10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2018

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to________________

Commission file number 001-34911

TROPIC INTERNATIONAL INC.

(Exact name of registrant as specified in its charter)

Nevada	None
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1057 Parkinson Road, Unit #9 Woodstock, Ontario, Canada	N4S 7W3
(Address of principal executive offices)	(Zip Code)

(519) 421-1900

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [X]
	Emerging growth company [X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [  ] No [  ]

APPLICABLE ONLY TO CORPORATE ISSURS:

As of April 18, 2018, the registrant’s outstanding common stock consisted of 57,532,843 shares.

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
Item 3. Quantitative and Qualitative Disclosures about Market Risk	10
Item 4. Controls and Procedures	10
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	11
Item 1A. Risk FactorsDirectView Holdings, Inc	11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3. Defaults Upon Senior Securities	11
Item 4. Mine Safety Disclosures	11
Item 5. Other Information	11
Item 6. Exhibits	12
SIGNATURES	13

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Tropic International Inc.

Consolidated Financial Statements
For the Six Months Ended February 28, 2018

(Expressed in Canadian dollars)

(unaudited)

	Index
Consolidated Balance Sheets	F-1
Consolidated Statements of Loss and Comprehensive Loss	F-2
Consolidated Statements of Cash Flows	F-3
Consolidated Statements of Stockholders’ Equity	F-4
Notes to the Consolidated Financial Statements	F-5

3

TROPIC INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

	February 28, 2018			August 31, 2017
ASSETS
Current assets:
Cash	$	40,249		$	63,144
Amounts receivable		85,423			84,290
Inventory (Note 9)		1			1
Prepaid expenses		15,214			28,624
Total current assets		140,887			176,059
Equipment, net (Note 8)		30,777			34,197
Patents, net (Note 9)		4			4
License agreement, net (Notes 3 and 10)		1,218,532			1,312,265
Total assets	$	1,390,200		$	1,522,525
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current liabilities:
Accounts payable and accrued liabilities (Notes 11 and 12)	$	1,322,021		$	1,075,601
Advances from related parties/shareholders (Notes 12 and 13)		470,049			415,960
License assignment fee payable (Notes 3 and 14)		698,091			683,212
Stock purchase warrants (Notes 4 and 16)		536,977			297,378
Stock subscribed (Note 16)		10,000			838,674
Total current liabilities		3,037,138			3,310,825
Due to the Clinic (Note 3)		212,451			197,765
		3,249,589			3,508,590
Stockholders’ deficiency (Note 16):
Common stock		1,018,256			526,182
Additional paid-in capital		8,458,365			8,460,414
Deficit		(11,336,010	)		(10,972,661	)
Total stockholders’ deficiency		(1,859,389	)		(1,986,065	)
Total liabilities and stockholders’ deficiency	$	1,390,200		$	1,522,525

Contingent liability (Note 19)

See accompanying notes to the consolidated financial statements.

F-1

TROPIC INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

	For the Six Months Ended February 28,
	2018			2017
Revenue:
Sales	$	—		$	—
Production costs:
Amortization – license agreement (Note 10)		93,733			—
Amortization – patent (Note 9)		—			187,546
Consulting fees – production		1,155			14,700
Depreciation (Note 8)		3,420			4,275
Materials and supplies		—			783
Patenting costs – the Clinic (Note 3)		10,175			—
Total production costs		108,483			207,304
Gross loss		(108,483	)		(207,304	)
General and administration:
Consulting fees – management (Note 12)		235,766			248,517
Interest on advances from related parties/shareholders (Notes 12 and 13)		8,089			5,649
Loss (gain) on foreign exchange		31,110			(15,536	)
Marketing		247			1,960
Office and miscellaneous		5,094			15,987
Patent maintenance fees		1,394			4,694
Professional fees		29,396			31,636
Rent		13,139			6,625
Travel and entertainment		2,426			6,433
Trust and filing fees		12,075			3,898
Total general and administration		338,736			309,863
Loss before other items and income taxes		(447,219	)		(517,167	)
Other items:
Writedown of amounts receivable		(18,746	)		—
Gain on revaluation of stock purchase warrants		102,616			—
Loss before income taxes		(363,349	)		(517,167	)
Income taxes		—			—
Net loss and comprehensive loss	$	(363,349	)	$	(517,167	)
Net loss per share – basic and diluted (Note 5)	$	(0.01	)	$	(0.01	)
Weighted-average number of shares outstanding		57,507,318			56,632,031

See accompanying notes to the consolidated financial statements.

F-2

TROPIC INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

	For the Six Months Ended February 28,
	2018			2017
Cash Flows Used In Operating Activities
Net loss	$	(363,349	)	$	(517,167	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization – license agreement		93,733			—
Amortization – patent		—			187,546
Depreciation		3,420			4,275
Unrealized foreign exchange on license assignment fee payable		14,879			(14,175	)
Unrealized foreign exchange on due to the Clinic		4,511			—
Writedown of amounts receivable		18,746			—
Gain on revaluation of stock purchase warrants		(102,615	)		—
Changes in assets and liabilities:
Amounts receivable		(19,879	)		(16,761	)
Inventory		—			61
Prepaid expenses		13,410			(86,719	)
Accounts payable and accrued liabilities		246,420			32,992
License assignment fee payable		—			(336,750	)
Due to the Clinic		10,175			—
Interest accrued on advances from related parties/shareholders		8,089			5,649
Net cash used in operating activities		(72,460	)		(741,049	)
Cash Flows Used In Investing Activities
Patent costs		—			(2,089	)
Cash Flows Provided By (Used In) Financing Activities
Proceeds from issuance of common stock		—			395,580
Stock issue costs		(6,435	)		(19,899	)
Advances from related parties		46,000			—
Repayment of advances from related parties/shareholders		—			(38,000	)
Stock subscriptions received		10,000			663,550
Net cash provided by financing activities		49,565			1,001,231
Increase (decrease) in cash during the period		(22,895	)		258,093
Cash, beginning of period		63,144			144,718
Cash, end of period	$	40,249		$	402,811

Supplementary Information:

On November 2, 2016, the Company issued 15,000 finder’s stock purchase warrants valued at $8,742. See Note 16.

On November 23, 2016, the Company incurred a license assignment fee payable in the amount of $1,347,000 (US$1,000,000) relating to the acquisition of the License Agreement from ZHC. See Note 3.

The gross proceeds of $838,674 relating to the stock issued on September 7, 2017 and September 21, 2017 were reported as stock subscribed at August 31, 2017. See Note 16.

On September 7, 2017, the Company issued 5,000 finder’s stock purchase warrants valued at $2,581. See Note 16.

See accompanying notes to the consolidated financial statements.

F-3

TROPIC INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

	Common Stock								Additional						Total
	* Common Stock		Amount			Stock subscribed			paid-in capital			Deficit			stockholders’ equity (deficiency)
Balance at August 31, 2015		6,132,073	$	12,612		$	30,000		$	8,431,728		$	(4,870,681	)	$	3,603,659
Stock subscribed		—		—			315,366			—			—			315,366
Stock issued for asset acquisition (Note 3)		50,000,000		127,920			—			—			—			127,920
Net loss		—		—			—			—			(1,030,293	)		(1,030,293	)
Balance at August 31, 2016		56,132,073		140,532			345,366			8,431,728			(5,900,974	)		3,016,652
Stock issued for cash		760,770		414,291			(345,366	)		28,686			—			97,611
Stock issue costs – cash		—		(19,899	)		—			—			—			(19,899	)
Stock issue costs – finder’s warrants		—		(8,742	)		—			—			—			(8,742	)
Net loss		—		—			—			—			(5,071,687	)		(5,071,687	)
Balance at August 31, 2017		56,892,843		526,182			—			8,460,414			(10,972,661	)		(1,986,065	)
Stock issued for cash		630,000		491,041			—			—			—			491,041
Stock issue costs – cash		—		(6,435	)		—			—			—			(6,435	)
Stock issue costs – finder’s warrants		—		(2,581	)		—			—			—			(2,581	)
Warrants exercised		10,000		10,049			—			(2,049	)		—			8,000
Net loss		—		—			—			—			(363,349	)		(363,349	)
Balance at February 28, 2018		57,532,843	$	1,018,256		$	—		$	8,458,365		$	(11,336,010	)	$	(1,859,389	)

* The above presentation reflects a 1:2 reverse split of the Company’s common stock on August 25, 2016. See Note 16.

See accompanying notes to the consolidated financial statements.

F-4

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED) 

1. Company Overview and Basis of Presentation

Nature and History of Operations

Tropic International Inc. (formerly Rockford Minerals, Inc.) (the “Company”) was incorporated under the laws of the state of Nevada on October 29, 2007. The Company was a natural resource exploration company with an objective of acquiring, exploring and, if warranted and feasible, developing natural resource properties. Activities during the exploration stage included developing the business plan and raising capital.

On June 28, 2013, the Company completed a reverse takeover transaction (see Note 2) with Tropic Spa Inc. (“TSI”), a company that manufactures and sells Home Mist Tanning units that deliver a full-body application. As a result of this transaction, the Company became a holding company operating through TSI. Upon the closing of the share exchange agreement described below, the Company changed its fiscal year end from October 31 to August 31 to coincide with the fiscal year end of TSI.

On December 6, 2013, the Company changed its name to Tropic International Inc. as a result of a merger with a wholly-owned subsidiary incorporated solely to effect the name change.

On September 3, 2014, the Company’s shares became eligible for quotation on the OTCQB under the symbol TRPO.

On June 13, 2016, the Company completed an asset acquisition transaction (see Note 3) with Notox Bioscience Inc. (“Notox”), a private Nevada corporation incorporated on May 31, 2016 for the purpose of acquiring 100% of the right, title and interest in and to an exclusive license agreement (the “License Agreement”) with The Cleveland Clinic Foundation (the “Clinic”), an Ohio not-for-profit corporation. As a result of this transaction, the Company is a holding company operating through both TSI and Notox.

The accompanying consolidated financial statements include the results of operations of the Company, TSI and Notox for the three months ended November 30, 2017. The comparative amounts are the results of operations of the Company, TSI and Notox for the three months ended November 30, 2016.

On November 19, 2007, TSI obtained the rights to the Home Mist Tanning system and the application for and acquisition of a United States Patent “Apparatus for Spray Application of a Sunless Tanning Product” (the “US Patent”). As of March 11, 2013, the total value assigned to the carrying value of the US Patent was $6,342,279.

On October 16, 2014, the Company, through TSI, obtained an Australian patent (the “Australian Patent”), incurring application costs of $4,976. On June 21, 2016, the Company, through TSI, obtained a Canadian patent (the “Canadian Patent”), incurring application costs of $17,406. On December 28, 2016, the Company, through TSI, obtained a Chinese patent (the “Chinese Patent”), incurring application costs of $5,806. Costs incurred are recorded as intangible assets. On August 31, 2017, the net carrying amount of the patents was written down to a nominal amount of $4 (see Note 9).

As reflected in the accompanying consolidated financial statements, the Company has a deficit of $11,336,010 (August 31, 2017 - $10,972,661) since inception, a working capital deficiency of $2,896,251 (August 31, 2017 - $3,134,766) and a stockholders’ deficiency of $1,859,389 (August 31, 2017 - stockholders’ equity of $1,986,065). This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on its ability to raise additional capital and to implement its business plan. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

F-5

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED) 

1. Company Overview and Basis of Presentation (cont’d)

Management has evaluated the Company’s ability to continue as a going concern by assessing its ability to meet its obligations as they become due within one year from the date of issue of the financial statements. Management’s assessment included the following factors:

● The Company’s financial condition as at the date of issue of the financial statements;

● The Company’s actual or anticipated conditional and unconditional obligations due within one year from the date of issue of the financial statements;

● The funds necessary to maintain the Company’s operations considering its current financial condition, obligations and other expected cash flows; and

● Other conditions and events that may affect the Company’s ability to meet its obligations within one year from the date of issue of the financial statements.

The Company’s operating expenses are estimated to be approximately $100,000 per year. As at February 28, 2018, the Company’s current cash liabilities total approximately $2,490,000 (August 31, 2017 - $2,175,000). Of this amount, approximately $2,222,000 – accounts payable and accrued liabilities ($1,054,000), advances from related parties/shareholders ($470,000) and license assignment fee payable ($698,000) – is payable to related parties and/or major shareholders who have not and will not require payment until such time as sufficient cash flow is available. To the extent the remaining $268,000 cannot be deferred and sufficient equity financing has not been raised to make the payment required, management will advance funds to the Company, if appropriate.

2. Reverse Takeover

On June 28, 2013 (the “Closing Date”), the Company, its wholly-owned subsidiary 1894632 Ontario Inc. (“Subco”) and TSI entered into a share exchange agreement (the “Exchange Agreement”) with certain of the shareholders of TSI (the “Selling Shareholders”) pursuant to which the Company acquired 39,015,439 common shares, or approximately 78% of the issued and outstanding shares, of TSI in exchange for the issuance of 39,015,439 preferred shares of Subco to the Selling Shareholders on a one-for-one basis. Each one preferred share of Subco is exchangeable into one share of the Company’s common stock at the option of the holder subject to the following restrictions:

● The Selling Shareholders required the written consent of Subco to exchange, sell or otherwise dispose of, directly or indirectly, any of their preferred shares of Subco until the six month anniversary of the Closing Date;

● Within 30 days of that time, and provided TSI generated at least $1,000,000 in gross revenue during the preceding six month period, Subco permitted the Selling Shareholders to require Subco to redeem an aggregate of 1% of its then-outstanding preferred shares on a pro-rata basis; and

● Within 30 days of each six month anniversary of the Closing Date until June 30, 2015, on which date all restrictions on the preferred shares automatically expired unless extended by the Selling Shareholders, Subco granted the holders of its preferred shares a permission identical to the one above.

Upon the closing of the Exchange Agreement, the sole officer and director of TSI became the sole officer and a director of the Company and the Company adopted the business plan of TSI.

F-6

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

2. Reverse Takeover (cont’d)

As a result of the share exchange, the Selling Shareholders controlled approximately 87% of the issued and outstanding common shares of the Company on a fully-exchanged basis as of the Closing Date. The Exchange Agreement represented a reverse takeover and was therefore accounted for under the acquisition method with TSI as the accounting acquirer and continuing entity for accounting and financial reporting purposes and the Company as the legal parent being the acquiree. There was no active market to reliably determine fair value of the consideration other than the value of the identifiable assets acquired. Therefore, the purchase price allocation of the acquisition was based on the fair value of the net liabilities acquired which was charged to additional paid-in-capital.

The fair values of assets acquired and liabilities assumed were as follows:

Cash	$	1,774
Subscriptions receivable		10
Accounts payable and accrued liabilities		(32,488	)
Loan payable to TSI		(25,454	)
Net liabilities acquired	$	(56,158	)

On February 17, 2015, the Company, Subco, TSI and the Selling Shareholders entered into an amendment to the Exchange Agreement in order to correct certain administrative errors in the Exchange Agreement and provide for the post-closing execution of the Exchange Agreement by those shareholders of TSI who were not original signatories thereto. In addition, the Selling Shareholders approved certain changes to the rights, privileges, restrictions and conditions attached to the preferred shares of Subco by consent in writing. This included extending the automatic expiration date in respect of the preferred shares of Subco from June 30, 2015 to June 30, 2017. On February 22, 2017, this automatic expiration date was further extended to December 31, 2018.

3. Asset Acquisition and License Agreement

On June 13, 2016 (the “Second Closing Date”), the Company, Notox and the shareholders of Notox (the “Notox Shareholders”) entered into a share exchange agreement (the “Share Exchange Agreement”) pursuant to which the Company acquired 100% of the issued and outstanding common stock of Notox from the Notox Shareholders in exchange for the issuance of 50,000,000 shares of the Company’s common stock.

On the Second Closing Date, Notox and Zoran Holding Corporation (“ZHC”), a private Ontario corporation, entered into an assignment agreement (the “Assignment Agreement”) pursuant to which ZHC irrevocably assigned 100% of its right, title and interest in and to the License Agreement, as amended, to Notox. Also on the Second Closing Date, the sole officer and director of Notox and ZHC became a director and officer of the Company.

On November 23, 2016, the Company, Notox and the Notox Shareholders entered into an amendment to the Share Exchange Agreement in order to clarify certain sections in the Share Exchange Agreement, to provide for an assignment fee and to describe how the Company will use the proceeds of any equity financing completed after the Second Closing Date. In consideration for inducing ZHC to enter into the Assignment Agreement, the Company will pay an aggregate of US$1,000,000 to ZKC in the form of a one-time assignment fee. See Note 14.

F-7

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED) 

3. Asset Acquisition and License Agreement (cont’d)

On December 1, 2012, ZHC and the Clinic entered into the License Agreement whereby the Clinic granted ZHC an exclusive worldwide license and a non-exclusive worldwide license in the field of aesthetics and pain to make, use, offer to sell, sell and import certain products throughout the term of the License Agreement. The term continues until the expiration of the last to expire of the certain patents. The License Agreement was amended on July 30, 2013 and July 1, 2016. Pursuant to the License Agreement, as amended, Notox is the licensee under the License Agreement and is solely responsible for making all regulatory filings and securing regulatory approval for the products covered by the License Agreement. The Clinic will receive a royalty based on the sale of certain products, a milestone payment within 30 days following the first commercial sale of such products and a percentage of any sublicensing revenues. Royalties and other payments are payable quarterly. Notox is required to achieve two commercial milestones: regulatory filings submitted to regulatory authorities by November 30, 2019 and first commercial sale within nine months following regulatory approval. Failure to achieve these milestones, without satisfactory justification, constitutes a material breach of the License Agreement giving the Clinic the right, but not the obligation, to convert the License Agreement to a non-exclusive license or terminate the License Agreement. The Clinic has the right to verify Notox’s compliance with the License Agreement.

Within 30 days following Notox’s receipt of the first regulatory approval, Notox is required to reimburse the Clinic for current patenting costs. All patenting costs, patent office fees and outside patent counsel costs will, at the Clinic’s option, either be paid directly by Notox or by the Clinic with the Clinic invoicing Notox, provided that Notox has no obligation to pay or reimburse the Clinic until after first regulatory approval has been obtained. Upon termination or expiration of the License Agreement, all accrued and unreimbursed patenting costs become immediately due and payable to the Clinic. As of February 28, 2018, all accrued and unreimbursed patenting costs totalled US$165,861 ($212,451) (August 31, 2017 - US$157,758 ($197,765)).

As a result of the share exchange and on the Second Closing Date, the Notox Shareholders controlled approximately 89% of the issued and outstanding common stock of the Company (52.5% on a fully-exchanged basis) and Notox became a wholly-owned subsidiary of the Company. Notox did not meet the definition (inputs, processes and outputs criteria) of a business. The Share Exchange Agreement represented an asset acquisition and was therefore accounted for under the asset acquisition method.

Acquired intangible assets are recognized and initially measured based on their fair value plus transaction costs incurred as part of the acquisition. There was no active market to reliably determine the fair value of the License Agreement acquired. Therefore the fair value of the License Agreement was based on the par value of the common stock exchanged by the Company.

The fair value and gross carrying value of the License Agreement is as follows:

License Agreement	$	133,212
Cash		131
Accrued liabilities		(5,423	)
Capital stock exchanged (50,000,000 shares at US$0.002 per share)	$	127,920

Fair value of License Agreement	$	133,212
Acquisition costs		19,519
Assignment fee (US$1,000,000)		1,347,000
Gross carrying value of License Agreement	$	1,499,731

See Note 10.

