LOAN PAYABLE

3 Months Ended

Oct. 31, 2019

Debt Disclosure [Abstract]

LOAN PAYABLE

8. LOAN PAYABLE

On September 3, 2019, the Company completed a debt financing for $1,000,000. This loan has a term of 4 years and an interest rate of 10% compounded monthly for the first two years increasing to 20% in year 3 and to 25% in year 4. Interest will accrue and be paid along with the principal upon the maturity date. The lender received 11,500,000 bonus share purchase warrants as additional consideration for advancing the loan. The fair value of these warrants was determined to be $444,942 which was netted against the loan payable balance along with $15,000 paid to the lender for other issuance costs. Each warrant entitles the holder to acquire one share of common stock at an exercise price of $0.08 (C$0.10) for a period of three years from the date of issuance. This loan may be repaid prior to the maturity date, in whole or in part, provided that all accrued interest is paid. In addition, if total interest payments are less than $200,000, the difference will be paid to the Lender as prepayment compensation. The Loan is secured against the assets of the Company and its subsidiary. As at October 31, 2019, the balance of this loan including accrued interest of $15,630 is $555,688.