NOTE

CAPITAL STOCK

Equity Financing

September 23, 2020,

we completed a public offering of

12,500,000

units at a price of

$1.20

per unit for gross proceeds of

$15,000,000

(the

“September 2020

Offering”). Each unit was comprised of

one

share of our Company and

one

-half of

one

share purchase warrant, and each whole warrant entitles its holder to acquire

one

share of our Company at an exercise price of

$1.80

per share and expiring

months from the date of issuance. In connection with the

September 2020

Offering, we also issued compensation share purchase warrants to agents as part of share issuance costs to purchase

583,333

shares of our Company exercisable at an exercise price of

$1.80

per share and expiring

months from the date of issuance.

The shares were valued at the Company's closing price of

$0.96

per share at

September 23, 2020.

The share purchase warrants were valued using the Black-Scholes option pricing model with the following assumptions.

Expected Risk Free Interest Rate	0.14	%
Expected Annual Volatility	76.81	%
Expected Contractual Life in Years	2.00
Expected Annual Dividend Yield	0.00	%

The net proceeds from the

September 2020

Offering were allocated to the fair values of the shares and share purchase warrants as presented below.

Fair Value of Shares	$	12,000,000
Fair Value of Share Purchase Warrants		1,445,756
Total Fair Value Before Allocation to Net Proceeds	$	13,445,756

Gross Proceeds	$	15,000,000
Share Issuance Costs - Cash		(878,344	)
Net Cash Proceeds Received	$	14,121,656

Relative Fair Value Allocation to:
Shares	$	12,603,224
Share Purchase Warrants		1,518,432
	$	14,121,656

Share Purchase Warrants

A continuity schedule of outstanding share purchase warrants for the

three

months ended

October 31, 2020,

is as follows:

	Number of Warrants		Weighted Average Exercise Price
Balance, July 31, 2020		7,721,981	$	2.03
Issued in connection with September 2020 Offering		6,833,333		1.80
Balance, October 31, 2020		14,555,314	$	1.92

A summary of share purchase warrants outstanding and exercisable at

October 31, 2020,

is as follows:

Weighted Average Exercise Price		Number of Warrants Outstanding		Weighted Average Remaining Contractual Life (Years)		Expiry Date
$	1.25		150,000		0.15	December 23, 2020
	1.50		150,000		0.15	December 23, 2020
	2.05		7,063,253		0.42	April 3, 2021
	2.30		308,728		1.77	August 9, 2022
	1.64		50,000		2.55	May 21, 2023
	1.80		6,833,333		1.89	September 23, 2022
$	1.92		14,555,314		1.14

Stock Options

October 31, 2020,

we had

one

stock option plan, our

2020

Stock Incentive Plan, which superseded and replaced our

2019

Stock Incentive Plan.

A continuity schedule of outstanding stock options for the underlying shares for the

three

months ended

October 31, 2020,

is as follows:

	Number of Stock Options			Weighted Average Exercise Price
Balance, July 31, 2020		15,514,750		$	1.13
Exercised		(28,500	)		0.93
Expired		(1,315,000	)		1.43
Balance, October 31, 2020		14,171,250		$	1.10

During the

three

months ended

October 31, 2020,

28,500

stock options were exercised, of which

18,500

stock options were exercised on a forfeiture basis, resulting in

3,532

shares being issued and

14,968

shares being forfeited as payment of exercise costs. The balance of

10,000

stock options were exercised on a cash basis where we received

$9,309

in cash proceeds. The total intrinsic value of these stock options exercised was

$6,378.

A continuity schedule of outstanding unvested stock options at

October 31, 2020,

and the changes during the period, is as follows:

	Number of Unvested Stock Options			Weighted Average Grant-Date Fair Value
Balance, July 31, 2020		6,797,471		$	0.46
Vested		(718,755	)		0.46
Balance, October 31, 2020		6,078,716		$	0.46

October 31, 2020,

unrecognized stock-based compensation expense related to the unvested portion of stock options totaled

$1,763,358

to be recognized over the next

1.25

years.

October 31, 2020,

the aggregate intrinsic value under the provisions of ASC

718

of all outstanding stock options was estimated at

$11,020

(vested:

$5,510

and unvested:

$5,510

A summary of stock options outstanding and exercisable at

October 31, 2020,

is as follows:

			Options Outstanding						Options Exercisable
Range of Exercise Prices			Outstanding at October 31, 2020		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Exercisable at October 31, 2020		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
$0.80	to	$0.99		8,141,000	$	0.92		7.38		3,487,284	$	0.93		4.77
$1.00	to	$1.49		3,900,000		1.19		4.58		2,475,000		1.25		1.84
$1.50	to	$2.81		2,130,250		1.64		2.56		2,130,250		1.64		2.56
				14,171,250	$	1.10		5.88		8,092,534	$	1.21		3.29

Restricted Stock Units

A summary of outstanding and unvested restricted stock units (“RSU”s) at

October 31, 2020,

is as follows:

Grant Date	Number of Restricted Stock Units		Grant Date Fair Value		Remaining Life (Years)		Aggregate Intrinsic Value
July 30, 2019		310,000	$	0.94		1.75	$	267,406
July 16, 2020		1,305,000		0.91		2.71		1,125,693
		1,615,000	$	0.92		2.52	$	1,393,099

During the

three

months ended

October 31, 2020

and

2019,

stock-based compensation relating to the RSUs totaled

$271,834

and

$66,928,

respectively. At

October 31, 2020,

outstanding unvested RSUs totaled

1,615,000

(

July 31, 2020:

1,615,000

), and unrecognized compensation costs relating to unvested RSUs totaled

$1,043,666,

which is expected to be recognized over a period of approximately

1.29

years.

Performance Based Restricted Stock Units

During the

three

months ended

October 31, 2020

and

2019,

stock-based compensation relating to target performance based restricted stock units (“PRSU”s) totaled

$37,544

and

$68,165,

respectively. At

October 31, 2020,

outstanding unvested PRSUs totaled

333,750

(

July 31, 2020:

333,750

), and unrecognized compensation costs relating to unvested PRSUs totaled

$201,808,

which is expected to be recognized over a period of approximately

1.01

years.

Stock

Based Compensation

A summary of stock-based compensation expense is as follows:

	Three Months Ended October 31,
	2020		2019
Stock-Based Compensation for Consultants
Common stock issued to consultants	$	119,470	$	107,608
Amortization of stock option expenses		103,928		46,971
		223,398		154,579
Stock-Based Compensation for Management
Common stock issued to management		-		34,707
Amortization of stock option expenses		253,731		243,377
Amortization of RSU & PRSU expenses		309,378		135,093
		563,109		413,177
Stock-Based Compensation for Employees
Common stock issued to employees		212,870		128,028
Amortization of stock option expenses		379,138		236,791
		592,008		364,819

Settlement of share issuance obligation		-		(15,189	)
	$	1,378,515	$	917,386