28, 2022, the Company did not advance any funds to IDP Portugal.

In January 2021, Instadose, along with its local partner in India, Sanctum Healthcare Remedies Private Limited (“Sanctum”), commenced official discussions with State government officials in Uttarakhand with a goal to secure a legal commercial license to grow, cultivate, process, and produce Medicinal Cannabis and Cannabinoid Oil (the “Uttarakhand License”) on agricultural lands located within the State of Uttarakhand (the “Uttarakhand Lands”).

In February 2021, Instadose and Sanctum agreed to a plan of joint venture that would see the parties work together in India to secure multiple State‑issued licenses to, among other rights, grow, cultivate, process, produce, export, and sell Medicinal Cannabis (according to India Law) and Cannabinoid Oil (the “India JV Licenses”) on certain agricultural lands in India (the “India JV Lands”) starting with the Uttarakhand License and Uttarakhand Lands (the “India Joint Venture”).

On February 18, 2021, Instadose and Sanctum executed a joint venture agreement (the “India JV Agreement”) formalizing their relationship under the India Joint Venture. In doing so, the India Joint Venture would serve the Global Distribution Platform as both a Medicinal Cannabis Cultivation Participant and Cannabinoid Oil Production Participant. The term of the India Joint Venture was agreed at twenty‑five (25) years, with a mutual option to extend the India Joint Venture for one additional twenty‑five (25) year term.

The India JV Agreement provided Instadose with exclusive rights to market and sell all of the Medicinal Cannabis and Cannabinoid Oil produced under the India Joint Venture with those net profits generated under the India Joint Venture to be shared as follows: Instadose 55%; Sanctum 45%.

On March18, 2021, Instadose and Sanctum incorporated a Subsidiary in India, Instadose Pharma India Private Limited (“IDP India”) to manage the India Joint Venture. IDP India is ownership is as follows: Instadose 55%; Sanctum 45%.

On August 6, 2021, the District Magistrate of Haridwar, in the State of Uttarakhand granted IDP India with its initial approval for the cultivation of Medicinal Cannabis, operating under the laws of India, on up to five hundred (500) acres of Uttarakhand Lands. IDP India is working to secure the Uttarakhand Lands. Once secured, approval to commence the official cultivation of Medicinal Cannabis in India (as well as receipt of the other applicable India JV Licenses) will be provided to IDP India.

During the nine months ended February 28, 2022 and the year ended May 31, 2021, the Company has advanced $0 and $775 to the joint venture.

In April 2021, Instadose and representatives of Instadose’s new third‑party partner in Mexico (the “Mexico Partner”) commenced discussions on a plan of joint venture/partnership that would see the parties work together in Mexico for the purposes of (i) growing, processing, purchasing, exporting, and selling Medicinal Cannabis, and (ii) utilizing Medicinal Cannabis to produce, export, and sell Cannabinoid Oil (collectively, the “Mexico Project”).

On July 29, 2021, Instadose and its Mexico Partner executed a letter agreement (the “Mexico Letter Agreement”) formalizing the scope of the Mexico Project which included the parties working together in Mexico.

During the nine months ended February 28, 2022 and the year ended May 31, 2021, there has been no activity with this joint venture.

In May 2021, Instadose and representatives of Instadose’s new third-party joint venture partner in Colombia (the “Colombia Partner”) commenced discussions on a plan of joint venture (the “Colombia Joint Venture”) that would see the Colombia Partner become an exclusive supplier to Instadose of no less than one million kilograms (1,000,000 kg) of Medicinal Cannabis per year throughout the term of the Colombia Joint Venture. The Colombia Partner is a Colombian company fully licensed in Colombia to cultivate and produce Medicinal Cannabis and its related derivatives.

On August 5, 2021, Instadose and its Colombia Partner executed a joint venture agreement (the “Colombia JV Agreement”) formalizing the scope of the Colombia Joint Venture. Under the Colombia JV Agreement, all of the Medicinal Cannabis to be supplied by the Colombia Partner to one or more Cannabinoid Oil Production Participants shall be determined in accordance with the terms of the supply agreements entered into between the applicable parties. Instadose and its Colombia Partner agreed to an initial five (5) year term for the operation of the Colombia Joint Venture subject to the right of the parties (absent the existence of a default) to extend the initial term for up to four (4) additional five (5) year terms.

During the nine months ended February 28, 2022 and the year ended May 31, 2021, there has been no activity with this joint venture.

In preparing the financial statements of individual entities, transactions in currencies other than the entity’s functional currency are recognized at exchange rates in effect on the date of the transactions. At each reporting date monetary assets and liabilities denominated in foreign currencies are re-translated at the exchange rates applicable at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary assets and liabilities that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Realized and unrealized exchange gains and losses are recognized through net income (loss).

For the purposes of presenting consolidated financial statements the assets and liabilities of foreign operations, are translated into Canadian dollars at the exchange rates applicable at the balance sheet date. Income and expenses, and cash flows of foreign operations are translated into Canadian dollars using average exchange rates. Exchange differences resulting from translating foreign operations are recognized in accumulated other comprehensive income (loss). At February 28, 2022 and May 31, 2021, respectively, there were no accounts that required translation from a currency other than the Company’s functional currency (Canadian dollars).

