CONVERTIBLE NOTES

9 Months Ended

May 31, 2021

On July 21, 2020, the Company issued convertible notes in the amount of $500,000 and $560,000 to two unrelated parties, in exchange for their assumption of the December 8, 2018 note and related party loans owed to Cayo for the same amounts. (See Note 4). The notes do not bear interest and matured on January 22, 2021. The first note in the amount of $500,000 is convertible into common shares at the rate equivalent to 70% of the Company’s 30-day average stock price prior to conversion. The second note in the amount of $560,000 is convertible into common stock at the rate equivalent to 80% of the Company’s 30-day average stock price prior to conversion.

On January 10, 2021 the holder of the note in the amount of $500,000 converted $500,000 of its note into 578,680 shares of common stock and the unamortized discount at the date of conversion of $27,838 was written off to interest expense.

On January 10, 2021 the holder of the note in the amount of $560,000 converted $560,000 of its note into 567,108 shares of common stock and the unamortized discount at the date of conversion of $22,439 was written off to interest expense.

On September 22, 2020, the Board approved the issuance of up to $5,000,000 in new convertible notes, in multiple tranches, convertible at maturity into common shares. At May 31, 2021 the Company has received tranches of $62,500, $44,550, $60,000, $110,000, $130,000, and $82,700 respectively from unrelated parties under this facility. The note in the amount of $62,500 matures on March 31, 2021 and is convertible into common stock at the rate equivalent to 80% of the Company’s 30-day average stock price prior to conversion. The note in the amount of $44,550 matures on June 22, 2021, the note in the amount of $60,000 matures on July 22, 2021, the note in the amount of $110,000 matures on August 22, 2021, the note in the amount of $130,000 matures on September 22, 2021 and the note in the amount of $82,700 matures on October 01, 2021; these notes are convertible into common stock at the rate equivalent to 80% of the Company’s 30-day average stock price prior to conversion but no less than $0.10 value per share of Common Stock. Due to these provisions, convertible notes with variable conversion prices that do not include a floor price qualified for derivative accounting under ASC 815-15, Derivatives and Hedging (See Note 8).

On April 23, 2021 the holder of the note in the amount of $62,500 converted $62,500 of its note into 135,038 shares of common stock.

A summary of changes to the convertible notes for the nine months ended May 31, 2021 is as follows:

Carrying value of Convertible Notes at August 31, 2020	$	464,650
New principal		489,750
Total principal		954,400
Less: conversion of principal		(1,122,500	)
Less: discount related to fair value of the embedded conversion feature		(16,133	)
Less: discount related to original issue discount		(1,565)
Add: amortization of discount		617,934
Carrying value of Convertible Notes at May 31, 2021	$	432,136

BOATIM INC. 10-Q