F-8

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

4. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the financial statements of the Company, TSI, Notox, Subco and 1894631 Ontario Inc., the Company’s subsidiaries. All significant inter-company balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to equipment, fair values of intangible assets, useful lives of intangible assets and the likelihood of realization of its deferred tax assets. The Company bases its estimates on assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Concentration of Risk

The financial instrument which potentially subjects the Company to a concentration of credit risk is cash. The Company places its cash in an account with a high credit quality financial institution.

Significant Accounting Policies

The accompanying consolidated financial statements reflect the application of certain significant accounting policies. There have been no material changes to the Company’s significant accounting policies that are disclosed in the consolidated financial statements and notes thereto during the period ended February 28, 2018.

Inventory

Inventory is stated at the lower of cost, computed using the first-in, first-out method, or market. If the cost of inventory exceeds its market value, a provision is made currently for the difference between the cost and market value. The Company’s inventory consists of finished goods, components and supplies.

Equipment, Net

Equipment is stated at cost, net of accumulated depreciation. Equipment is depreciated over the estimated useful life of the asset. Mould equipment is depreciated at 20% on a declining-balance basis. The website was depreciated on a straight-line basis over five years. One-half of these rates are used in the year of acquisition. Replacements and major improvements are capitalized, while maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost of assets disposed of and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to operations.

F-9

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

4. Summary of Significant Accounting Policies (cont’d)

Intangible Assets

Patents

The US Patent is recorded at the value attributed to the shares issued by TSI in connection with its acquisition less accumulated amortization and impairment writedowns. The US Patent was issued on September 29, 2009 and is effective until September 29, 2026. The Australian, Canadian and Chinese Patents are recorded at the application costs incurred less accumulated amortization and impairment writedowns. The Australian Patent was issued on October 16, 2014 and is effective until April 5, 2027. The Canadian Patent was issued on June 21, 2016 and is effective until April 5, 2027. The Chinese Patent was issued on December 28, 2016 and is effective until February 1, 2033. Upon expiration, the patents can be extended subject to certain changes required to secure the extension. Although the effects of obsolescence, demand, competition and other economic factors (such as stability of the industry, technological advances and legislative action that results in an uncertain or changing regulatory environment) can have an adverse effect on the industry and the Company’s product, management is not currently aware of any known adverse factors that will affect the Company in the future.

Costs incurred for patents which are in the process of being completed will be amortized over the life of the patent when the patent is issued.

The Company does not believe that there are any limits to how long its Home Mist Tanning units can sell in the market place. While it expects to be able to secure extensions for its patents prior to expiry, this cannot be predicted with certainty at this time. Accordingly, management has determined that the best estimates of useful lives of the US, Australian, Canadian and Chinese Patents are 17, 13, 11 and 16 years, respectively. At this time, the Company does not believe that the patents will have a residual value at the end of their useful lives.

License Agreement

The License Agreement is recorded at estimated fair value plus acquisition costs less accumulated amortization. The term of the License Agreement continues until the expiration of the last to expire of the Licensed Patents (as defined in the License Agreement). All costs related to the development of the licensed technology are expensed as incurred.

The technology licensed by Notox is a platform that provides the Company access to four large market segments or verticals (derma, pain, body and headache) that include the fields of aesthetics, drug-free pain management, body contouring and perspiration control. Based on management’s experience, it takes approximately two years to fully develop each vertical, with each vertical being developed in sequence. Accordingly, management’s best estimate of the amortization period for the License Agreement is eight years.

Amortization and Impairment

Definite-lived intangible assets are required to be amortized using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or utilized. At this time, management is not able to determine with any amount of certainty the number of Home Mist Tanning units that will be sold over the useful lives of the patents. Accordingly, the patents were being amortized on a straight-line basis over the period of their useful lives. The License Agreement is being amortized over eight years based on management’s best estimate of the time required to develop the four verticals as explained above.

F-10

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED) 

4. Summary of Significant Accounting Policies (cont’d)

Intangible assets subject to amortization are required to be reviewed for impairment. An impairment loss must be recognized if the intangible asset’s carrying amount is not recoverable and the carrying amount exceeds fair value. The Company applies the following three-step process to identify, recognize and measure impairment of intangible assets:

● Consider whether indicators of impairment are present indicating that the intangible assets’ carrying amount might not be recoverable;

● If indicators are present, perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the intangible assets to their carrying amounts; and

● If the undiscounted cash flows used in the recoverability test are less than the intangible assets’ carrying amount, determine the intangible assets’ fair value and recognize an impairment loss if the carrying amount exceeds fair value.

Because of the unique nature of a patent and a license agreement, income-producing definite-lived intangible assets, the calculation of cash flows can be very difficult to estimate. In this case, the estimated cash flows reflect the direct revenue expected to be generated by the patents and the License Agreement as well as an allocation of expenses.

Leases

The Company currently rents premises pursuant to an operating lease.

Impairment of Long-Lived Assets

Long-lived assets, including equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be evaluated. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by it. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds its fair value.

Stock Purchase Warrants

When the Company undertakes a private placement, it may issue units comprised of common stock of the Company and warrants to acquire common stock of the Company. Warrants with a strike price denominated in the Company’s functional currency (the Canadian dollar) are considered to be indexed to the Company’s stock and are classified as equity. Warrants with a strike price denominated in a currency other than the Company’s functional currency are considered not to be indexed to the Company’s stock and are classified as a liability. Warrants classified as equity are initially measured at fair value. Subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity. Warrants classified as a liability are initially measured at fair value with changes in fair value recorded in profit or loss in each reporting period.

Sales

The Company has Home Mist Tanning units and related supplies available for sale, primarily online via its website. The Company recognizes revenue when the units and supplies have been shipped to the customer, the amount to be paid by the customer is fixed or determinable and collectability is reasonably assured. Revenue is recorded net of applicable sales taxes.

F-11

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED) 

4. Summary of Significant Accounting Policies (cont’d)

Warranty

The Company is committed to supplying products of superior quality and design. Because of this commitment, it provides a limited one year warranty effective from the date of purchase. The Company warranties its Home Mist Tanning units to be free of defects. If a unit stops operating due to defects in materials or workmanship, the Company either repairs or replaces it for free.

Production Costs

Production costs consist of patent and license agreement amortization, production consulting fees, equipment depreciation, design and production costs and materials and supplies.

Advertising Costs

The Company charges all advertising and marketing costs to expense in the period incurred.

Income Taxes

Deferred income tax is accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income and expense items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax bases of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. At this time, the Company is not able to project future taxable income over the periods in which the deferred tax assets are deductible and, accordingly, management is not able to determine if it is more likely than not that the Company will realize the benefits of these deductible differences.

Derivative Financial Instruments

The Company does not have any derivative financial assets or liabilities.

Fair Value of Financial Instruments

Carrying values of cash, accounts payable and accrued liabilities, advances from related parties/shareholders, license assignment fee payable and stock subscribed approximate fair value because of the short-term nature of these items. Amounts receivable consists primarily of Harmonized Sales Tax (“HST”) receivable from the Government of Canada. HST is not a financial instrument.

Foreign Currency

The functional currency of the Company and its subsidiaries is the Canadian dollar. The accompanying consolidated financial statements are presented in Canadian dollars.

F-12

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED) 

4. Summary of Significant Accounting Policies (cont’d)

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in the loss in the period in which they arise.

5. Loss Per Share

The following table sets forth the computation of loss per share:

	For the Six Months Ended February 28,
	2018			2017
Net loss per share:
Net loss	$	(363,349	)	$	(517,167	)
Weighted-average shares outstanding:
Common stock		57,532,843			56,892,843
Number of shares used in per share computations		57,507,318			56,632,031
Loss per share	$	(0.01	)	$	(0.01	)

6. 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. There is a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3 – Unobservable inputs that are supported by little or no market activity, which require management judgment or estimation.

The Company measures its financial instruments at fair value.

The carrying value of cash deposits is a reasonable estimate of its fair value due to the short maturity of the financial instrument.

The Company’s stock purchase warrants are measured at fair value on a recurring basis.

7. Design and Production – NRFTS

On February 20, 2017, the Company entered into the Notox Radio Frequency Treatment System (“NRFTS”) Proposal (the “Proposal”) with RBC Medical Innovations (“RBC”) to develop technology licensed by Notox. The NRFTS is comprised of two distinct components – the disposable probe and the radio frequency generator (“RFG”) console. Pursuant to the Proposal, RBC will execute design and production of the NRFTS and is responsible for overall program management, system integration and development and manufacturing transfer of the RFG console. The project is to be completed in three

F-13

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

7. Design and Production – NRFTS (cont’d)

stages on a fixed-fee basis at an estimated cost of US$1,748,000. The NRFTS planning stage proposes three milestones payments – project stage initiation (US$55,600), completion of product requirements and documentation (US$55,600) and all stage deliverables and completion (US$55,800). During the year ended August 31, 2017, the Company paid the US$55,600 ($73,453) project stage initiation milestone payment and as at February 28, 2018, an accrual for US$55,600 ($71,657) (August 31, 2017 - US$55,600 ($69,700)) has been made for the second milestone payment.

8. Equipment, Net

Equipment, at cost, consisted of:

	February 28, 2018			August 31, 2017
Mould equipment	$	155,300		$	155,300
Website		28,875			28,875
Equipment at cost		184,175			184,175
Accumulated depreciation		(153,398	)		(149,978	)
Equipment, net	$	30,777		$	34,197

Depreciation was $3,420 and $4,275 for the six month periods ended February 28, 2018 and 2017, respectively.

9. Patents, Net

The following tables provide information regarding the patents:

	February 28, 2018
	Gross carrying amount		Accumulated amortization		Writedowns		Net carrying amount
United States Patent	$	6,342,279	$	2,984,602	$	3,357,676	$	1
Australian Patent		4,976		1,145		3,830		1
Canadian Patent		17,406		2,024		15,381		1
Chinese Patent		5,806		1,330		4,475		1
Patents abandoned		6,793		—		6,793		—
	$	6,377,260	$	2,989,101	$	3,388,155	$	4

	August 31, 2017
	Gross carrying amount		Accumulated amortization		Writedowns		Net carrying amount
United States Patent	$	6,342,279	$	2,984,602	$	3,357,676	$	1
Australian Patent		4,976		1,145		3,830		1
Canadian Patent		17,406		2,024		15,381		1
Chinese Patent		5,806		1,330		4,475		1
Patents abandoned		6,793		—		6,793		—
	$	6,377,260	$	2,989,101	$	3,388,155	$	4

Also see Note 1.

F-14

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

9. Patents, Net (cont’d)

During the year ended August 31, 2017, management identified the following indicators of impairment indicating that the patents’ carrying amounts might not be recoverable:

● The inability to raise sufficient equity financing to implement its strategic plan; and

● Operating and cash flow losses since the Company completed the development of the US, Australian, Canadian and Chinese patents.

Management’s intention is to license commercial tanning units for use in stores and spas in the United States, to sell personal tanning units internationally and to supply the spray tan solution for those units. Given that management is in the process of changing its focus in respect of the marketing and sale of the tanning units and associated products, it is not in a position to be able to estimate the future cash flows attributable to the patents with any degree of certainty. Accordingly, the patents were written down to a nominal amount of $4 at August 31, 2017.

In connection with the writedown of the patents, the fact that there have been minimal sales to date and no comparable products on the market to use as a point of reference, management is not able to determine whether inventory is stated at the lower of cost or market. Accordingly, inventory was written down to a nominal amount of $1 at August 31, 2017.

10. License Agreement, Net

	February 28, 2018
	Gross carrying amount		Accumulated amortization		Net carrying amount
License Agreement	$	1,499,731	$	281,199	$	1,218,532

	August 31, 2017
	Gross carrying amount		Accumulated amortization		Net carrying amount
License Agreement	$	1,499,731	$	187,466	$	1,312,265

As of February 28, 2018, amortization expense on the License Agreement for the next seven years was expected to be as follows:

	Amount
Year ending:
2018	$	93,733
2019		187,466
2020		187,466
2021		187,466
2022		187,466
Thereafter		374,935
Total	$	1,218,532

During the period ended February 28, 2018, management identified the following indicators of impairment indicating that the License Agreement’s carrying amount might not be recoverable:

● The inability to raise sufficient equity financing to implement its strategic plan; and

● Operating and cash flow losses since inception.

F-15

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

10. License Agreement, Net (cont’d)

The Company has previously performed a recoverability test by preparing a five-year proforma projection of the undiscounted future cash flows attributable to the License Agreement. The undiscounted cash flows exceed the carrying value of the License Agreement as at February 28, 2018.

Also see Note 3.

11. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of:

	February 28, 2018		August 31,  2017
Trade payables	$	1,159,873	$	929,855
Vendor accruals		162,148		145,746
Accounts payable and accrued liabilities	$	1,322,021	$	1,075,601

12. Related Party Transactions

The following amounts were payable to the Company’s related parties:

● At February 28, 2018, the Company owed $232,000 in advances payable to the President of the Company (2017 - $232,000) and $232,000 at August 31, 2017 (2016 - $257,500). These advances are unsecured and bear interest at 3% per annum. Of this amount, $219,500 is due on demand and $12,500 has no repayment terms. Accrued interest payable to the President totaled $29,030 at February 28, 2018 (2017 - $22,069) and $25,578 at August 31, 2017 (2016 - $18,578).

● At February 28, 2018, the Company owed $46,000 for an advance payable to the CEO of the Company (2017 - $nil) and $nil at August 31, 2017 (2016 - $nil). This advance is unsecured, bears interest of 2% per month and is due on demand. Accrued interest payable to the CEO totaled $2,480 at February 28, 2018 (2017 - $nil) and $nil at August 31, 2017 (2016 - $nil).

● At February 28, 2018, the Company owed $1,134 (2017 - $3,984) to the President for reimbursable expenses incurred on the Company’s behalf. At August 31, 2017, the Company owed $5,329 (2016 - $10,477).

● At February 28, 2018, the Company owed $354,020 ($181,070 and US$135,022) (2017 - $238,307 ($181,070 and US$43,097)) in consulting fees to a company controlled by the President of the Company. At August 31, 2017, the Company owed $271,984 ($181,070 and US$72,522) (2016 - $215,224 ($181,070 and US$26,040)).

● At February 28, 2018, the Company owed $160,881 (US$125,600) (2017 - $95,115 (US$71,618)) in consulting fees to a company controlled by the CEO of the Company. At August 31, 2017, the Company owed $79,102 (US$63,100) (2016 - $34,154 (US$26,040)).

● At February 28, 2018, the Company owed $341,211  ($181,070 and US$125,022) (2017 - $237,540 ($181,070 and US$42,519)) in consulting fees and $276 in reimbursable expenses (2017 - $nil) to a company controlled by a major shareholder of the Company. At August 31,

F-16

12. Related Party Transactions (cont’d)

2017, the Company owed $259,448 ($181,070 and US$62,522) (2016 - $215,224 ($181,070 and US$26,040)) in consulting fees.

● At February 28, 2018, the Company owed $nil (2017 - $nil) in shareholder advances and $761 (2017 - $761) in accrued interest on these advances to the same major shareholder. At August 31, 2017, the Company owed $nil (2016 - $12,500) in shareholder advances and $761 (2016 - $761) in accrued interest on these advances.

● At February 28, 2018, the Company owed $75,000 (2017 - $75,000) to a company controlled by the Company’s former CFO. At August 31, 2017, the Company owed $75,000 (2016 - $75,000).

During the six months ended February 28, 2018, the Company had the following transactions with related parties:

● The President of the Company advanced $nil during the six months ended February 28, 2018 (2017 - $nil), and $nil to the Company during the year ended August 31, 2017 (2016 - $5,000). Interest expense of $3,451 was accrued on advances payable to the President of the Company during the six months ended February 28, 2018 (2017 - $3,491) and $7,000 during the year ended August 31, 2017 (2016 - $7,696).

● The CEO of the Company advanced $46,000 during the six months ended February 28, 2018 (2017 - $nil), and $nil to the Company during the year ended August 31, 2017 (2016 - $nil). Interests expense of $2,480 was accrued on this advance payable to the CEO of the Company during the six months ended February 28, 2018 (2017 - $nil) and $nil during the year ended August 31, 2017 (2016 - $nil).

● Consulting fees paid or accrued as payable to a company controlled by the President of the Company were $78,589 (US$62,500) and $82,906 (US$62,500) for the six months ended February 28, 2018 and 2017, respectively.

● Consulting fees paid or accrued as payable to a company controlled by the CEO of the Company were $78,589 (US$62,500) and $82,906 (US$62,500) for the six months ended February 28, 2018 and 2017, respectively.

● Consulting fees accrued as payable to a company controlled by a major shareholder of the Company were $78,589 (US$62,500) and $82,906 (US$62,500) for the six months ended February 28, 2018 and 2017, respectively.

All transactions with related parties occurred in the normal course of business and were measured at the exchange amount, which was the amount of consideration agreed upon between management and the related parties.

Also see Notes 3, 13, 14 and 15.

13. Advances from Shareholders

Advances payable to shareholders totaled $145,000 at February 28, 2018 (2017 - $145,000) and $145,000 at August 31, 2017 (2016 - $157,500). These advances are unsecured and bear interest at 3% per annum. There are no repayment terms. Interest expense of $2,157 was accrued on these advances during the six months ended February 28, 2018 (2017 - $2,158) and $4,351 during the year ended

F-17

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

13. Advances from Shareholders (cont’d)

August 31, 2017 (2016 - $4,738). Accrued interest payable to shareholders totaled $15,539 at February 28, 2018 (2017 - $11,189), and $13,382 at August 31, 2017 (2016 - $9,031).

14. License Assignment Fee Payable

Pursuant to the amendment to the Share Exchange Agreement, the Company will pay an aggregate of US$1,000,000 to ZKC in the form of a one-time assignment fee. The assignment fee payable is repayable in monthly instalments of US$50,000 beginning on October 1, 2016. Upon completion of any equity financing pursuant to which the Company raises gross proceeds of at least US$1,000,000, the outstanding balance is to be repaid in full. At February 28, 2018, the balance of the license assignment fee payable to ZKC was US$545,000 ($698,091) (August 31, 2017 - US$545,000 ($683,212)). See Note 3.

15. Commitments

On November 16, 2015, the Company entered into a consulting agreement (the “ECC Agreement”) with Edgewater Consulting Corp., a private Ontario corporation (“ECC”). Pursuant to the ECC Agreement, ECC, through its principal, acted in the capacity of CFO of the Company. The ECC Agreement was terminated effective November 10, 2016. A signing bonus of 750,000 exchangeable preferred shares of Subco was issued on August 24, 2016. As at February 28, 2018, ECC is entitled to $75,000 (August 31, 2017 - $75,000) in accrued remuneration.

On December 1, 2015, the Company entered into consulting agreements with 1040614 Ontario Ltd., a private Ontario corporation (the “Old 1040614 Agreement”), and MCM Consulting, an Ontario sole proprietorship (the “Old MCM Agreement”, and together with the Old 1040614 Agreement, the “Old Agreements”). Pursuant to the Old 1040614 Agreement, the company, through its principal, performed various services related to business development, strategic planning and capital-raising for the Company. Pursuant to the Old MCM Agreement, the sole proprietor acted in the capacity of CEO of the Company. On June 13, 2016, the Old 1040614 and MCM Agreements were terminated and replaced by the 1040614 and MCM Agreements (see below). As at February 28, 2018, 1040614 and MCM are each entitled to $80,770 (August 31, 2017 - $80,770) in accrued remuneration in respect of the Old Agreements.