The Company accounts for business acquisitions using the acquisition method of accounting, in accordance with which assets acquired and liabilities assumed are recorded at their respective fair values at the acquisition date. The fair value of the consideration paid, including contingent consideration, is assigned to the assets acquired and liabilities assumed based on their respective fair values. Goodwill represents excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed.

Significant judgments are used in determining fair values of assets acquired and liabilities assumed, as well as intangibles. Fair value and useful life determinations are based on, among other factors, estimates of future expected cash flows, and appropriate discount rates used in computing present values. These judgments may materially impact the estimates used in allocating acquisition date fair values to assets acquired and liabilities assumed, as well as the Company’s current and future operating results. Actual results may vary from these estimates which may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement period or upon a final determination of asset and liability fair values, whichever occurs first. Adjustments to fair values of assets and liabilities made after the end of the measurement period are recorded within the Company’s operating results.

The Company uses the “management approach” to identify its reportable segments. The management approach requires companies to report segment financial information consistent with information used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. The Company manages its business as one identifiable and reportable segment.

The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.

The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.

The three tiers are defined as follows:

The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate.

Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values.

The Company’s financial instruments, including cash, and accounts payable and accrued expenses, are carried at historical cost. At February 28, 2022, and May 31, 2021, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At February 28, 2022, and May 31, 2021, respectively, the Company did not have any cash equivalents.

Sales taxes in Canada are imposed at two levels.

Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.” Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy.

In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.

If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets.

Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations.

Management reviews the carrying value of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

For the nine months ended February 28, 2022, and 2021, respectively, the Company did not recognize any impairment loss.

At February 28, 2022, and May 31, 2021, respectively, none of the Company’s capitalized property, plant and equipment had been placed into service. Once operations begin, all assets will be depreciated over their estimated useful lives. See Note 4.

The Right of Use Asset and Lease Liability reflect the present value of the Company’s estimated future minimum lease payments over the lease term, which may include options that are reasonably assured of being exercised, discounted using a collateralized incremental borrowing rate.

Typically, renewal options are considered reasonably assured of being exercised if the associated asset lives of the building or leasehold improvements exceed that of the initial lease term, and the performance of the business remains strong. Therefore, the Right of Use Asset and Lease Liability may include an assumption on renewal options that have not yet been exercised by the Company. At February 28, 2022, the Company’s operating lease did not contain any lease renewal options.

As the rate implicit in leases are not readily determinable, the Company uses an incremental borrowing rate to calculate the lease liability that represents an estimate of the interest rate the Company would incur to borrow on a collateralized basis over the term of a lease within a particular currency environment.

Intangible assets consist of accessible license rights to cultivate Medicinal Cannabis in the DRC and is stated at cost less accumulated amortization. Amortization is provided for on the straight-line basis over the estimated useful life of the agreement which is twenty-five (25) years. See Notes 5 and 6.

The Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 ”Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of May 31, 2021, and 2020, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.

The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related to uncertain income tax positions were recorded for the nine months ended February 28, 2022, and 2021, respectively.

As of February 28, 2022, all tax years remain open for audit.

Advertising costs are expensed as incurred. Advertising costs are included as a component of general and administrative expense in the consolidated statements of operations.

The Company recognized US$300,000 in marketing and advertising costs during the nine months ended February 28, 2022. The advertising costs were with respect to a media contract with Stellar Media entered into Instadose Pharma Corp. (USA) as previously disclosed in the 10-k filing on March 15, 2022.

We account for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

We use the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.

Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future.

During the nine months ended February 28, 2022, the Company granted 3,000,000 stock options (See Note 8). These options vest 1,000,000 each in June 2022 (fiscal year May 2023), June 2023 (fiscal year May 31, 2024) and June 2024 (fiscal year May 31, 2025). At February 28, 2022, none of these stock options had vested and were not exercisable, therefore, at February 28, 2022, there are no related common stock equivalents.

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. See Notes 5 and 6 regarding the purchase of intangible rights and related loan payable with the Company’s Former Chairman and Chief Executive Officer.

In September 2016, FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which supersedes current guidance by requiring recognition of credit losses when it is probable that a loss has been incurred. The new standard requires the establishment of an allowance for estimated credit losses on financial assets including trade and other receivables at each reporting date. The new standard will result in earlier recognition of allowances for losses on trade and other receivables and other contractual rights to receive cash. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842), which extends the effective date of Topic 326 for certain companies until fiscal years beginning after December 15, 2022. The new standard will be effective for the Company in the first quarter of fiscal year June 1, 2023, and early adoption is permitted. The Company has not completed its review of the impact of this standard on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This guidance, among other provisions, eliminates certain exceptions to existing guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We adopted this pronouncement on March 1, 2021; however, the adoption of this standard did not have a material effect on the Company’s consolidated financial statements.

In June 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). This standard eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. For public business entities, it is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years using the fully retrospective or modified retrospective method. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the potential impact of this standard on our financial statements.