On February 4, 2016, the Company entered into a consulting agreement (the “Old ZKC Agreement”) with Zoran K Corporation, a private Ontario corporation (“ZKC”). Pursuant to the Old ZKC Agreement, ZKC, through its principal, acted in the capacity of the Company’s exclusive sales, marketing and product development agent. On June 13, 2016, the Old ZKC Agreement was terminated and replaced by the ZKC Agreement (see below). As at February 28, 2018, there is no remuneration payable (August 31, 2017 - $nil) by the Company under the Old ZKC Agreement.

On June 13, 2016, the Company entered into consulting agreements with 1040614 Ontario Ltd. (the “1040614 Agreement”), MCM Consulting (the “MCM Agreement”) and ZKC (the “ZKC Agreement”).

Pursuant to the 1040614 Agreement, the company, through its principal, performs general consulting services on behalf of the Company. Pursuant to the MCM Agreement, the sole proprietor acts in the capacity of President of the Company. Pursuant to the ZKC Agreement, ZKC, through its principal, acts in the capacity of CEO of the Company. Each consulting agreement is for a period of 10 years, with successive automatic renewal periods of two years until terminated. Pursuant to these consulting agreements, each consultant is entitled to receive the following compensation:

● Remuneration – an aggregate of US$125,000 per annum plus HST on a bi-monthly basis;

F-18

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

15. Commitments (cont’d)

● EPS Bonus – when the Company generates earnings per share of $0.05, plus any multiple thereof, the Company shall issue the consultant 1,000,000 shares of the Company’s common stock and pay the consultant US$250,000 plus HST;

● Change of Control Bonus – immediately prior to the completion of a change of control (as defined in these consulting agreements) the Company shall issue the consultant an aggregate of 20,000,000 shares of the Company’s common stock; and

● Additional Bonus – the company may from time to time pay the consultant one or more bonuses as determined by the Board of Directors at its sole discretion.

Effective February 3, 2018, the Company terminated the 1040614 Agreement.

On August 31, 2017, the Company entered into a premises lease for a year beginning on September 1, 2017 for a rental of $21,000 for the year plus HST.

16. Stockholders’ Deficiency

The Company is authorized to issue 500,000,000 (August 31, 2017 - 500,000,000) shares of common stock at a par value of $US0.001.

On August 25, 2016, the Company completed a reverse split of the Company’s common stock at the ratio of one new share for every two existing shares. All share and per share amounts have been adjusted to reflect this reverse split.

At February 28, 2018, the Company had 57,532,843 shares of common stock legally issued and outstanding (2016 - 56,892,843 shares). At August 31, 2017, the Company had 56,892,843 shares of common stock legally issued and outstanding (2016 - 56,132,073 shares).

On June 28, 2013, pursuant to the Exchange Agreement, the Company acquired 39,015,439 common shares of TSI in exchange for the issuance of 39,015,439 preferred shares of Subco to the Selling Shareholders on a one-for-one basis. As a result of the Exchange Agreement, TSI became the Company’s majority-owned subsidiary. Each preferred share of Subco is exchangeable into one share of the Company’s common stock at the option of the holder subject to certain restrictions. As at February 28, 2018 and August 31, 2017, none of the preferred shares had been exchanged.

As a condition of the closing of the Exchange Agreement, the Company also entered into a Support Agreement and a Voting and Exchange Trust Agreement on the closing date. The Support Agreement ensures that the obligations of Subco remain effective until all of the preferred shares have been exchanged. The Voting and Exchange Trust Agreement provides and establishes a procedure whereby the voting rights attached to shares of the Company’s common stock are exercisable by the registered holders (the Selling Shareholders) of the preferred shares. The Trustee holds legal title to a Special Voting Share to which voting rights are attached for the benefit of the Selling Shareholders. The Trustee holds the Special Voting Share solely for the use and benefit of the Selling Shareholders.

Common Stock Issuances

During the six months ended February 28, 2018, the Company completed the following common stock transactions:

● On September 7, 2017, the Company closed a US dollar financing pursuant to which the Company issued 630,000 units at US$1.00 per unit for gross proceeds of $830,674 (US$630,000), with each unit consisting of one share of the Company’s common stock and one

F-19

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

16. Stockholders’ Deficiency (cont’d)

warrant to purchase one share of common stock exercisable at a price of US$1.40 per share until September 7, 2019. $491,041 was allocated to common stock and $339,633 was allocated to stock purchase warrants. The Company paid cash finder’s fees of  $6,435 (US$5,000) and issued 5,000 finder’s stock purchase warrants exercisable at US$1.40 per warrant share until July 17, 2019, valued at  $2,581 and credited to stock purchase warrants.

● On September 21, 2017, the Company issued 10,000 shares of common stock at $0.80 per share for gross proceeds of $8,000 pursuant to the exercise of warrants during the year ended August 31, 2017. $2,049 of the gross proceeds received that was allocated to these warrants has been deducted from additional paid-in capital.

At August 31, 2017, the gross proceeds received of $838,674 were reported as stock subscribed.

During the year ended August 31, 2017, the Company completed the following common stock transactions:

● On October 31, 2016, the Company closed a concurrent Canadian and US dollar financing as follows:

○	Canadian financing – the Company issued 140,000 units at $0.50 per unit for gross proceeds of $70,000, with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of $0.80 per share until October 31, 2018. $41,314 was allocated to common stock and $28,686 was allocated to additional paid-in capital.
○	US financing – the Company issued 220,770 units at US$0.50 per unit for gross proceeds of $146,716 (US$110,385), with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$0.80 per share until October 31, 2018. $86,027 was allocated to common stock and $60,689 was allocated to stock purchase warrants.

● On November 2, 2016, the Company closed a US dollar financing pursuant to which the Company issued 400,000 units at US$1.00 per unit for gross proceeds of $524,230 (US$400,000), with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$1.40 per share until November 2, 2018. $286,950 was allocated to common stock and $237,280 was allocated to stock purchase warrants. The Company paid cash finder’s fees of $19,899 and issued 15,000 finder’s stock purchase warrants exercisable at US$1.40 per warrant share until September 28, 2018, valued at $8,742 and credited to stock purchase warrants.

Stock Subscribed

During the six months ended February 28, 2018, $10,000 in stock subscriptions was received pursuant to a private placement.

During the year ended August 31, 2017, $838,674 ($8,000 and US$630,000) in stock subscriptions was received pursuant to individual private placements. These subscriptions were for a total of:

● 10,000 shares of common stock of the Company at a price of $0.80 per share pursuant to the exercise of stock purchase warrants. These shares were issued on September 21, 2017.

F-20

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

16. Stockholders’ Deficiency (cont’d)

● 630,000 units of the Company at a price of US$1.00 per unit. Each unit consists of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$1.40 per share for a period of 24 months from the closing date of the financing. These units were issued on September 7, 2017.

Stock Purchase Warrants

The continuity of Canadian dollar denominated stock purchase warrants for the three months ended February 28, 2018 is as follows:

Expiry Date	Price		August 31, 2017		Issued		Exercised		February 28, 2018
October 31, 2018	$	0.80		130,000		—		—		130,000

At February 28, 2018, the weighted-average remaining contractual life of Canadian dollar warrants outstanding was 0.67 years (August 31, 2017 - 1.17).

The continuity of US dollar denominated stock purchase warrants for the three months ended February 28, 2018 is as follows:

Expiry Date	Price		August 31, 2017		Issued		Exercised		February 28, 2018
September 30, 2018 – Finder		US$1.40		15,000		—		—		15,000
October 31, 2018		US$0.80		220,770		—		—		220,770
November 2, 2018		US$1.40		400,000		—		—		400,000
July 17,2019 – Finder		US$1.40		—		5,000		—		5,000
September 7, 2019		US$1.40		—		630,000		—		630,000
				635,770		635,000		—		1,270,770

At February 28, 2018, the weighted-average remaining contractual life of US dollar warrants outstanding was 1.10 years (August 31, 2017 - 1.17 years).

The Company used the Black-Scholes Option Pricing Model to determine the fair values of unit warrants and finder’s warrants issued pursuant to private placements during the six months ended February 28, 2018 and the year ended August 31, 2017 with the following assumptions:

	February 28, 2018			August 31, 2017
Expected dividend yield		0.00	%		0.00	%
Risk-free interest rate		1.74	%		0.54% - 0.55%
Expected stock price volatility		100.00	%		100.00	%
Expected life of warrants		0.58 – 1.52 years			2 years

See Note 4.

17. Risks and Uncertainties

The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect its future operating results and cause actual results to vary materially from expectations include, but are not limited to: current economic conditions; uncertainty in the potential markets for its Home Mist Tanning units; the design, production and marketing of NRFTS; increasing competition; and dependence on its existing management and key personnel.

F-21

TROPIC INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

18. Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) issued the following Accounting Standard Updates (“ASUs”) that may be of relevance to the Company. The Company is currently assessing the impact that the adoption of these ASUs will have on its financial statements and related disclosures.

● February 2017 – ASU No. 2017-05, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)” clarifies the scope of asset derecognition guidance and accounting for the partial sale of non-financial assets, as well as provides guidance for recognizing gains and losses from the transfer of non-financial assets in contracts with non-customers. The amendments in this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company expects the impact of adoption of this ASU to be minimal.

● September 2017 – ASU No. 2017-13, “Leases (Topic 842)” provides the requirements of financial accounting and reporting for lessees and lessors and establishes principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease under Accounting Standards Codification 842, Leases. The amendments in this ASU are effective for reporting periods beginning after December 15, 2019. The Company will be required to recognize a right-of-use asset and a lease liability for its office lease.

19. Contingent Liability

Pursuant to the Exchange Agreement, as amended, the Company may be required to acquire up to 296,500 common shares of TSI, being those TSI shares still outstanding, in exchange for 148,250 preferred shares of Subco on a one-for-two basis. Such preferred shares would then be exchangeable on the same basis as the approximately 50 million Subco preferred shares currently outstanding (see Notes 2 and 14). On August 24, 2016, 21,672,623 common shares of TSI were exchanged for 10,836,312 preferred shares of Subco.

F-22

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (this “Report”) contains forward-looking statements. The forward-looking statements are contained principally in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Report. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates”, “believes”, “seeks”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “potential”, “predicts”, “projects”, “should”, “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Such statements may include, but are not limited to, information related to: anticipated operating results; relationships with our customers; consumer demand; financial resources and condition; changes in revenues; changes in profitability; changes in accounting treatment; cost of sales; selling, general and administrative expenses; interest expense; the ability to produce the liquidity or enter into agreements to acquire the capital necessary to continue our operations and take advantage of opportunities; legal proceedings and claims.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this Report. You should read this Report and the documents that we reference and file or furnish as exhibits to this Report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

PRESENTATION OF INFORMATION

Except as otherwise indicated by the context, references in this Report to “we”, “us” and “our” are to the combined business of Tropic International Inc. and its consolidated subsidiaries.

This Report includes our interim unaudited consolidated financial statements as at and for the six months ended February 28, 2018. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”). All financial information in this Report is presented in Canadian dollars, unless otherwise indicated, and should be read in conjunction with our interim unaudited consolidated financial statements and the notes thereto included in this Report.

As disclosed in our current report on Form 8-K dated July 3, 2013, on June 28, 2013 we completed a share exchange with Tropic Spa Inc., an Ontario corporation (“Tropic Spa”), 1894632 Ontario Inc., an Ontario corporation (“Subco”), and certain of the shareholders of Tropic Spa (collectively, the “Tropic Spa Shareholders”), pursuant to which we acquired 78,030,877 common shares, or approximately 78% of the issued and outstanding shares, of Tropic Spa in exchange for the issuance of 78,030,877 preferred shares of Subco, our wholly owned subsidiary, to the Tropic Spa Shareholders on a one-for-one basis (the “Share Exchange”). Each preferred share of Subco is exchangeable into one share of our common stock at the option of the holder thereof, subject to certain restrictions. As a result of the Share Exchange, Tropic Spa became our majority-owned subsidiary and the former shareholders of Tropic Spa became holders of the preferred shares of Subco, a company that has only one issued and outstanding common share which is held by us. The transaction was accounted for as a reverse takeover/recapitalization effected by a share exchange, wherein Tropic Spa is considered the acquirer for accounting and financial reporting purposes. Our consolidated financial statements are therefore, in substance, those of Tropic Spa.

Also, as disclosed in our current report on Form 8-K dated July 14, 2016, on June 13, 2016 we completed a share exchange with Notox Bioscience Inc., a Nevada corporation (“Notox”), and all the shareholders of Notox (collectively, the “Notox Shareholders”) pursuant to which we acquired all the issued and outstanding shares of Notox from the Notox Shareholders in exchange for the issuance of 100,000,000 restricted shares of our common stock to the Notox Shareholders on a 1,000-for-one basis (the “Notox Share Exchange”). In connection with the Notox Share Exchange, Notox acquired 100% of the right, title and interest in and to an exclusive license agreement dated December 1, 2012, as amended on July 30, 2013 (together, the “License Agreement”) with the Cleveland Clinic Foundation (the “Clinic”) formerly held by Zoran Holding Corporation, a private Ontario corporation (“ZHC”), Notox became our wholly-owned subsidiary, and the Notox Shareholders acquired approximately 89% of our issued and outstanding common stock (52.5% on a fully-exchanged basis). The transaction represented an asset acquisition and was therefore accounted for under the asset acquisition method.

Finally, on August 25, 2016, we completed a reverse split of our issued and outstanding common stock at the ratio of one (1) new share for every two (2) existing shares and caused Subco to do the same. All share and per share amounts have been adjusted to reflect the reverse split except as otherwise indicated.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our results of operations and financial condition has been derived from and should be read in conjunction with our interim unaudited consolidated financial statements and the related notes thereto that appear elsewhere in this Report, as well as the “Presentation of Information” section that appears at the beginning of this Report.

Overview

We are a company in the business of developing and commercializing innovative technologies. Through Notox, we own 100% of the right, title and interest in and to the License Agreement with the Clinic formerly held by ZHC. The License Agreement grants us the exclusive license to certain patented intellectual property of the Clinic relating to the treatment of a neuromuscular defect developed by Dr. Frank Papay, MD, FACS Chairman Dermatology and Plastic Surgery Institute, Cleveland Clinic, and in particular, the ability to produce sell, improve and modernize products that incorporate such intellectual property in the fields of aesthetics, drug free pain management, body contouring and perspiration control. We plan to develop this intellectual property into the world’s first credible and healthier non-toxic alternative to Botox, which is a commercial form of the botulinum toxin protein used primarily for medical and cosmetic purposes.

On September 26, 2017, we entered into a second amendment to the License Agreement with Notox and the Clinic, effective July 1, 2016. The purpose of this amendment was to, among other things: (i) clarify certain vague terms of the License Agreement; (ii) include us as a party for the purpose of guaranteeing the due and prompt payment and performance of all covenants, agreements, obligations and liabilities of Notox; (iii) record the Clinic’s explicit consent to the assignment from ZHC to Notox; (iv) extend the deadline for achieving the first commercial milestone (the submission of regulatory filings to applicable authorities) from November 30, 2017 to November 30, 2019; and (v) establish a second commercial milestone (the completion of at least one commercial sale within nine months of receiving regulatory approval).

Through Tropic Spa, we have finalized the design of a personal tanning product and applied for and acquired patents for it in the United States (the “US Patent”), Canada, Australia and China. The product consists of a unique tanning system designed for spas, gyms, clinics and convenient home use that delivers a full-body application and eliminates the harmful health effects associated with traditional tanning beds, and in particular, exposure to ultraviolet (UV) radiation. We are currently seeking to establish licensing opportunities for Tropic Spa’s intellectual property, but have not entered into any formal arrangements as of the date of this Report.

Results of Operations

Revenue

We did not generate any revenue during either the six months ended February 28, 2018 or the same period in the prior year.

Production Costs

During the six months ended February 28, 2018, we incurred production costs of $108,483, which was equal to our gross loss for the period. During the same period in the prior year, we incurred production costs and a gross loss of $207,304. Our production costs for the six months ended February 28, 2018 included $93,733 in License Agreement amortization, $10,175 in patenting costs, $3,420 in depreciation and $1,155 in production-related consulting fees. During the six months ended February 28, 2017, our production costs consisted of $187,546 in patent amortization, $14,700 in production-related consulting fees, $4,275 in depreciation and $783 in materials and supplies.

5

Expenses

During the six months ended February 28, 2018, we incurred $338,736 in total general and administrative expenses, compared to $309,863 in such expenses during the same period in 2017.

Our expenses during the six months ended February 28, 2018 consisted of $235,766 in management-related consulting fees, $29,396 in professional fees, $13,139 in rent, $12,075 in trust and filing fees, $8,089 in interest on advances from related parties/shareholders, $5,094 in office and miscellaneous expenses, $2,426 in travel and entertainment expenses, $1,394 in patent maintenance fees, $247 in marketing expenses and $31,110 in foreign exchange loss.

During the same period in the prior year, our expenses included $248,517 in management-related consulting fees, $31,636 in professional fees, $6,625 in rent, $3,898 in trust and filing fees, $5,649 in interest on advances from shareholders $15,987 in office and miscellaneous expenses, $6,433 in travel and entertainment expenses, $4,694 in patent maintenance fees and $1,960 in marketing expenses, as offset by a $15,536 foreign exchange gain. Apart from the $46,646 foreign exchange difference between the two periods, our expenses were relatively consistent from period-to-period.

The significant management-related consulting fees we incurred over both periods were paid to our principal executive officers and directors and one consultant who provides management-related services to us and is also a major shareholder.

Other Items

During the year ended August 31, 2017, we incurred a patent writedown in the amount of $3,381,362 associated with the U.S., Australian, Canadian and Chinese patents, as well as a writedown of amounts receivable in the amount of $20,332. These were offset to some extent by a $9,333 gain associated with the revaluation of certain outstanding warrants to purchase shares of our common stock that are denominated in U.S. dollars.

During the six months ended February 28, 2018, we incurred a writedown of amounts receivable in the amount of $18,746 and a $102,616 gain associated with the revaluation of certain outstanding warrants to purchase shares of our common stock for the reason described above.

Net Loss

During the six months ended February 28, 2018, we incurred a net loss and comprehensive loss of $363,349 and a net loss per share of $0.01. During the same period in the prior year, we experienced a net loss and comprehensive loss of $517,167 and a net loss per share of $0.01.

Liquidity and Capital Resources

As of February 28, 2018, we had $40,249 in cash, $140,887 in current assets, $1,390,200 in total assets, $3,037,138 in current liabilities, $3,249,589 in total liabilities and a working capital deficiency of $2,896,251. As of that date, we also had an accumulated deficit of $11,336,010.

During the six months ended February 28, 2018, we spent $72,460 in net cash on operating activities, compared to $741,049 in net cash spending on operating activities during the same period in the prior year. The decrease of approximately 90% in our cash spending on operating activities between the two periods was primarily attributable to the decrease in our net loss as described above, as adjusted for certain changes in our assets and liabilities from period-to-period, and in particular an increase of $213,428 in our accounts payable and accrued liabilities and a license assignment fee payable decrease of $336,750.

6

We spent did not spend any cash on investing activities during the six months ended February 28, 2018, whereas we spent $2,089 in net cash on investing activities during the same period in the prior year. All of this spending was related to patent costs.

During the six months ended February 28, 2018, we received $49,565 in net cash from financing activities, compared to receiving $1,001,231 in net cash from financing activities during the same period in the prior year. Of the cash we received from financing activities during the current period, $46,000 was in the form of advances from related parties, whereas substantially all of the cash we received during the same period in the prior year was in the form of stock subscription received ($663,550) and proceeds from the issuance of our common stock ($395,580), less certain stock issuance costs ($19,899) and related party/shareholder advance repayments ($38,000).

During the six months ended February 28, 2018, our cash decreased by $22,895 due to a combination of our operating and financing activities.

Plan of Operations

Our plan of operations over the next 12 months is to continue the process initiated by ZHC to design, manufacture and commercialize the Notox system and its features. We expect to work closely with the Clinic in this regard, and anticipate that we will require at least US$4,675,000 to carry out our plan, as follows:

Description	Amount (US$)
Design, testing and prototyping the Notox unit (including $111,200 in milestone payments to RBC)		600,000
Design, testing and prototyping the Notox treatment probe		1,400,000
Acquisition costs payable to ZHC		450,000
Human trial expenses		950,000
FDA Section 510(k) notification costs and CE marking expenses		750,000
Marketing and inventory expenses		525,000
Total		4,675,000

In addition, over the next 12 months our plan of operations through Tropic Spa is to create licensing opportunities for Tropic Spa’s intellectual property, and in particular, its US, Canadian, Australian and Chinese patents. We plan to target existing and highly-recognized brands in the tanning industry, both locally and internationally, that may be drawn to Tropic Spa’s technology in order to better serve their existing customers and enhance their competitive advantage. We do not anticipate spending any specific amounts for this purpose, as the creation of such opportunities will be covered by our general and administrative expenses described below.

We expect to incur the following general and administrative expenses over the next 12 months. These expenses are reasonably consistent with those from prior periods, as adjusted to reflect the expected increase in our operations and the costs of maintaining our status as a public company.

7

Description	Amount ($)
Professional fees and filing fees		120,000
Management-related consulting fees		333,000
Rent (including utilities)		30,000
Travel and entertainment expenses		25,000
Office and miscellaneous expenses		25,000
Total		533,000

We do not currently have sufficient funds to carry out our entire plan of operations, so we intend to meet the balance of our cash requirements for the next 12 months through a combination of debt financing and equity financing through private placements. Currently we are active in contacting broker/dealers in Canada and elsewhere regarding possible financing arrangements; however, we do not currently have any agreements in place to complete any private placement financings and there is no assurance that we will be successful in completing any such financings. If we are unsuccessful in obtaining sufficient funds through our capital raising efforts, we may review other financing options, although we cannot provide any assurance that any such options will be available to us or on terms reasonably acceptable to us. Further, if we are unable to secure any additional financing then we plan to reduce the amount that we spend on our operations, including management-related consulting fees and other general and administrative expenses, so as not to exceed the capital resources available to us.

Critical Accounting Policies

Intangible Assets

Patents

The US Patent is recorded at the value attributed to the shares issued by TSI in connection with its acquisition less accumulated amortization and impairment writedowns. The US Patent was issued on September 29, 2009 and is effective until September 29, 2026. The Australian, Canadian and Chinese Patents are recorded at the application costs incurred less accumulated amortization and impairment writedowns. The Australian Patent was issued on October 16, 2014 and is effective until April 5, 2027. The Canadian Patent was issued on June 21, 2016 and is effective until April 5, 2027. The Chinese Patent was issued on December 28, 2016 and is effective until February 1, 2033. Upon expiration, the patents can be extended subject to certain changes required to secure the extension. Although the effects of obsolescence, demand, competition and other economic factors (such as stability of the industry, technological advances and legislative action that results in an uncertain or changing regulatory environment) can have an adverse effect on the industry and our product, management is not currently aware of any known adverse factors that will affect us in the future.

Costs incurred for patents which are in the process of being completed will be amortized over the life of the patent when the patent is issued.

We do not believe that there are any limits to how long our Home Mist Tanning units can sell in the market place. While we expect to be able to secure an extension to our patents prior to expiry, this cannot be predicted with certainty at this time. Accordingly, management has determined that the best estimate of the useful life of the US, Australian, Canadian and Chinese Patents are 17, 13, 11 and 16 years, respectively. At this time, we do not believe that the patents will have a residual value at the end of their useful lives.

8

License Agreement

The License Agreement is recorded at estimated fair value plus acquisition costs less accumulated amortization. The term of the License Agreement continues until the expiration of the last to expire of the Licensed Patents (as defined in the License Agreement). All costs related to the development of the licensed technology are expensed as incurred.

The technology licensed by Notox is a platform that provides us access to four large market segments or verticals (derma, pain, body and headache) that include the fields of aesthetics, drug-free pain management, body contouring and perspiration control. Based on management’s experience, it takes approximately two years to fully develop each vertical, with each vertical being developed in sequence. Accordingly, management’s best estimate of the amortization period for the License Agreement is eight years.

Amortization and Impairment

Definite-lived intangible assets are required to be amortized using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or utilized. At this time, management is not able to determine with any amount of certainty the number of Home Mist Tanning units that will be sold over the useful lives of the patents. Accordingly, the patents were being amortized on a straight-line basis over the period of their useful lives. The License Agreement is being amortized over eight years based on management’s best estimate of the time required to develop the four verticals as explained above.

Intangible assets subject to amortization are required to be reviewed for impairment. An impairment loss must be recognized if the intangible asset’s carrying amount is not recoverable and the carrying amount exceeds fair value. We apply the following three-step process to identify, recognize and measure impairment of intangible assets:

● Consider whether indicators of impairment are present indicating that the intangible assets’ carrying amount might not be recoverable;

● If indicators are present, perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the intangible assets to their carrying amounts; and

● If the undiscounted cash flows used in the recoverability test are less than the intangible assets’ carrying amount, determine the intangible assets’ fair value and recognize an impairment loss if the carrying amount exceeds fair value.

Because of the unique nature of a patent and a license agreement, income-producing definite-lived intangible assets, the calculation of cash flows can be very difficult to estimate. In this case, the estimated cash flows reflect the direct revenue expected to be generated by the patents and the License Agreement as well as an allocation of expenses.

Stock Purchase Warrants

When we undertake a private placement, we may issue units comprised of our common stock and warrants to acquire our common stock. Warrants with a strike price denominated in our functional currency (the Canadian dollar) are considered to be indexed to our stock and are classified as equity. Warrants with a strike price denominated in a currency other than our functional currency are considered not to be indexed to our stock and are classified as a liability. Warrants classified as equity are initially measured at fair value. Subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity. Warrants classified as a liability are initially measured at fair value with changes in fair value recorded in profit or loss in each reporting period.

9

Foreign Currency

Our functional currency and the functional currency of our subsidiaries is the Canadian dollar. Our consolidated financial statements are presented in Canadian dollars.

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in the loss in the period in which they arise.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Going Concern

Our financial statements have been prepared on a going concern basis, which implies we will continue to realize our assets and discharge our liabilities in the normal course of business. As at February 28, 2018, we had a working capital deficiency of $2,896,251 and an accumulated deficit of $11,336,010. Our continuation as a going concern is dependent upon the continued financial support from our stockholders, our ability to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding our ability to continue as a going concern. Our financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

As of the end of the period covered by this Report, management, with the participation of our Chief Executive and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, management concluded that our disclosure controls and procedures were not effective due to certain deficiencies in our internal control over financial reporting. These deficiencies include the fact that we have no audit committee, traditionally have had no independent directors, and do not have a system in place to review and monitor internal control over financial reporting.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that a reasonable possibility exists that a material misstatement of our financial statements will not be prevented or detected on a timely basis. The deficiencies described above constitute, both individually and in the aggregate, a material weakness given their potential impact on our financial reporting and internal control over financial reporting.

Management is currently evaluating remediation plans for the deficiencies and will implement changes as time and financial resources allow.

Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the period ended February 28, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our executive officers or any of our subsidiaries, threatened against or affecting us, our common stock, any of our subsidiaries or our officers or directors of those of our subsidiaries’ in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

The following documents are filed as a part of this Report:

Exhibit Number	Exhibit Description
3(i).1	Articles of Incorporation filed with the Nevada Secretary of State on October 29, 2007 (1)
3(i).2	Certificate of Amendment filed with the Nevada Secretary of State on August 24, 2010 (1)
3(i).3	Certificate of Amendment filed with the Nevada Secretary of State on April 17, 2013 (2)
3(i).4	Articles of Merger filed with the Nevada Secretary of State on December 6, 2013 (3)
3(ii).1	By-Laws (1)
10.1	Share Exchange Agreement dated June 28, 2013 with 1894632 Ontario Inc., Tropic Spa Inc. and the shareholders of Tropic Spa Inc. (4)
10.2	Amendment to Share Exchange Agreement dated February 17, 2015 with 1894632 Ontario Inc., Tropic Spa Inc. and the shareholders of Tropic Spa Inc. (5)
10.3	Share Exchange Agreement dated June 6, 2016 with Notox Bioscience Inc. and the shareholders of Notox Bioscience Inc. (6)
10.4	Amendment to Share Exchange Agreement dated November 23, 2016 with Notox Bioscience Inc. and the shareholders of Notox Bioscience Inc. (7)
21	1894631 Ontario Inc. (Ontario, Canada), 1894632 Ontario Inc. (Ontario, Canada), Notox Bioscience Inc. (Nevada), Tropic Spa Inc. (Ontario, Canada)
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Presentation Linkbase

(1)	Incorporated by reference from our registration statement on Form 10, filed with the SEC on October 15, 2010.
(2)	Incorporated by reference from our quarterly report on Form 10-Q, filed with the SEC on June 20, 2013.
(3)	Incorporated by reference from our annual report on Form 10-K, filed with the SEC on December 9, 2013.
(4)	Incorporated by reference from our current report on Form 8-K, filed with the SEC on July 3, 2013.
(5)	Incorporated by reference from our current report on Form 8-K, filed with the SEC on February 19, 2015.
(6)	Incorporated by reference from our current report on Form 8-K, filed with the SEC on June 13, 2016.
(7)	Incorporated by reference from our quarterly report on Form 10-Q, filed with the SEC on January 19, 2017.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: April 18, 2018	TROPIC INTERNATIONAL INC.
	By:	/s/ John Marmora
		John Marmora
		President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, Director

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EX-31.1

Exhibit 31.1

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Zoran Konević, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Tropic International Inc.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 18, 2018
By:	/s/ Zoran Konević
	Zoran Konević
	Chief Executive Officer, Director

EX-31.2

Exhibit 31.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John Marmora, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Tropic International Inc.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 18, 2018

By:	/s/ John Marmora
	John Marmora
	President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, Director

EX-32.1

Exhibit 32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of Tropic International Inc. for the period ended February 28, 2018 as filed with the Securities and Exchange Commission (the “Report”), I hereby certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date: April 18, 2018
By:	/s/ Zoran Konević
	Zoran Konević
	Chief Executive Officer, Director

EX-32.2

Exhibit 32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of Tropic International Inc. for the period ended February 28, 2018 as filed with the Securities and Exchange Commission (the “Report”), I hereby certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date: April 18, 2018
By:	/s/ John Marmora
	John Marmora
	President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, Director

XML

Document and Entity Information - shares	6 Months Ended
	Feb. 28, 2018	Apr. 18, 2018
Document And Entity Information
Entity Registrant Name	TROPIC INTERNATIONAL INC.
Entity Central Index Key	0000844538
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Feb. 28, 2018
Current Fiscal Year End Date	--08-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock Shares Outstanding		57,532,843
Trading Symbol	TRPO
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2018

XML

Consolidated Balance Sheets (Unaudited) - CAD ($)	Feb. 28, 2018	Aug. 31, 2017
Current assets:
Cash	$ 40,249	$ 63,144
Amounts receivable	85,423	84,290
Inventory (Note 9)	1	1
Prepaid expenses	15,214	28,624
Total current assets	140,887	176,059
Equipment, net (Note 8)	30,777	34,197
Patents, net (Note 9)	4	4
License agreement, net (Notes 3 and 10)	1,218,532	1,312,265
Total assets	1,390,200	1,522,525
Current liabilities:
Accounts payable and accrued liabilities (Notes 11 and 12)	1,322,021	1,075,601
Advances from related parties/shareholders (Notes 12 and 13)	470,049	415,960
License assignment fee payable (Notes 3 and 14)	698,091	683,212
Stock purchase warrants (Notes 4 and 16)	536,977	297,378
Stock subscribed (Note 16)	10,000	838,674
Total current liabilities	3,037,138	3,310,825
Due to the Clinic (Note 3)	212,451	197,765
Total liabilities	3,249,589	3,508,590
Stockholders’ deficiency (Note 16):
Common stock	1,018,256	526,182
Additional paid-in capital	8,458,365	8,460,414
Deficit	(11,336,010)	(10,972,661)
Total stockholders’ deficiency	(1,859,389)	(1,986,065)
Total liabilities and stockholders’ deficiency	$ 1,390,200	$ 1,522,525

XML

Consolidated Statements of Loss and Comprehensive Loss (Unaudited) - CAD ($)	6 Months Ended
	Feb. 28, 2018	Feb. 28, 2017
Revenue:
Sales
Production costs:
Amortization - license agreement (Note 10)	93,733
Amortization - patent (Note 9)		187,546
Consulting fees - production	1,155	14,700
Depreciation (Note 8)	3,420	4,275
Materials and supplies		783
Patenting costs - the Clinic (Note 3)	10,175
Total production costs	108,483	207,304
Gross loss	(108,483)	(207,304)
General and administration:
Consulting fees - management (Note 12)	235,766	248,517
Interest on advances from related parties/shareholders (Notes 12 and 13)	8,089	5,649
Loss (gain) on foreign exchange	31,110	(15,536)
Marketing	247	1,960
Office and miscellaneous	5,094	15,987
Patent maintenance fees	1,394	4,694
Professional fees	29,396	31,636
Rent	13,139	6,625
Travel and entertainment	2,426	6,433
Trust and filing fees	12,075	3,898
Total general and administration	338,736	309,863
Loss before other items and income taxes	(447,219)	(517,167)
Other items:
Writedown of amounts receivable	(18,746)
Gain on revaluation of stock purchase warrants	102,616
Loss before income taxes	(363,349)	(517,167)
Income taxes
Net loss and comprehensive loss	$ (363,349)	$ (517,167)
Net loss per share - basic and diluted (Note 5)	$ (0.01)	$ (0.01)
Weighted-average number of shares outstanding	57,507,318	56,632,031

XML

Consolidated Statements of Cash Flows (Unaudited) - CAD ($)	6 Months Ended
	Feb. 28, 2018	Feb. 28, 2017
Cash Flows Used In Operating Activities
Net loss	$ (363,349)	$ (517,167)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization – license agreement	93,733
Amortization – patent		187,546
Depreciation	3,420	4,275
Unrealized foreign exchange on license assignment fee payable	14,879	(14,175)
Unrealized foreign exchange on due to the Clinic	4,511
Writedown of amounts receivable	18,746
Gain on revaluation of stock purchase warrants	(102,616)
Changes in assets and liabilities:
Amounts receivable	(19,879)	(16,761)
Inventory		61
Prepaid expenses	13,410	(86,719)
Accounts payable and accrued liabilities	246,420	32,992
License assignment fee payable		(336,750)
Due to the Clinic	10,175
Interest accrued on advances from related parties/shareholders	8,089	5,649
Net cash used in operating activities	(72,460)	(741,049)
Cash Flows Used In Investing Activities
Patent costs		(2,089)
Cash Flows Provided By (Used In) Financing Activities
Proceeds from issuance of common stock		395,580
Stock issue costs	(6,435)	(19,899)
Advances from related parties	46,000
Repayment of advances from related parties/shareholders		(38,000)
Stock subscriptions received	10,000	663,550
Net cash provided by financing activities	49,565	1,001,231
Increase (decrease) in cash during the period	(22,895)	258,093
Cash, beginning of period	63,144	144,718
Cash, end of period	$ 40,249	$ 402,811

XML

Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - CAD ($)			12 Months Ended
	Sep. 07, 2017	Nov. 02, 2016	Aug. 31, 2017	Nov. 23, 2016
License assignment fee payable			$ 683,212
License Agreement [Member] | Zoran Holding Corporation [Member]
License assignment fee payable				$ 1,347,000
License Agreement [Member] | Zoran Holding Corporation [Member] | USD [Member]
License assignment fee payable				$ 1,000,000
Warrant [Member]
Common stock shares issued during period	5,000	15,000
Purchase warrant, value	$ 2,581	$ 8,742
Stock Subscriptions [Member]
Common stock shares issued during period			838,674

XML

Consolidated Statements of Stockholders’ Equity (Deficiency) (Unaudited) - CAD ($)		Common Stock [Member]	Stock Subscribed [Member]	Additional Paid-in Capital [Member]	Deficit [Member]	Total
Balance at Aug. 31, 2015		$ 12,612	$ 30,000	$ 8,431,728	$ (4,870,681)	$ 3,603,659
Balance, shares at Aug. 31, 2015	[1]	6,132,073
Stock subscribed			315,366			315,366
Stock issued for asset acquisition (Notes 3)		$ 127,920				127,920
Stock issued for asset acquisition (Notes 3), shares	[1]	50,000,000
Net loss					(1,030,293)	(1,030,293)
Balance at Aug. 31, 2016		$ 140,532	345,366	8,431,728	(5,900,974)	3,016,652
Balance, shares at Aug. 31, 2016	[1]	56,132,073
Stock issued for cash		$ 414,291	(345,366)	28,686		97,611
Stock issued for cash, shares	[1]	760,770
Stock issue costs - cash		$ (19,899)				(19,899)
Stock issue costs - finder's warrants		(8,742)				(8,742)
Net loss					(5,071,687)	(5,071,687)
Balance at Aug. 31, 2017		$ 526,182		8,460,414	(10,972,661)	(1,986,065)
Balance, shares at Aug. 31, 2017	[1]	56,892,843
Stock subscribed						10,000
Stock issued for cash		$ 491,041				491,041
Stock issued for cash, shares	[1]	630,000
Stock issue costs - cash		$ (6,435)				(6,435)
Stock issue costs - finder's warrants		(2,581)				(2,581)
Warrants exercised		$ 10,049		(2,049)		8,000
Warrants exercised, shares	[1]	10,000
Net loss					(363,349)	(363,349)
Balance at Feb. 28, 2018		$ 1,018,256		$ 8,458,365	$ (11,336,010)	$ (1,859,389)
Balance, shares at Feb. 28, 2018	[1]	57,532,843

[1] The above presentation reflects a 1:2 reverse split of the Company's common stock on August 25, 2016. See Note 16.

XML

Consolidated Statements of Stockholders’ Equity (Deficiency) (Unaudited) (Parenthetical)	Aug. 25, 2016
Statement of Stockholders' Equity [Abstract]
Reverse split	1:2 reverse split

XML

Company Overview and Basis of Presentation

6 Months Ended

Feb. 28, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Company Overview and Basis of Presentation

1. Company Overview and Basis of Presentation

Nature and History of Operations

Tropic International Inc. (formerly Rockford Minerals, Inc.) (the “Company”) was incorporated under the laws of the state of Nevada on October 29, 2007. The Company was a natural resource exploration company with an objective of acquiring, exploring and, if warranted and feasible, developing natural resource properties. Activities during the exploration stage included developing the business plan and raising capital.

On June 28, 2013, the Company completed a reverse takeover transaction (see Note 2) with Tropic Spa Inc. (“TSI”), a company that manufactures and sells Home Mist Tanning units that deliver a full-body application. As a result of this transaction, the Company became a holding company operating through TSI. Upon the closing of the share exchange agreement described below, the Company changed its fiscal year end from October 31 to August 31 to coincide with the fiscal year end of TSI.

On December 6, 2013, the Company changed its name to Tropic International Inc. as a result of a merger with a wholly-owned subsidiary incorporated solely to effect the name change.

On September 3, 2014, the Company’s shares became eligible for quotation on the OTCQB under the symbol TRPO.

On June 13, 2016, the Company completed an asset acquisition transaction (see Note 3) with Notox Bioscience Inc. (“Notox”), a private Nevada corporation incorporated on May 31, 2016 for the purpose of acquiring 100% of the right, title and interest in and to an exclusive license agreement (the “License Agreement”) with The Cleveland Clinic Foundation (the “Clinic”), an Ohio not-for-profit corporation. As a result of this transaction, the Company is a holding company operating through both TSI and Notox.

The accompanying consolidated financial statements include the results of operations of the Company, TSI and Notox for the three months ended November 30, 2017. The comparative amounts are the results of operations of the Company, TSI and Notox for the three months ended November 30, 2016.

On November 19, 2007, TSI obtained the rights to the Home Mist Tanning system and the application for and acquisition of a United States Patent “Apparatus for Spray Application of a Sunless Tanning Product” (the “US Patent”). As of March 11, 2013, the total value assigned to the carrying value of the US Patent was $6,342,279.

On October 16, 2014, the Company, through TSI, obtained an Australian patent (the “Australian Patent”), incurring application costs of $4,976. On June 21, 2016, the Company, through TSI, obtained a Canadian patent (the “Canadian Patent”), incurring application costs of $17,406. On December 28, 2016, the Company, through TSI, obtained a Chinese patent (the “Chinese Patent”), incurring application costs of $5,806. Costs incurred are recorded as intangible assets. On August 31, 2017, the net carrying amount of the patents was written down to a nominal amount of $4 (see Note 9).

As reflected in the accompanying consolidated financial statements, the Company has a deficit of $11,336,010 (August 31, 2017 - $10,972,661) since inception, a working capital deficiency of $2,896,251 (August 31, 2017 - $3,134,766) and a stockholders’ deficiency of $1,859,389 (August 31, 2017 - stockholders’ equity of $1,986,065). This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on its ability to raise additional capital and to implement its business plan. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management has evaluated the Company’s ability to continue as a going concern by assessing its ability to meet its obligations as they become due within one year from the date of issue of the financial statements. Management’s assessment included the following factors:

● The Company’s financial condition as at the date of issue of the financial statements;

● The Company’s actual or anticipated conditional and unconditional obligations due within one year from the date of issue of the financial statements;

● The funds necessary to maintain the Company’s operations considering its current financial condition, obligations and other expected cash flows; and

● Other conditions and events that may affect the Company’s ability to meet its obligations within one year from the date of issue of the financial statements.

The Company’s operating expenses are estimated to be approximately $100,000 per year. As at February 28, 2018, the Company’s current cash liabilities total approximately $2,490,000 (August 31, 2017 - $2,175,000). Of this amount, approximately $2,222,000 – accounts payable and accrued liabilities ($1,054,000), advances from related parties/shareholders ($470,000) and license assignment fee payable ($698,000) – is payable to related parties and/or major shareholders who have not and will not require payment until such time as sufficient cash flow is available. To the extent the remaining $268,000 cannot be deferred and sufficient equity financing has not been raised to make the payment required, management will advance funds to the Company, if appropriate.

XML

Reverse Takeover

6 Months Ended

Feb. 28, 2018

Business Combinations [Abstract]

Reverse Takeover

2. Reverse Takeover

On June 28, 2013 (the “Closing Date”), the Company, its wholly-owned subsidiary 1894632 Ontario Inc. (“Subco”) and TSI entered into a share exchange agreement (the “Exchange Agreement”) with certain of the shareholders of TSI (the “Selling Shareholders”) pursuant to which the Company acquired 39,015,439 common shares, or approximately 78% of the issued and outstanding shares, of TSI in exchange for the issuance of 39,015,439 preferred shares of Subco to the Selling Shareholders on a one-for-one basis. Each one preferred share of Subco is exchangeable into one share of the Company’s common stock at the option of the holder subject to the following restrictions:

● The Selling Shareholders required the written consent of Subco to exchange, sell or otherwise dispose of, directly or indirectly, any of their preferred shares of Subco until the six month anniversary of the Closing Date;

● Within 30 days of that time, and provided TSI generated at least $1,000,000 in gross revenue during the preceding six month period, Subco permitted the Selling Shareholders to require Subco to redeem an aggregate of 1% of its then-outstanding preferred shares on a pro-rata basis; and

● Within 30 days of each six month anniversary of the Closing Date until June 30, 2015, on which date all restrictions on the preferred shares automatically expired unless extended by the Selling Shareholders, Subco granted the holders of its preferred shares a permission identical to the one above.

Upon the closing of the Exchange Agreement, the sole officer and director of TSI became the sole officer and a director of the Company and the Company adopted the business plan of TSI.

As a result of the share exchange, the Selling Shareholders controlled approximately 87% of the issued and outstanding common shares of the Company on a fully-exchanged basis as of the Closing Date. The Exchange Agreement represented a reverse takeover and was therefore accounted for under the acquisition method with TSI as the accounting acquirer and continuing entity for accounting and financial reporting purposes and the Company as the legal parent being the acquiree. There was no active market to reliably determine fair value of the consideration other than the value of the identifiable assets acquired. Therefore, the purchase price allocation of the acquisition was based on the fair value of the net liabilities acquired which was charged to additional paid-in-capital.

The fair values of assets acquired and liabilities assumed were as follows:

Cash	$	1,774
Subscriptions receivable		10
Accounts payable and accrued liabilities		(32,488	)
Loan payable to TSI		(25,454	)
Net liabilities acquired	$	(56,158	)

On February 17, 2015, the Company, Subco, TSI and the Selling Shareholders entered into an amendment to the Exchange Agreement in order to correct certain administrative errors in the Exchange Agreement and provide for the post-closing execution of the Exchange Agreement by those shareholders of TSI who were not original signatories thereto. In addition, the Selling Shareholders approved certain changes to the rights, privileges, restrictions and conditions attached to the preferred shares of Subco by consent in writing. This included extending the automatic expiration date in respect of the preferred shares of Subco from June 30, 2015 to June 30, 2017. On February 22, 2017, this automatic expiration date was further extended to December 31, 2018.

XML

Asset Acquisition and License Agreement

6 Months Ended

Feb. 28, 2018

Business Combinations [Abstract]

Asset Acquisition and License Agreement

3. Asset Acquisition and License Agreement

On June 13, 2016 (the “Second Closing Date”), the Company, Notox and the shareholders of Notox (the “Notox Shareholders”) entered into a share exchange agreement (the “Share Exchange Agreement”) pursuant to which the Company acquired 100% of the issued and outstanding common stock of Notox from the Notox Shareholders in exchange for the issuance of 50,000,000 shares of the Company’s common stock.

On the Second Closing Date, Notox and Zoran Holding Corporation (“ZHC”), a private Ontario corporation, entered into an assignment agreement (the “Assignment Agreement”) pursuant to which ZHC irrevocably assigned 100% of its right, title and interest in and to the License Agreement, as amended, to Notox. Also on the Second Closing Date, the sole officer and director of Notox and ZHC became a director and officer of the Company.

On November 23, 2016, the Company, Notox and the Notox Shareholders entered into an amendment to the Share Exchange Agreement in order to clarify certain sections in the Share Exchange Agreement, to provide for an assignment fee and to describe how the Company will use the proceeds of any equity financing completed after the Second Closing Date. In consideration for inducing ZHC to enter into the Assignment Agreement, the Company will pay an aggregate of US$1,000,000 to ZKC in the form of a one-time assignment fee. See Note 14.

On December 1, 2012, ZHC and the Clinic entered into the License Agreement whereby the Clinic granted ZHC an exclusive worldwide license and a non-exclusive worldwide license in the field of aesthetics and pain to make, use, offer to sell, sell and import certain products throughout the term of the License Agreement. The term continues until the expiration of the last to expire of the certain patents. The License Agreement was amended on July 30, 2013 and July 1, 2016. Pursuant to the License Agreement, as amended, Notox is the licensee under the License Agreement and is solely responsible for making all regulatory filings and securing regulatory approval for the products covered by the License Agreement. The Clinic will receive a royalty based on the sale of certain products, a milestone payment within 30 days following the first commercial sale of such products and a percentage of any sublicensing revenues. Royalties and other payments are payable quarterly. Notox is required to achieve two commercial milestones: regulatory filings submitted to regulatory authorities by November 30, 2019 and first commercial sale within nine months following regulatory approval. Failure to achieve these milestones, without satisfactory justification, constitutes a material breach of the License Agreement giving the Clinic the right, but not the obligation, to convert the License Agreement to a non-exclusive license or terminate the License Agreement. The Clinic has the right to verify Notox’s compliance with the License Agreement.

Within 30 days following Notox’s receipt of the first regulatory approval, Notox is required to reimburse the Clinic for current patenting costs. All patenting costs, patent office fees and outside patent counsel costs will, at the Clinic’s option, either be paid directly by Notox or by the Clinic with the Clinic invoicing Notox, provided that Notox has no obligation to pay or reimburse the Clinic until after first regulatory approval has been obtained. Upon termination or expiration of the License Agreement, all accrued and unreimbursed patenting costs become immediately due and payable to the Clinic. As of February 28, 2018, all accrued and unreimbursed patenting costs totalled US$165,861 ($212,451) (August 31, 2017 - US$157,758 ($197,765)).

As a result of the share exchange and on the Second Closing Date, the Notox Shareholders controlled approximately 89% of the issued and outstanding common stock of the Company (52.5% on a fully-exchanged basis) and Notox became a wholly-owned subsidiary of the Company. Notox did not meet the definition (inputs, processes and outputs criteria) of a business. The Share Exchange Agreement represented an asset acquisition and was therefore accounted for under the asset acquisition method.

Acquired intangible assets are recognized and initially measured based on their fair value plus transaction costs incurred as part of the acquisition. There was no active market to reliably determine the fair value of the License Agreement acquired. Therefore the fair value of the License Agreement was based on the par value of the common stock exchanged by the Company.

The fair value and gross carrying value of the License Agreement is as follows:

License Agreement	$	133,212
Cash		131
Accrued liabilities		(5,423	)
Capital stock exchanged (50,000,000 shares at US$0.002 per share)	$	127,920

Fair value of License Agreement	$	133,212
Acquisition costs		19,519
Assignment fee (US$1,000,000)		1,347,000
Gross carrying value of License Agreement	$	1,499,731

See Note 10.

XML

Summary of Significant Accounting Policies

6 Months Ended

Feb. 28, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

4. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the financial statements of the Company, TSI, Notox, Subco and 1894631 Ontario Inc., the Company’s subsidiaries. All significant inter-company balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to equipment, fair values of intangible assets, useful lives of intangible assets and the likelihood of realization of its deferred tax assets. The Company bases its estimates on assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Concentration of Risk

The financial instrument which potentially subjects the Company to a concentration of credit risk is cash. The Company places its cash in an account with a high credit quality financial institution.

Significant Accounting Policies

The accompanying consolidated financial statements reflect the application of certain significant accounting policies. There have been no material changes to the Company’s significant accounting policies that are disclosed in the consolidated financial statements and notes thereto during the period ended February 28, 2018.

Inventory

Inventory is stated at the lower of cost, computed using the first-in, first-out method, or market. If the cost of inventory exceeds its market value, a provision is made currently for the difference between the cost and market value. The Company’s inventory consists of finished goods, components and supplies.

Equipment, Net

Equipment is stated at cost, net of accumulated depreciation. Equipment is depreciated over the estimated useful life of the asset. Mould equipment is depreciated at 20% on a declining-balance basis. The website was depreciated on a straight-line basis over five years. One-half of these rates are used in the year of acquisition. Replacements and major improvements are capitalized, while maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost of assets disposed of and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to operations.

Intangible Assets

Patents

The US Patent is recorded at the value attributed to the shares issued by TSI in connection with its acquisition less accumulated amortization and impairment writedowns. The US Patent was issued on September 29, 2009 and is effective until September 29, 2026. The Australian, Canadian and Chinese Patents are recorded at the application costs incurred less accumulated amortization and impairment writedowns. The Australian Patent was issued on October 16, 2014 and is effective until April 5, 2027. The Canadian Patent was issued on June 21, 2016 and is effective until April 5, 2027. The Chinese Patent was issued on December 28, 2016 and is effective until February 1, 2033. Upon expiration, the patents can be extended subject to certain changes required to secure the extension. Although the effects of obsolescence, demand, competition and other economic factors (such as stability of the industry, technological advances and legislative action that results in an uncertain or changing regulatory environment) can have an adverse effect on the industry and the Company’s product, management is not currently aware of any known adverse factors that will affect the Company in the future.

Costs incurred for patents which are in the process of being completed will be amortized over the life of the patent when the patent is issued.

The Company does not believe that there are any limits to how long its Home Mist Tanning units can sell in the market place. While it expects to be able to secure extensions for its patents prior to expiry, this cannot be predicted with certainty at this time. Accordingly, management has determined that the best estimates of useful lives of the US, Australian, Canadian and Chinese Patents are 17, 13, 11 and 16 years, respectively. At this time, the Company does not believe that the patents will have a residual value at the end of their useful lives.

License Agreement

The License Agreement is recorded at estimated fair value plus acquisition costs less accumulated amortization. The term of the License Agreement continues until the expiration of the last to expire of the Licensed Patents (as defined in the License Agreement). All costs related to the development of the licensed technology are expensed as incurred.

The technology licensed by Notox is a platform that provides the Company access to four large market segments or verticals (derma, pain, body and headache) that include the fields of aesthetics, drug-free pain management, body contouring and perspiration control. Based on management’s experience, it takes approximately two years to fully develop each vertical, with each vertical being developed in sequence. Accordingly, management’s best estimate of the amortization period for the License Agreement is eight years.

Amortization and Impairment

Definite-lived intangible assets are required to be amortized using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or utilized. At this time, management is not able to determine with any amount of certainty the number of Home Mist Tanning units that will be sold over the useful lives of the patents. Accordingly, the patents were being amortized on a straight-line basis over the period of their useful lives. The License Agreement is being amortized over eight years based on management’s best estimate of the time required to develop the four verticals as explained above.

Intangible assets subject to amortization are required to be reviewed for impairment. An impairment loss must be recognized if the intangible asset’s carrying amount is not recoverable and the carrying amount exceeds fair value. The Company applies the following three-step process to identify, recognize and measure impairment of intangible assets:

● Consider whether indicators of impairment are present indicating that the intangible assets’ carrying amount might not be recoverable;

● If indicators are present, perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the intangible assets to their carrying amounts; and

● If the undiscounted cash flows used in the recoverability test are less than the intangible assets’ carrying amount, determine the intangible assets’ fair value and recognize an impairment loss if the carrying amount exceeds fair value.

Because of the unique nature of a patent and a license agreement, income-producing definite-lived intangible assets, the calculation of cash flows can be very difficult to estimate. In this case, the estimated cash flows reflect the direct revenue expected to be generated by the patents and the License Agreement as well as an allocation of expenses.

Leases

The Company currently rents premises pursuant to an operating lease.

Impairment of Long-Lived Assets

Long-lived assets, including equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be evaluated. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by it. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds its fair value.

Stock Purchase Warrants

When the Company undertakes a private placement, it may issue units comprised of common stock of the Company and warrants to acquire common stock of the Company. Warrants with a strike price denominated in the Company’s functional currency (the Canadian dollar) are considered to be indexed to the Company’s stock and are classified as equity. Warrants with a strike price denominated in a currency other than the Company’s functional currency are considered not to be indexed to the Company’s stock and are classified as a liability. Warrants classified as equity are initially measured at fair value. Subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity. Warrants classified as a liability are initially measured at fair value with changes in fair value recorded in profit or loss in each reporting period.

Sales

The Company has Home Mist Tanning units and related supplies available for sale, primarily online via its website. The Company recognizes revenue when the units and supplies have been shipped to the customer, the amount to be paid by the customer is fixed or determinable and collectability is reasonably assured. Revenue is recorded net of applicable sales taxes.

Warranty

The Company is committed to supplying products of superior quality and design. Because of this commitment, it provides a limited one year warranty effective from the date of purchase. The Company warranties its Home Mist Tanning units to be free of defects. If a unit stops operating due to defects in materials or workmanship, the Company either repairs or replaces it for free.

Production Costs

Production costs consist of patent and license agreement amortization, production consulting fees, equipment depreciation, design and production costs and materials and supplies.

Advertising Costs

The Company charges all advertising and marketing costs to expense in the period incurred.

Income Taxes

Deferred income tax is accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income and expense items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax bases of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. At this time, the Company is not able to project future taxable income over the periods in which the deferred tax assets are deductible and, accordingly, management is not able to determine if it is more likely than not that the Company will realize the benefits of these deductible differences.

Derivative Financial Instruments

The Company does not have any derivative financial assets or liabilities.

Fair Value of Financial Instruments

Carrying values of cash, accounts payable and accrued liabilities, advances from related parties/shareholders, license assignment fee payable and stock subscribed approximate fair value because of the short-term nature of these items. Amounts receivable consists primarily of Harmonized Sales Tax (“HST”) receivable from the Government of Canada. HST is not a financial instrument.

Foreign Currency

The functional currency of the Company and its subsidiaries is the Canadian dollar. The accompanying consolidated financial statements are presented in Canadian dollars.

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in the loss in the period in which they arise.

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Loss Per Share

6 Months Ended

Feb. 28, 2018

Earnings Per Share [Abstract]

Loss Per Share

5. Loss Per Share

The following table sets forth the computation of loss per share:

	For the Six Months Ended  February 28,
	2018			2017
Net loss per share:
Net loss	$	(363,349	)	$	(517,167	)
Weighted-average shares outstanding:
Common stock		57,532,843			56,892,843
Number of shares used in per share computations		57,507,318			56,632,031
Loss per share	$	(0.01	)	$	(0.01	)

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Fair Value Measurements

6 Months Ended

Feb. 28, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

6. 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. There is a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3 – Unobservable inputs that are supported by little or no market activity, which require management judgment or estimation.

The Company measures its financial instruments at fair value.

The carrying value of cash deposits is a reasonable estimate of its fair value due to the short maturity of the financial instrument.

The Company’s stock purchase warrants are measured at fair value on a recurring basis.

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Design and Production - NRFTS

6 Months Ended

Feb. 28, 2018

Research and Development [Abstract]

Design and Production - NRFTS

7. Design and Production – NRFTS

On February 20, 2017, the Company entered into the Notox Radio Frequency Treatment System (“NRFTS”) Proposal (the “Proposal”) with RBC Medical Innovations (“RBC”) to develop technology licensed by Notox. The NRFTS is comprised of two distinct components – the disposable probe and the radio frequency generator (“RFG”) console. Pursuant to the Proposal, RBC will execute design and production of the NRFTS and is responsible for overall program management, system integration and development and manufacturing transfer of the RFG console. The project is to be completed in three

stages on a fixed-fee basis at an estimated cost of US$1,748,000. The NRFTS planning stage proposes three milestones payments – project stage initiation (US$55,600), completion of product requirements and documentation (US$55,600) and all stage deliverables and completion (US$55,800). During the year ended August 31, 2017, the Company paid the US$55,600 ($73,453) project stage initiation milestone payment and as at February 28, 2018, an accrual for US$55,600 ($71,657) (August 31, 2017 - US$55,600 ($69,700)) has been made for the second milestone payment.

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Equipment, Net

6 Months Ended

Feb. 28, 2018

Property, Plant and Equipment [Abstract]

Equipment, Net

8. Equipment, Net

Equipment, at cost, consisted of:

	February 28, 2018			August 31, 2017
Mould equipment	$	155,300		$	155,300
Website		28,875			28,875
Equipment at cost		184,175			184,175
Accumulated depreciation		(153,398	)		(149,978	)
Equipment, net	$	30,777		$	34,197

Depreciation was $3,420 and $4,275 for the six month periods ended February 28, 2018 and 2017, respectively.

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Patents, Net

6 Months Ended

Feb. 28, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Patents, Net

9. Patents, Net

The following tables provide information regarding the patents:

	February 28, 2018
	Gross carrying amount		Accumulated amortization		Writedowns		Net carrying amount
United States Patent	$	6,342,279	$	2,984,602	$	3,357,676	$	1
Australian Patent		4,976		1,145		3,830		1
Canadian Patent		17,406		2,024		15,381		1
Chinese Patent		5,806		1,330		4,475		1
Patents abandoned		6,793		—		6,793		—
	$	6,377,260	$	2,989,101	$	3,388,155	$	4

	August 31, 2017
	Gross carrying amount		Accumulated amortization		Writedowns		Net carrying amount
United States Patent	$	6,342,279	$	2,984,602	$	3,357,676	$	1
Australian Patent		4,976		1,145		3,830		1
Canadian Patent		17,406		2,024		15,381		1
Chinese Patent		5,806		1,330		4,475		1
Patents abandoned		6,793		—		6,793		—
	$	6,377,260	$	2,989,101	$	3,388,155	$	4

Also see Note 1.

During the year ended August 31, 2017, management identified the following indicators of impairment indicating that the patents’ carrying amounts might not be recoverable:

● The inability to raise sufficient equity financing to implement its strategic plan; and

● Operating and cash flow losses since the Company completed the development of the US, Australian, Canadian and Chinese patents.

Management’s intention is to license commercial tanning units for use in stores and spas in the United States, to sell personal tanning units internationally and to supply the spray tan solution for those units. Given that management is in the process of changing its focus in respect of the marketing and sale of the tanning units and associated products, it is not in a position to be able to estimate the future cash flows attributable to the patents with any degree of certainty. Accordingly, the patents were written down to a nominal amount of $4 at August 31, 2017.

In connection with the writedown of the patents, the fact that there have been minimal sales to date and no comparable products on the market to use as a point of reference, management is not able to determine whether inventory is stated at the lower of cost or market. Accordingly, inventory was written down to a nominal amount of $1 at August 31, 2017.

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License Agreement, Net

6 Months Ended

Feb. 28, 2018

Finite-Lived Intangible Assets, Net [Abstract]

License Agreement, Net

10. License Agreement, Net

	February 28, 2018
	Gross carrying amount		Accumulated amortization		Net carrying amount
License Agreement	$	1,499,731	$	281,199	$	1,218,532

	August 31, 2017
	Gross carrying amount		Accumulated amortization		Net carrying amount
License Agreement	$	1,499,731	$	187,466	$	1,312,265

As of February 28, 2018, amortization expense on the License Agreement for the next seven years was expected to be as follows:

	Amount
Year ending:
2018	$	93,733
2019		187,466
2020		187,466
2021		187,466
2022		187,466
Thereafter		374,935
Total	$	1,218,532

During the period ended February 28, 2018, management identified the following indicators of impairment indicating that the License Agreement’s carrying amount might not be recoverable:

● The inability to raise sufficient equity financing to implement its strategic plan; and

● Operating and cash flow losses since inception.

The Company has previously performed a recoverability test by preparing a five-year proforma projection of the undiscounted future cash flows attributable to the License Agreement. The undiscounted cash flows exceed the carrying value of the License Agreement as at February 28, 2018.

Also see Note 3.

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Accounts Payable and Accrued Liabilities

6 Months Ended

Feb. 28, 2018

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities

11. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of:

	February 28, 2018		August 31,  2017
Trade payables	$	1,159,873	$	929,855
Vendor accruals		162,148		145,746
Accounts payable and accrued liabilities	$	1,322,021	$	1,075,601

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Related Party Transactions

6 Months Ended

Feb. 28, 2018

Related Party Transactions [Abstract]

Related Party Transactions

12. Related Party Transactions

The following amounts were payable to the Company’s related parties:

● At February 28, 2018, the Company owed $232,000 in advances payable to the President of the Company (2017 - $232,000) and $232,000 at August 31, 2017 (2016 - $257,500). These advances are unsecured and bear interest at 3% per annum. Of this amount, $219,500 is due on demand and $12,500 has no repayment terms. Accrued interest payable to the President totaled $29,030 at February 28, 2018 (2017 - $22,069) and $25,578 at August 31, 2017 (2016 - $18,578).

● At February 28, 2018, the Company owed $46,000 for an advance payable to the CEO of the Company (2017 - $nil) and $nil at August 31, 2017 (2016 - $nil). This advance is unsecured, bears interest of 2% per month and is due on demand. Accrued interest payable to the CEO totaled $2,480 at February 28, 2018 (2017 - $nil) and $nil at August 31, 2017 (2016 - $nil).

● At February 28, 2018, the Company owed $1,134 (2017 - $3,984) to the President for reimbursable expenses incurred on the Company’s behalf. At August 31, 2017, the Company owed $5,329 (2016 - $10,477).

● At February 28, 2018, the Company owed $354,020 ($181,070 and US$135,022) (2017 - $238,307 ($181,070 and US$43,097)) in consulting fees to a company controlled by the President of the Company. At August 31, 2017, the Company owed $271,984 ($181,070 and US$72,522) (2016 - $215,224 ($181,070 and US$26,040)).

● At February 28, 2018, the Company owed $160,881 (US$125,600) (2017 - $95,115 (US$71,618)) in consulting fees to a company controlled by the CEO of the Company. At August 31, 2017, the Company owed $79,102 (US$63,100) (2016 - $34,154 (US$26,040)).

● At February 28, 2018, the Company owed $341,211  ($181,070 and US$125,022) (2017 - $237,540 ($181,070 and US$42,519)) in consulting fees and $276 in reimbursable expenses (2017 - $nil) to a company controlled by a major shareholder of the Company. At August 31,

2017, the Company owed $259,448 ($181,070 and US$62,522) (2016 - $215,224 ($181,070 and US$26,040)) in consulting fees.

● At February 28, 2018, the Company owed $nil (2017 - $nil) in shareholder advances and $761 (2017 - $761) in accrued interest on these advances to the same major shareholder. At August 31, 2017, the Company owed $nil (2016 - $12,500) in shareholder advances and $761 (2016 - $761) in accrued interest on these advances.

● At February 28, 2018, the Company owed $75,000 (2017 - $75,000) to a company controlled by the Company’s former CFO. At August 31, 2017, the Company owed $75,000 (2016 - $75,000).

During the six months ended February 28, 2018, the Company had the following transactions with related parties:

● The President of the Company advanced $nil during the six months ended February 28, 2018 (2017 - $nil), and $nil to the Company during the year ended August 31, 2017 (2016 - $5,000). Interest expense of $3,451 was accrued on advances payable to the President of the Company during the six months ended February 28, 2018 (2017 - $3,491) and $7,000 during the year ended August 31, 2017 (2016 - $7,696).

● The CEO of the Company advanced $46,000 during the six months ended February 28, 2018 (2017 - $nil), and $nil to the Company during the year ended August 31, 2017 (2016 - $nil). Interests expense of $2,480 was accrued on this advance payable to the CEO of the Company during the six months ended February 28, 2018 (2017 - $nil) and $nil during the year ended August 31, 2017 (2016 - $nil).

● Consulting fees paid or accrued as payable to a company controlled by the President of the Company were $78,589 (US$62,500) and $82,906 (US$62,500) for the six months ended February 28, 2018 and 2017, respectively.

● Consulting fees paid or accrued as payable to a company controlled by the CEO of the Company were $78,589 (US$62,500) and $82,906 (US$62,500) for the six months ended February 28, 2018 and 2017, respectively.

● Consulting fees accrued as payable to a company controlled by a major shareholder of the Company were $78,589 (US$62,500) and $82,906 (US$62,500) for the six months ended February 28, 2018 and 2017, respectively.

All transactions with related parties occurred in the normal course of business and were measured at the exchange amount, which was the amount of consideration agreed upon between management and the related parties.

Also see Notes 3, 13, 14 and 15.

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Advances from Shareholders

6 Months Ended

Feb. 28, 2018

Related Party Transactions [Abstract]

Advances from Shareholders

13. Advances from Shareholders

Advances payable to shareholders totaled $145,000 at February 28, 2018 (2017 - $145,000) and $145,000 at August 31, 2017 (2016 - $157,500). These advances are unsecured and bear interest at 3% per annum. There are no repayment terms. Interest expense of $2,157 was accrued on these advances during the six months ended February 28, 2018 (2017 - $2,158) and $4,351 during the year ended

August 31, 2017 (2016 - $4,738). Accrued interest payable to shareholders totaled $15,539 at February 28, 2018 (2017 - $11,189), and $13,382 at August 31, 2017 (2016 - $9,031).

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License Assignment Fee Payable

6 Months Ended

Feb. 28, 2018

Finite-Lived Intangible Assets, Net [Abstract]

License Assignment Fee Payable

14. License Assignment Fee Payable

Pursuant to the amendment to the Share Exchange Agreement, the Company will pay an aggregate of US$1,000,000 to ZKC in the form of a one-time assignment fee. The assignment fee payable is repayable in monthly instalments of US$50,000 beginning on October 1, 2016. Upon completion of any equity financing pursuant to which the Company raises gross proceeds of at least US$1,000,000, the outstanding balance is to be repaid in full. At February 28, 2018, the balance of the license assignment fee payable to ZKC was US$545,000 ($698,091) (August 31, 2017 - US$545,000 ($683,212)). See Note 3.

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Commitments

6 Months Ended

Feb. 28, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments

15. Commitments

On November 16, 2015, the Company entered into a consulting agreement (the “ECC Agreement”) with Edgewater Consulting Corp., a private Ontario corporation (“ECC”). Pursuant to the ECC Agreement, ECC, through its principal, acted in the capacity of CFO of the Company. The ECC Agreement was terminated effective November 10, 2016. A signing bonus of 750,000 exchangeable preferred shares of Subco was issued on August 24, 2016. As at February 28, 2018, ECC is entitled to $75,000 (August 31, 2017 - $75,000) in accrued remuneration.

On December 1, 2015, the Company entered into consulting agreements with 1040614 Ontario Ltd., a private Ontario corporation (the “Old 1040614 Agreement”), and MCM Consulting, an Ontario sole proprietorship (the “Old MCM Agreement”, and together with the Old 1040614 Agreement, the “Old Agreements”). Pursuant to the Old 1040614 Agreement, the company, through its principal, performed various services related to business development, strategic planning and capital-raising for the Company. Pursuant to the Old MCM Agreement, the sole proprietor acted in the capacity of CEO of the Company. On June 13, 2016, the Old 1040614 and MCM Agreements were terminated and replaced by the 1040614 and MCM Agreements (see below). As at February 28, 2018, 1040614 and MCM are each entitled to $80,770 (August 31, 2017 - $80,770) in accrued remuneration in respect of the Old Agreements.

On February 4, 2016, the Company entered into a consulting agreement (the “Old ZKC Agreement”) with Zoran K Corporation, a private Ontario corporation (“ZKC”). Pursuant to the Old ZKC Agreement, ZKC, through its principal, acted in the capacity of the Company’s exclusive sales, marketing and product development agent. On June 13, 2016, the Old ZKC Agreement was terminated and replaced by the ZKC Agreement (see below). As at February 28, 2018, there is no remuneration payable (August 31, 2017 - $nil) by the Company under the Old ZKC Agreement.

On June 13, 2016, the Company entered into consulting agreements with 1040614 Ontario Ltd. (the “1040614 Agreement”), MCM Consulting (the “MCM Agreement”) and ZKC (the “ZKC Agreement”).

Pursuant to the 1040614 Agreement, the company, through its principal, performs general consulting services on behalf of the Company. Pursuant to the MCM Agreement, the sole proprietor acts in the capacity of President of the Company. Pursuant to the ZKC Agreement, ZKC, through its principal, acts in the capacity of CEO of the Company. Each consulting agreement is for a period of 10 years, with successive automatic renewal periods of two years until terminated. Pursuant to these consulting agreements, each consultant is entitled to receive the following compensation:

● Remuneration – an aggregate of US$125,000 per annum plus HST on a bi-monthly basis;

● EPS Bonus – when the Company generates earnings per share of $0.05, plus any multiple thereof, the Company shall issue the consultant 1,000,000 shares of the Company’s common stock and pay the consultant US$250,000 plus HST;

● Change of Control Bonus – immediately prior to the completion of a change of control (as defined in these consulting agreements) the Company shall issue the consultant an aggregate of 20,000,000 shares of the Company’s common stock; and

● Additional Bonus – the company may from time to time pay the consultant one or more bonuses as determined by the Board of Directors at its sole discretion.

Effective February 3, 2018, the Company terminated the 1040614 Agreement.

On August 31, 2017, the Company entered into a premises lease for a year beginning on September 1, 2017 for a rental of $21,000 for the year plus HST.

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Stockholders' Deficiency

6 Months Ended

Feb. 28, 2018

Equity [Abstract]

Stockholders' Deficiency

16. Stockholders’ Deficiency

The Company is authorized to issue 500,000,000 (August 31, 2017 - 500,000,000) shares of common stock at a par value of $US0.001.

On August 25, 2016, the Company completed a reverse split of the Company’s common stock at the ratio of one new share for every two existing shares. All share and per share amounts have been adjusted to reflect this reverse split.

At February 28, 2018, the Company had 57,532,843 shares of common stock legally issued and outstanding (2016 - 56,892,843 shares). At August 31, 2017, the Company had 56,892,843 shares of common stock legally issued and outstanding (2016 - 56,132,073 shares).

On June 28, 2013, pursuant to the Exchange Agreement, the Company acquired 39,015,439 common shares of TSI in exchange for the issuance of 39,015,439 preferred shares of Subco to the Selling Shareholders on a one-for-one basis. As a result of the Exchange Agreement, TSI became the Company’s majority-owned subsidiary. Each preferred share of Subco is exchangeable into one share of the Company’s common stock at the option of the holder subject to certain restrictions. As at February 28, 2018 and August 31, 2017, none of the preferred shares had been exchanged.

As a condition of the closing of the Exchange Agreement, the Company also entered into a Support Agreement and a Voting and Exchange Trust Agreement on the closing date. The Support Agreement ensures that the obligations of Subco remain effective until all of the preferred shares have been exchanged. The Voting and Exchange Trust Agreement provides and establishes a procedure whereby the voting rights attached to shares of the Company’s common stock are exercisable by the registered holders (the Selling Shareholders) of the preferred shares. The Trustee holds legal title to a Special Voting Share to which voting rights are attached for the benefit of the Selling Shareholders. The Trustee holds the Special Voting Share solely for the use and benefit of the Selling Shareholders.

Common Stock Issuances

During the six months ended February 28, 2018, the Company completed the following common stock transactions:

● On September 7, 2017, the Company closed a US dollar financing pursuant to which the Company issued 630,000 units at US$1.00 per unit for gross proceeds of $830,674 (US$630,000), with each unit consisting of one share of the Company’s common stock and one

warrant to purchase one share of common stock exercisable at a price of US$1.40 per share until September 7, 2019. $491,041 was allocated to common stock and $339,633 was allocated to stock purchase warrants. The Company paid cash finder’s fees of  $6,435 (US$5,000) and issued 5,000 finder’s stock purchase warrants exercisable at US$1.40 per warrant share until July 17, 2019, valued at  $2,581 and credited to stock purchase warrants.

● On September 21, 2017, the Company issued 10,000 shares of common stock at $0.80 per share for gross proceeds of $8,000 pursuant to the exercise of warrants during the year ended August 31, 2017. $2,049 of the gross proceeds received that was allocated to these warrants has been deducted from additional paid-in capital.

At August 31, 2017, the gross proceeds received of $838,674 were reported as stock subscribed.

During the year ended August 31, 2017, the Company completed the following common stock transactions:

● On October 31, 2016, the Company closed a concurrent Canadian and US dollar financing as follows:

○	Canadian financing – the Company issued 140,000 units at $0.50 per unit for gross proceeds of $70,000, with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of $0.80 per share until October 31, 2018. $41,314 was allocated to common stock and $28,686 was allocated to additional paid-in capital.
○	US financing – the Company issued 220,770 units at US$0.50 per unit for gross proceeds of $146,716 (US$110,385), with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$0.80 per share until October 31, 2018. $86,027 was allocated to common stock and $60,689 was allocated to stock purchase warrants.

● On November 2, 2016, the Company closed a US dollar financing pursuant to which the Company issued 400,000 units at US$1.00 per unit for gross proceeds of $524,230 (US$400,000), with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$1.40 per share until November 2, 2018. $286,950 was allocated to common stock and $237,280 was allocated to stock purchase warrants. The Company paid cash finder’s fees of $19,899 and issued 15,000 finder’s stock purchase warrants exercisable at US$1.40 per warrant share until September 28, 2018, valued at $8,742 and credited to stock purchase warrants.

Stock Subscribed

During the six months ended February 28, 2018, $10,000 in stock subscriptions was received pursuant to a private placement.

During the year ended August 31, 2017, $838,674 ($8,000 and US$630,000) in stock subscriptions was received pursuant to individual private placements. These subscriptions were for a total of:

● 10,000 shares of common stock of the Company at a price of $0.80 per share pursuant to the exercise of stock purchase warrants. These shares were issued on September 21, 2017.

● 630,000 units of the Company at a price of US$1.00 per unit. Each unit consists of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$1.40 per share for a period of 24 months from the closing date of the financing. These units were issued on September 7, 2017.

Stock Purchase Warrants

The continuity of Canadian dollar denominated stock purchase warrants for the three months ended February 28, 2018 is as follows:

Expiry Date	Price		August 31, 2017		Issued		Exercised		February 28, 2018
October 31, 2018	$	0.80		130,000		—		—		130,000

At February 28, 2018, the weighted-average remaining contractual life of Canadian dollar warrants outstanding was 0.67 years (August 31, 2017 - 1.17).

The continuity of US dollar denominated stock purchase warrants for the three months ended February 28, 2018 is as follows:

Expiry Date	Price		August 31, 2017		Issued		Exercised		February 28, 2018
September 30, 2018 – Finder		US$1.40		15,000		—		—		15,000
October 31, 2018		US$0.80		220,770		—		—		220,770
November 2, 2018		US$1.40		400,000		—		—		400,000
July 17,2019 – Finder		US$1.40		—		5,000		—		5,000
September 7, 2019		US$1.40		—		630,000		—		630,000
				635,770		635,000		—		1,270,770

At February 28, 2018, the weighted-average remaining contractual life of US dollar warrants outstanding was 1.10 years (August 31, 2017 - 1.17 years).

The Company used the Black-Scholes Option Pricing Model to determine the fair values of unit warrants and finder’s warrants issued pursuant to private placements during the six months ended February 28, 2018 and the year ended August 31, 2017 with the following assumptions:

	February 28, 2018			August 31, 2017
Expected dividend yield		0.00	%		0.00	%
Risk-free interest rate		1.74	%		0.54% - 0.55%
Expected stock price volatility		100.00	%		100.00	%
Expected life of warrants		0.58 – 1.52 years			2 years

See Note 4.

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Risks and Uncertainties

6 Months Ended

Feb. 28, 2018

Risks and Uncertainties [Abstract]

Risks and Uncertainties

17. Risks and Uncertainties

The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect its future operating results and cause actual results to vary materially from expectations include, but are not limited to: current economic conditions; uncertainty in the potential markets for its Home Mist Tanning units; the design, production and marketing of NRFTS; increasing competition; and dependence on its existing management and key personnel.

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Accounting Pronouncements

6 Months Ended

Feb. 28, 2018

Accounting Changes and Error Corrections [Abstract]

Accounting Pronouncements

18. Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) issued the following Accounting Standard Updates (“ASUs”) that may be of relevance to the Company. The Company is currently assessing the impact that the adoption of these ASUs will have on its financial statements and related disclosures.

● February 2017 – ASU No. 2017-05, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)” clarifies the scope of asset derecognition guidance and accounting for the partial sale of non-financial assets, as well as provides guidance for recognizing gains and losses from the transfer of non-financial assets in contracts with non-customers. The amendments in this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company expects the impact of adoption of this ASU to be minimal.

● September 2017 – ASU No. 2017-13, “Leases (Topic 842)” provides the requirements of financial accounting and reporting for lessees and lessors and establishes principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease under Accounting Standards Codification 842, Leases. The amendments in this ASU are effective for reporting periods beginning after December 15, 2019. The Company will be required to recognize a right-of-use asset and a lease liability for its office lease.

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Contingent Liability

6 Months Ended

Feb. 28, 2018

Commitments and Contingencies Disclosure [Abstract]

Contingent Liability

19. Contingent Liability

Pursuant to the Exchange Agreement, as amended, the Company may be required to acquire up to 296,500 common shares of TSI, being those TSI shares still outstanding, in exchange for 148,250 preferred shares of Subco on a one-for-two basis. Such preferred shares would then be exchangeable on the same basis as the approximately 50 million Subco preferred shares currently outstanding (see Notes 2 and 14). On August 24, 2016, 21,672,623 common shares of TSI were exchanged for 10,836,312 preferred shares of Subco.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Feb. 28, 2018

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements include the financial statements of the Company, TSI, Notox, Subco and 1894631 Ontario Inc., the Company’s subsidiaries. All significant inter-company balances and transactions have been eliminated.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to equipment, fair values of intangible assets, useful lives of intangible assets and the likelihood of realization of its deferred tax assets. The Company bases its estimates on assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Concentration of Risk

Concentration of Risk

The financial instrument which potentially subjects the Company to a concentration of credit risk is cash. The Company places its cash in an account with a high credit quality financial institution.

Significant Accounting Policies

Significant Accounting Policies

The accompanying consolidated financial statements reflect the application of certain significant accounting policies. There have been no material changes to the Company’s significant accounting policies that are disclosed in the consolidated financial statements and notes thereto during the period ended February 28, 2018.

Inventory

Inventory

Inventory is stated at the lower of cost, computed using the first-in, first-out method, or market. If the cost of inventory exceeds its market value, a provision is made currently for the difference between the cost and market value. The Company’s inventory consists of finished goods, components and supplies.

Equipment, Net

Equipment, Net

Equipment is stated at cost, net of accumulated depreciation. Equipment is depreciated over the estimated useful life of the asset. Mould equipment is depreciated at 20% on a declining-balance basis. The website was depreciated on a straight-line basis over five years. One-half of these rates are used in the year of acquisition. Replacements and major improvements are capitalized, while maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost of assets disposed of and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to operations.

Intangible Assets

Intangible Assets

Patents

The US Patent is recorded at the value attributed to the shares issued by TSI in connection with its acquisition less accumulated amortization and impairment writedowns. The US Patent was issued on September 29, 2009 and is effective until September 29, 2026. The Australian, Canadian and Chinese Patents are recorded at the application costs incurred less accumulated amortization and impairment writedowns. The Australian Patent was issued on October 16, 2014 and is effective until April 5, 2027. The Canadian Patent was issued on June 21, 2016 and is effective until April 5, 2027. The Chinese Patent was issued on December 28, 2016 and is effective until February 1, 2033. Upon expiration, the patents can be extended subject to certain changes required to secure the extension. Although the effects of obsolescence, demand, competition and other economic factors (such as stability of the industry, technological advances and legislative action that results in an uncertain or changing regulatory environment) can have an adverse effect on the industry and the Company’s product, management is not currently aware of any known adverse factors that will affect the Company in the future.

Costs incurred for patents which are in the process of being completed will be amortized over the life of the patent when the patent is issued.

The Company does not believe that there are any limits to how long its Home Mist Tanning units can sell in the market place. While it expects to be able to secure extensions for its patents prior to expiry, this cannot be predicted with certainty at this time. Accordingly, management has determined that the best estimates of useful lives of the US, Australian, Canadian and Chinese Patents are 17, 13, 11 and 16 years, respectively. At this time, the Company does not believe that the patents will have a residual value at the end of their useful lives.

License Agreement

The License Agreement is recorded at estimated fair value plus acquisition costs less accumulated amortization. The term of the License Agreement continues until the expiration of the last to expire of the Licensed Patents (as defined in the License Agreement). All costs related to the development of the licensed technology are expensed as incurred.

The technology licensed by Notox is a platform that provides the Company access to four large market segments or verticals (derma, pain, body and headache) that include the fields of aesthetics, drug-free pain management, body contouring and perspiration control. Based on management’s experience, it takes approximately two years to fully develop each vertical, with each vertical being developed in sequence. Accordingly, management’s best estimate of the amortization period for the License Agreement is eight years.

Amortization and Impairment

Definite-lived intangible assets are required to be amortized using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or utilized. At this time, management is not able to determine with any amount of certainty the number of Home Mist Tanning units that will be sold over the useful lives of the patents. Accordingly, the patents were being amortized on a straight-line basis over the period of their useful lives. The License Agreement is being amortized over eight years based on management’s best estimate of the time required to develop the four verticals as explained above.

Intangible assets subject to amortization are required to be reviewed for impairment. An impairment loss must be recognized if the intangible asset’s carrying amount is not recoverable and the carrying amount exceeds fair value. The Company applies the following three-step process to identify, recognize and measure impairment of intangible assets:

● Consider whether indicators of impairment are present indicating that the intangible assets’ carrying amount might not be recoverable;

● If indicators are present, perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the intangible assets to their carrying amounts; and

● If the undiscounted cash flows used in the recoverability test are less than the intangible assets’ carrying amount, determine the intangible assets’ fair value and recognize an impairment loss if the carrying amount exceeds fair value.

Because of the unique nature of a patent and a license agreement, income-producing definite-lived intangible assets, the calculation of cash flows can be very difficult to estimate. In this case, the estimated cash flows reflect the direct revenue expected to be generated by the patents and the License Agreement as well as an allocation of expenses.

Leases

Leases

The Company currently rents premises pursuant to an operating lease.

Impairment of Long-lived Assets

Impairment of Long-Lived Assets

Long-lived assets, including equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be evaluated. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by it. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds its fair value.

Stock Purchase Warrants

Stock Purchase Warrants

When the Company undertakes a private placement, it may issue units comprised of common stock of the Company and warrants to acquire common stock of the Company. Warrants with a strike price denominated in the Company’s functional currency (the Canadian dollar) are considered to be indexed to the Company’s stock and are classified as equity. Warrants with a strike price denominated in a currency other than the Company’s functional currency are considered not to be indexed to the Company’s stock and are classified as a liability. Warrants classified as equity are initially measured at fair value. Subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity. Warrants classified as a liability are initially measured at fair value with changes in fair value recorded in profit or loss in each reporting period.

Sales

Sales

The Company has Home Mist Tanning units and related supplies available for sale, primarily online via its website. The Company recognizes revenue when the units and supplies have been shipped to the customer, the amount to be paid by the customer is fixed or determinable and collectability is reasonably assured. Revenue is recorded net of applicable sales taxes.

Warranty

Warranty

The Company is committed to supplying products of superior quality and design. Because of this commitment, it provides a limited one year warranty effective from the date of purchase. The Company warranties its Home Mist Tanning units to be free of defects. If a unit stops operating due to defects in materials or workmanship, the Company either repairs or replaces it for free.

Production Costs

Production Costs

Production costs consist of patent and license agreement amortization, production consulting fees, equipment depreciation, design and production costs and materials and supplies.

Advertising Costs

Advertising Costs

The Company charges all advertising and marketing costs to expense in the period incurred.

Income Taxes

Income Taxes

Deferred income tax is accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income and expense items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax bases of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. At this time, the Company is not able to project future taxable income over the periods in which the deferred tax assets are deductible and, accordingly, management is not able to determine if it is more likely than not that the Company will realize the benefits of these deductible differences.

Derivative Financial Instruments

Derivative Financial Instruments

The Company does not have any derivative financial assets or liabilities.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Carrying values of cash, accounts payable and accrued liabilities, advances from related parties/shareholders, license assignment fee payable and stock subscribed approximate fair value because of the short-term nature of these items. Amounts receivable consists primarily of Harmonized Sales Tax (“HST”) receivable from the Government of Canada. HST is not a financial instrument.

Foreign Currency

Foreign Currency

The functional currency of the Company and its subsidiaries is the Canadian dollar. The accompanying consolidated financial statements are presented in Canadian dollars.

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in the loss in the period in which they arise.

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Reverse Takeover (Tables)

6 Months Ended

Feb. 28, 2018

Business Combinations [Abstract]

Schedule of Fair Values of Assets Acquired and Liabilities Assumed

The fair values of assets acquired and liabilities assumed were as follows:

Cash	$	1,774
Subscriptions receivable		10
Accounts payable and accrued liabilities		(32,488	)
Loan payable to TSI		(25,454	)
Net liabilities acquired	$	(56,158	)

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Asset Acquisition and License Agreement (Tables)

6 Months Ended

Feb. 28, 2018

Business Combinations [Abstract]

Schedule of Fair Value and Carrying Value of License Agreement

The fair value and gross carrying value of the License Agreement is as follows:

License Agreement	$	133,212
Cash		131
Accrued liabilities		(5,423	)
Capital stock exchanged (50,000,000 shares at US$0.002 per share)	$	127,920

Fair value of License Agreement	$	133,212
Acquisition costs		19,519
Assignment fee (US$1,000,000)		1,347,000
Gross carrying value of License Agreement	$	1,499,731

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Loss Per Share (Tables)

6 Months Ended

Feb. 28, 2018

Earnings Per Share [Abstract]

Schedule of Computation of Loss Per Share

The following table sets forth the computation of loss per share:

	For the Six Months Ended  February 28,
	2018			2017
Net loss per share:
Net loss	$	(363,349	)	$	(517,167	)
Weighted-average shares outstanding:
Common stock		57,532,843			56,892,843
Number of shares used in per share computations		57,507,318			56,632,031
Loss per share	$	(0.01	)	$	(0.01	)

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Equipment, Net (Tables)

6 Months Ended

Feb. 28, 2018

Property, Plant and Equipment [Abstract]

Schedule of Equipment Net

Equipment, at cost, consisted of:

	February 28, 2018			August 31, 2017
Mould equipment	$	155,300		$	155,300
Website		28,875			28,875
Equipment at cost		184,175			184,175
Accumulated depreciation		(153,398	)		(149,978	)
Equipment, net	$	30,777		$	34,197

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Patents, Net (Tables)

6 Months Ended

Feb. 28, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Patents

The following tables provide information regarding the patents:

	February 28, 2018
	Gross carrying amount		Accumulated amortization		Writedowns		Net carrying amount
United States Patent	$	6,342,279	$	2,984,602	$	3,357,676	$	1
Australian Patent		4,976		1,145		3,830		1
Canadian Patent		17,406		2,024		15,381		1
Chinese Patent		5,806		1,330		4,475		1
Patents abandoned		6,793		—		6,793		—
	$	6,377,260	$	2,989,101	$	3,388,155	$	4

	August 31, 2017
	Gross carrying amount		Accumulated amortization		Writedowns		Net carrying amount
United States Patent	$	6,342,279	$	2,984,602	$	3,357,676	$	1
Australian Patent		4,976		1,145		3,830		1
Canadian Patent		17,406		2,024		15,381		1
Chinese Patent		5,806		1,330		4,475		1
Patents abandoned		6,793		—		6,793		—

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License Agreement, Net (Tables)

6 Months Ended

Feb. 28, 2018

Finite-Lived Intangible Assets, Net [Abstract]

Schedule of License Agreement

	February 28, 2018
	Gross carrying amount		Accumulated amortization		Net carrying amount
License Agreement	$	1,499,731	$	281,199	$	1,218,532

	August 31, 2017
	Gross carrying amount		Accumulated amortization		Net carrying amount
License Agreement	$	1,499,731	$	187,466	$	1,312,265

Schedule of Amortization Expense on Intangible Assets

As of February 28, 2018, amortization expense on the License Agreement for the next seven years was expected to be as follows:

	Amount
Year ending:
2018	$	93,733
2019		187,466
2020		187,466
2021		187,466
2022		187,466
Thereafter		374,935
Total	$	1,218,532

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Accounts Payable and Accrued Liabilities (Tables)

6 Months Ended

Feb. 28, 2018

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of:

	February 28, 2018		August 31,  2017
Trade payables	$	1,159,873	$	929,855
Vendor accruals		162,148		145,746
Accounts payable and accrued liabilities	$	1,322,021	$	1,075,601

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Stockholders' Deficiency (Tables)

6 Months Ended

Feb. 28, 2018

Equity [Abstract]

Schedule of Stock Purchase Warrants

The continuity of Canadian dollar denominated stock purchase warrants for the three months ended February 28, 2018 is as follows:

Expiry Date	Price		August 31, 2017		Issued		Exercised		February 28, 2018
October 31, 2018	$	0.80		130,000		—		—		130,000

The continuity of US dollar denominated stock purchase warrants for the three months ended February 28, 2018 is as follows:

Expiry Date	Price		August 31, 2017		Issued		Exercised		February 28, 2018
September 30, 2018 – Finder		US$1.40		15,000		—		—		15,000
October 31, 2018		US$0.80		220,770		—		—		220,770
November 2, 2018		US$1.40		400,000		—		—		400,000
July 17,2019 – Finder		US$1.40		—		5,000		—		5,000
September 7, 2019		US$1.40		—		630,000		—		630,000
				635,770		635,000		—		1,270,770

Schedule of Stock Options Valuation Assumptions

The Company used the Black-Scholes Option Pricing Model to determine the fair values of unit warrants and finder’s warrants issued pursuant to private placements during the six months ended February 28, 2018 and the year ended August 31, 2017 with the following assumptions:

	February 28, 2018			August 31, 2017
Expected dividend yield		0.00	%		0.00	%
Risk-free interest rate		1.74	%		0.54% - 0.55%
Expected stock price volatility		100.00	%		100.00	%
Expected life of warrants		0.58 – 1.52 years			2 years

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Company Overview and Basis of Presentation (Details Narrative) - CAD ($)	6 Months Ended
	Feb. 28, 2018	Aug. 31, 2017	Dec. 28, 2016	Aug. 31, 2016	Jun. 21, 2016	Jun. 13, 2016	May 31, 2016	Aug. 31, 2015	Oct. 16, 2014	Mar. 11, 2013
Subscription received amount used for patent	$ 6,377,260	$ 6,377,260
Carrying value of patent, net		4
Deficit	11,336,010	10,972,661
Working capital deficiency	2,896,251	3,134,766
Stockholders' equity	1,859,389	1,986,065		$ (3,016,652)				$ (3,603,659)
Operating expenses	100,000
Accounts payable and accrued liabilities	1,322,021	1,075,601
Advances from related parties/shareholders	470,049	415,960
License assignment fee payable	698,091	683,212
Extent remaining payment balance cannot be deferred	268,000
Related Parties and Major Shareholders [Member]
Cash liabilities	2,490,000	2,175,000
Payable to related parties and/or major shareholders	2,222,000
Accounts payable and accrued liabilities	1,054,000
Advances from related parties/shareholders	470,000
License assignment fee payable	698,000
United States Patent [Member]
Subscription received amount used for patent	6,342,279	6,342,279								$ 6,342,279
Chinese Patent [Member]
Subscription received amount used for patent	$ 5,806	$ 5,806
Notox Bioscience Inc [Member]
Purpose of acquiring right percentage						100.00%	100.00%
Tropic Spa Inc [Member] | Australian Patent [Member]
Application costs									$ 4,976
Tropic Spa Inc [Member] | Canadian Patent [Member]
Application costs					$ 17,406
Tropic Spa Inc [Member] | Chinese Patent [Member]
Application costs			$ 5,806

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Reverse Takeover (Details Narrative) - CAD ($)				6 Months Ended	12 Months Ended
		Aug. 24, 2016	Jun. 28, 2013	Feb. 28, 2018	Aug. 31, 2016
Common Stock [Member]
Common shares acquired	[1]				50,000,000
Tropic Spa Inc [Member]
Percentage of redeemable outstanding preferred shares on a pro-rata basis			1.00%
Percentage of control of issued and outstanding of common stock			87.00%
Tropic Spa Inc [Member] | Minimum [Member]
Expected revenue, gross			$ 1,000,000
Tropic Spa Inc [Member] | Common Stock [Member]
Common shares acquired		21,672,623	39,015,439	296,500
Percentage of shares exchange for preferred stock of holding company			78.00%
Subco [Member] | Preferred Stock [Member]
Number of preferred stock for exchange		10,836,312	39,015,439	148,250

[1] The above presentation reflects a 1:2 reverse split of the Company's common stock on August 25, 2016. See Note 16.

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Reverse Takeover - Schedule of Fair Values of Assets Acquired and Liabilities Assumed (Details)	Feb. 28, 2018 CAD ($)
Business Combinations [Abstract]
Cash	$ 1,774
Subscriptions receivable	10
Accounts payable and accrued liabilities	(32,488)
Loan payable to TSI	(25,454)
Net liabilities acquired	$ (56,158)

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Asset Acquisition and License Agreement (Details Narrative)	Jun. 13, 2016 shares	Feb. 28, 2018 CAD ($)	Feb. 28, 2018 USD ($)	Aug. 31, 2017 CAD ($)	Aug. 31, 2017 USD ($)	Nov. 23, 2016 USD ($)	May 31, 2016
License assignment fee payable		$ 698,091		$ 683,212
Accrued and unreimbursed patenting costs		212,451		197,765
USD [Member]
Accrued and unreimbursed patenting costs			$ 165,861		$ 157,758
Notox Bioscience Inc [Member]
Purpose of acquiring right percentage	100.00%						100.00%
Issuance of common stock shares for exchange | shares	50,000,000
Owned subsidiary description	As a result of the share exchange and on the Second Closing Date, the Notox Shareholders controlled approximately 89% of the issued and outstanding common stock of the Company (52.5% on a fully-exchanged basis) and Notox became a wholly-owned subsidiary of the Company.
Percentage of control of issued and outstanding of common stock	89.00%
Zoran Holding Corporation [Member]
Purpose of acquiring right percentage	100.00%
Zoran K Corporation [Member]
License assignment fee payable		$ 698,091		$ 683,212
Zoran K Corporation [Member] | USD [Member]
License assignment fee payable						$ 1,000,000
Zoran K Corporation [Member] | USD [Member]
License assignment fee payable			$ 545,000		$ 545,000

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Asset Acquisition and License Agreement - Schedule of Fair Value and Carrying Value of License Agreement (Details) - License Agreement [Member]	Feb. 28, 2018 CAD ($)
License Agreement	$ 133,212
Cash	131
Accrued liabilities	(5,423)
Capital stock exchanged (50,000,000 shares at US$0.002 per share)	127,920
Fair value of License Agreement	133,212
Acquisition costs	19,519
Assignment fee (US$1,000,000)	1,347,000
Gross carrying value of License Agreement	$ 1,499,731

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Asset Acquisition and License Agreement - Schedule of Fair Value and Carrying Value of License Agreement (Details) (Parenthetical)	6 Months Ended
	Feb. 28, 2018 CAD ($) shares	Feb. 28, 2018 USD ($) $ / shares	Aug. 31, 2017 CAD ($)
License assignment fee payable	$ 698,091		$ 683,212
License Agreement [Member]
Number of shares exchanged | shares	50,000,000
License Agreement [Member] | USD [Member]
Exchanged share, per share value | $ / shares		$ 0.002
License assignment fee payable		$ 1,000,000

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Summary of Significant Accounting Policies (Details Narrative)					6 Months Ended
	Dec. 28, 2016	Jun. 21, 2016	Oct. 16, 2014	Sep. 29, 2009	Feb. 28, 2018
Mould equipment, depreciation percentage					20.00%
Website, useful life					5 years
Warranty period					1 year
United States Patent [Member]
Patent expiration date				Sep. 29, 2026
Estimate of useful life of patent				17 years
Australian Patent [Member]
Patent expiration date			Apr. 05, 2027
Estimate of useful life of patent			13 years
Canadian Patent [Member]
Patent expiration date		Apr. 05, 2027
Estimate of useful life of patent		11 years
Chinese Patent [Member]
Patent expiration date	Feb. 01, 2033
Estimate of useful life of patent	16 years

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Loss Per Share - Schedule of Computation of Loss Per Share (Details) - CAD ($)	6 Months Ended		12 Months Ended
	Feb. 28, 2018	Feb. 28, 2017	Aug. 31, 2017	Aug. 31, 2016
Earnings Per Share [Abstract]
Net loss	$ (363,349)	$ (517,167)	$ (5,071,687)	$ (1,030,293)
Common stock	57,532,843	56,892,843
Number of shares used in per share computations	57,507,318	56,632,031
Loss per share	$ (0.01)	$ (0.01)

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Design and Production - NRFTS (Details Narrative) - RBC Medical Innovations [Member]		6 Months Ended		12 Months Ended
	Feb. 20, 2017 USD ($)	Feb. 28, 2018 CAD ($)	Feb. 28, 2018 USD ($)	Aug. 31, 2017 CAD ($)	Aug. 31, 2017 USD ($)
Initiation Milesstone Stage [Member]
Payment on design and production		$ 71,657		$ 73,453
Second Milesstone Stage [Member]
Payment on design and production				$ 69,700
USD [Member]
Project estimated cost	$ 1,748,000
USD [Member] | Initiation Stage [Member]
Payment on design and production	55,600
USD [Member] | Product Requirements and Documentation [Member]
Payment on design and production	55,600
USD [Member] | Deliverables and Completion [Member]
Payment on design and production	$ 55,800
USD [Member] | Initiation Milesstone Stage [Member]
Payment on design and production			$ 55,600		$ 55,600
USD [Member] | Second Milesstone Stage [Member]
Payment on design and production					$ 55,600

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Equipment, Net (Details Narrative) - CAD ($)	6 Months Ended
	Feb. 28, 2018	Feb. 28, 2017
Property, Plant and Equipment [Abstract]
Depreciation	$ 3,420	$ 4,275

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Equipment, Net - Schedule of Equipment Net (Details) - CAD ($)	Feb. 28, 2018	Aug. 31, 2017
Property, Plant and Equipment [Abstract]
Mould equipment	$ 155,300	$ 155,300
Website	28,875	28,875
Equipment at cost	184,175	184,175
Accumulated depreciation	(153,398)	(149,978)
Equipment, net	$ 30,777	$ 34,197

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Patents, Net (Details Narrative) - CAD ($)	Feb. 28, 2018	Aug. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Patents, nominal amount	$ 4	$ 4
Inventory, nominal amount	$ 1	$ 1

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Patents, Net - Schedule of Patents (Details) - CAD ($)	Feb. 28, 2018	Aug. 31, 2017	Mar. 11, 2013
Patent, Gross carrying amount	$ 6,377,260	$ 6,377,260
Patent, Accumulated amortization	2,989,101	2,989,101
Patent, Write-downs	3,388,155	3,388,155
Patent, Net carrying amount	4	4
United States Patent [Member]
Patent, Gross carrying amount	6,342,279	6,342,279	$ 6,342,279
Patent, Accumulated amortization	2,984,602	2,984,602
Patent, Write-downs	3,357,676	3,357,676
Patent, Net carrying amount	1	1
Australian Patent [Member]
Patent, Gross carrying amount	4,976	4,976
Patent, Accumulated amortization	1,145	1,145
Patent, Write-downs	3,830	3,830
Patent, Net carrying amount	1	1
Canadian Patent [Member]
Patent, Gross carrying amount	17,406	17,406
Patent, Accumulated amortization	2,024	2,024
Patent, Write-downs	15,381	15,381
Patent, Net carrying amount	1	1
Chinese Patent [Member]
Patent, Gross carrying amount	5,806	5,806
Patent, Accumulated amortization	1,330	1,330
Patent, Write-downs	4,475	4,475
Patent, Net carrying amount	1	1
Patents Abandoned [Member]
Patent, Gross carrying amount	6,793	6,793
Patent, Accumulated amortization
Patent, Write-downs	6,793	6,793
Patent, Net carrying amount

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License Agreement, Net - Schedule of License Agreement (Details) - CAD ($)	Feb. 28, 2018	Aug. 31, 2017
Finite-Lived Intangible Assets, Net [Abstract]
License Agreement, Gross carrying amount	$ 1,499,731	$ 1,499,731
License Agreement, Accumulated amortization	281,199	187,466
License Agreement, Net carrying amount	$ 1,218,532	$ 1,312,265

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License Agreement, Net - Schedule of Amortization Expense on Intangible Assets (Details) - CAD ($)	Feb. 28, 2018	Aug. 31, 2017
Total		$ 4
License Agreement [Member]
2018	$ 93,733
2019	187,466
2020	187,466
2021	187,466
2022	187,466
Thereafter	374,935
Total	$ 1,218,532

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Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - CAD ($)	Feb. 28, 2018	Aug. 31, 2017
Payables and Accruals [Abstract]
Trade payables	$ 1,159,873	$ 929,855
Vendor accruals	162,148	145,746
Accounts payable and accrued liabilities	$ 1,322,021	$ 1,075,601

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Related Party Transactions (Details Narrative)	6 Months Ended				12 Months Ended
	Feb. 28, 2018 CAD ($)	Feb. 28, 2018 USD ($)	Feb. 28, 2017 CAD ($)	Feb. 28, 2017 USD ($)	Aug. 31, 2017 CAD ($)	Aug. 31, 2017 USD ($)	Aug. 31, 2016 CAD ($)	Aug. 31, 2016 USD ($)	Feb. 28, 2018 USD ($)	Aug. 31, 2017 USD ($)	Feb. 28, 2017 USD ($)	Aug. 31, 2016 USD ($)
Unsecured bear interest rate	3.00%								3.00%
Due on demand	$ 219,500
Debt outstanding	12,500
Consulting fees	29,396		$ 31,636
President [Member]
Advances payable to related parties	232,000		232,000		$ 232,000		$ 257,500
Interest payable to related parties	29,030		22,069		25,578		18,578
Reimbursable expenses	1,134		3,984		5,329		10,477
Due to related party	354,020		238,307		271,984		215,224
Consulting fees	181,070		181,070		181,070		181,070
Advanced from related party							5,000
Interest expense	3,451		3,491		7,000		7,696
Consulting fees paid	78,589		82,906
President [Member] | USD [Member]
Consulting fees		$ 135,022		$ 43,097		$ 72,522		$ 26,040
Consulting fees paid		62,500		62,500
Chief Executive Officer [Member]
Advances payable to related parties	$ 46,000
Unsecured bear interest rate	2.00%								2.00%
Interest payable to related parties	$ 2,480
Due to related party	160,881		95,115		79,102		34,154
Advanced from related party	46,000
Interest expense	2,480
Consulting fees paid	78,589		82,906
Chief Executive Officer [Member] | USD [Member]
Due to related party									$ 125,600	$ 63,100	$ 71,618	$ 26,040
Consulting fees paid		62,500		62,500
Major Shareholder [Member]
Advances payable to related parties							12,500
Interest payable to related parties	761		761		761		761
Reimbursable expenses	276
Due to related party	341,211		237,540		259,448		215,224
Consulting fees	181,070		181,070		181,070		181,070
Consulting fees paid	78,589		82,906
Major Shareholder [Member] | USD [Member]
Consulting fees		125,022		42,519		$ 62,522		$ 26,040
Consulting fees paid		$ 62,500		$ 62,500
Chief Financial Officer [Member]
Due to related party	$ 75,000		$ 75,000		$ 75,000		$ 75,000

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Advances from Shareholders (Details Narrative) - CAD ($)	6 Months Ended		12 Months Ended
	Feb. 28, 2018	Feb. 28, 2017	Aug. 31, 2017	Aug. 31, 2016
Unsecured bear interest rate	3.00%
Shareholder [Member]
Advances payable	$ 145,000	$ 145,000	$ 145,000	$ 157,500
Unsecured bear interest rate	3.00%
Interest expense	$ 2,157	2,158	4,351	4,738
Accrued interest payable	$ 15,539	$ 11,189	$ 13,382	$ 9,031

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License Assignment Fee Payable (Details Narrative)		6 Months Ended
	Oct. 01, 2016 USD ($)	Feb. 28, 2018 USD ($)	Feb. 28, 2018 CAD ($)	Feb. 28, 2018 USD ($)	Aug. 31, 2017 CAD ($)	Aug. 31, 2017 USD ($)
License assignment fee payable			$ 698,091		$ 683,212
Zoran K Corporation [Member]
License assignment fee payable			$ 698,091		$ 683,212
Zoran K Corporation [Member] | USD [Member]
License assignment fee payable				$ 545,000		$ 545,000
Share Exchange Agreement [Member] | Zoran K Corporation [Member] | USD [Member]
License assignment fee payable				$ 1,000,000
Debt periodic payment	$ 50,000
Gross proceeds from sale of stock		$ 1,000,000

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Commitments (Details Narrative)			6 Months Ended		12 Months Ended
	Jun. 13, 2016 $ / shares	Jun. 13, 2016 USD ($) shares	Feb. 28, 2018 CAD ($)	Feb. 28, 2017 CAD ($)	Aug. 31, 2017 CAD ($)	Aug. 24, 2016 shares
Premises lease rental			$ 13,139	$ 6,625
Premises Lease [Member]
Premises lease rental					$ 21,000
Consultant [Member]
Share issued during period | shares		1,000,000
Consultant [Member] | USD [Member]
Share issued during period, value		$ 250,000
MCM Agreement [Member]
Accrued remuneration			80,770		80,770
ZKC Agreement [Member]
Accrued remuneration
Consulting Agreement [Member] | Consultant [Member]
Consulting agreement period		10 years
Earnings per share | $ / shares	$ 0.05
Share issued during period | shares		20,000,000
Consulting Agreement [Member] | Consultant [Member] | USD [Member]
Remuneration		$ 125,000
Subco [Member]
Preferred stock shares issued | shares						750,000
Edgewater Consulting Corp [Member]
Accrued remuneration			$ 75,000		$ 75,000

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Stockholders’ Deficiency (Details Narrative)												6 Months Ended			12 Months Ended
		Sep. 21, 2017 CAD ($) $ / shares shares	Sep. 07, 2017 CAD ($) shares	Sep. 07, 2017 USD ($) shares	Nov. 02, 2016 CAD ($) shares	Nov. 02, 2016 USD ($) shares	Oct. 31, 2016 CAD ($) $ / shares shares	Oct. 31, 2016 USD ($) shares	Aug. 25, 2016	Aug. 24, 2016 shares	Jun. 28, 2013 shares	Feb. 28, 2018 CAD ($) shares	Feb. 28, 2018 USD ($) $ / shares shares	Feb. 28, 2017 CAD ($)	Aug. 31, 2017 CAD ($) $ / shares shares	Aug. 31, 2017 USD ($) shares	Aug. 31, 2016 shares	Sep. 07, 2017 $ / shares	Aug. 31, 2017 $ / shares shares	Nov. 02, 2016 $ / shares	Oct. 31, 2016 $ / shares
Common stock, shares authorized | shares													500,000,000		500,000,000				500,000,000
Reverse stock split									The Company completed a reverse split of the Company's common stock at the ratio of one new share for every two existing shares. All share and per share amounts have been adjusted to reflect this reverse split.
Common stock, shares issued | shares													57,532,843		56,892,843		56,132,073		56,892,843
Common stock, shares outstanding | shares													57,532,843		56,892,843		56,132,073		56,892,843
Subscriptions were received														$ 395,580
Canadian Financing [Member]
Common stock shares issued during period | shares							140,000	140,000
Shares issued price per share | $ / shares							$ 0.50
Proceeds from issuance of common stock							$ 70,000
Warrants exercise price per share | $ / shares							$ 0.80
Warrant to purchase, shares | shares							1
Common stock allocated value							$ 41,314
Share purchase warrants allocated value							$ 28,686
US Financing [Member]
Common stock shares issued during period | shares					400,000	400,000	220,770	220,770
Proceeds from issuance of common stock					$ 524,230		$ 146,716
Warrant to purchase, shares | shares					1		1						15,000
Common stock allocated value					$ 286,950		$ 86,027
Share purchase warrants allocated value					$ 237,280		$ 60,689
Finder's fees												19,899
Purchase warrant, value												$ 8,742
Common Stock [Member]
Common shares acquired | shares	[1]																50,000,000
Common stock shares issued during period | shares		10,000	630,000	630,000								5,000	5,000
Shares issued price per share | $ / shares		$ 0.80
Proceeds from issuance of common stock		$ 8,000	$ 830,674
Warrant to purchase, shares | shares			1
Common stock allocated value			$ 491,041
Share purchase warrants allocated value			$ 339,633
Finder's fees												$ 6,435
Purchase warrant, value												2,581
Proceeds from exercise of warrants															$ 2,049
Stock Subscriptions [Member]
Shares issued price per share | $ / shares															$ 1.00
Proceeds from issuance of common stock															$ 838,674
Warrants exercise price per share | $ / shares															$ 1
Subscriptions were received												$ 10,000			$ 838,674
Number of shares subscriptions during the period | shares															630,000	630,000
Common stock subscriptions period															24 months	24 months
Stock Subscriptions [Member] | Private Placement [Member]
Subscriptions were received															$ 8,000
Warrant [Member]
Common stock shares issued during period | shares															10,000	10,000
Shares issued price per share | $ / shares															$ 0.80
Warrants outstanding of weighted-average remaining contractual life												8 months 2 days	8 months 2 days		1 year 2 months 1 day	1 year 2 months 1 day
Tropic Spa Inc [Member] | Common Stock [Member]
Common shares acquired | shares										21,672,623	39,015,439	296,500	296,500
Subco [Member] | Preferred Stock [Member]
Number of preferred stock for exchange | shares										10,836,312	39,015,439	148,250	148,250
USD [Member]
Common stock, par share value | $ / shares													$ 0.001
Warrant to purchase, shares | shares													635,000
USD [Member] | US Financing [Member]
Shares issued price per share | $ / shares																				$ 1.00	$ 0.50
Proceeds from issuance of common stock						$ 400,000		$ 110,385
Warrants exercise price per share | $ / shares													$ 1.40							$ 1.40	$ 0.80
USD [Member] | Common Stock [Member]
Shares issued price per share | $ / shares																		$ 1.00
Proceeds from issuance of common stock				$ 630,000
Warrants exercise price per share | $ / shares													$ 1.40					$ 1.40
Finder's fees													$ 5,000
USD [Member] | Stock Subscriptions [Member]
Common stock exercisable price per share | $ / shares																			$ 1.40
USD [Member] | Stock Subscriptions [Member] | Private Placement [Member]
Subscriptions were received																$ 630,000
USD [Member] | Warrant [Member]
Warrants outstanding of weighted-average remaining contractual life												1 year 1 month 6 days	1 year 1 month 6 days		1 year 2 months 1 day	1 year 2 months 1 day

[1] The above presentation reflects a 1:2 reverse split of the Company's common stock on August 25, 2016. See Note 16.

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Stockholders’ Deficiency - Schedule of Stock Purchase Warrants (Details)	6 Months Ended
	Feb. 28, 2018 $ / shares shares	Feb. 28, 2018 $ / shares shares	Aug. 31, 2017 shares	Aug. 31, 2016 shares
USD [Member]
Stock Purchase Warrants Issued, Shares	635,000	635,000
Stock Purchase Warrants Outstanding, Shares	1,270,770	1,270,770	635,700
October 31, 2018 [Member]
Stock Purchase Warrants Price Per Share | $ / shares	$ 0.80
Stock Purchase Warrants Issued, Shares
Exercised
Stock Purchase Warrants Outstanding, Shares	130,000	130,000	130,000
October 31, 2018 [Member] | USD [Member]
Stock Purchase Warrants Price Per Share | $ / shares		$ 0.80
Stock Purchase Warrants Issued, Shares
Exercised
Stock Purchase Warrants Outstanding, Shares	220,770	220,770	220,700
September 30, 2018 - Finder [Member] | USD [Member]
Stock Purchase Warrants Price Per Share | $ / shares		$ 1.40
Stock Purchase Warrants Issued, Shares
Exercised
Stock Purchase Warrants Outstanding, Shares	15,000	15,000	15,000
November 2, 2018 [Member] | USD [Member]
Stock Purchase Warrants Price Per Share | $ / shares		$ 1.40
Stock Purchase Warrants Issued, Shares
Exercised
Stock Purchase Warrants Outstanding, Shares	400,000	400,000	400,000
July 17,2019 – Finder [Member] | USD [Member]
Stock Purchase Warrants Price Per Share | $ / shares		$ 1.40
Stock Purchase Warrants Issued, Shares	5,000	5,000
Exercised
Stock Purchase Warrants Outstanding, Shares	5,000	5,000
September 7, 2019 | USD [Member]
Stock Purchase Warrants Price Per Share | $ / shares		$ 1.40
Stock Purchase Warrants Issued, Shares	630,000	630,000
Exercised
Stock Purchase Warrants Outstanding, Shares	630,000	630,000

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Stockholders’ Deficiency - Schedule of Stock Options Valuation Assumptions (Details) - Warrant [Member]	6 Months Ended	12 Months Ended
	Feb. 28, 2018	Aug. 31, 2017
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	1.74%
Expected stock price volatility	100.00%	100.00%
Expected life of warrants		2 years
Minimum [Member]
Risk-free interest rate		0.54%
Expected life of warrants	6 months 29 days
Maximum [Member]
Risk-free interest rate		0.55%
Expected life of warrants	1 year 6 months 7 days

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Contingent Liability (Details Narrative) - shares				6 Months Ended	12 Months Ended
		Aug. 24, 2016	Jun. 28, 2013	Feb. 28, 2018	Aug. 31, 2016
Common Stock [Member]
Common shares acquired	[1]				50,000,000
Tropic Spa Inc [Member] | Common Stock [Member]
Common shares acquired		21,672,623	39,015,439	296,500
Subco [Member]
Preferred stock outstanding				50,000,000
Subco [Member] | Preferred Stock [Member]
Number of preferred stock for exchange		10,836,312	39,015,439	148,250

[1] The above presentation reflects a 1:2 reverse split of the Company's common stock on August 25, 2016. See Note 16.