DERIVATIVE LIABILITY

3 Months Ended

Oct. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE LIABILITY

9. DERIVATIVE LIABILITY

The exercise price of the Company’s share purchase warrants is fixed in Canadian dollars and the functional currency of the Company is the USD. These warrants are considered to be a derivative as a variable amount of cash in the Company’s functional currency will be received on exercise of the warrants. Accordingly, the share purchase warrants issued as part of past financings, are classified and accounted for as a derivative liability.

The following table shows a continuity of the Company’s derivative liability:

	Derivative liability			Number of warrants accounted for as derivative liability
Balance, August 1, 2019	$	1,604,768			80,494,276
Addition		869,673			22,913,217
Expiry		(577	)		(7,077,140	)
Fair value adjustment		(729,685	)		-
Balance, October 31, 2019	$	1,744,179			96,330,353

As the initial recognition as well as the revaluation of these warrants both took place within the three-month period ended October 31, 2019, the Company recorded a loss on fair value of derivative liability of $1,744,179 during the period (October 31, 2018 - $Nil)

The following weighted average assumptions were used for the Black-Scholes pricing model valuation of warrants as at October 31, 2019 and August 1, 2019:

	October 31, 2019	August 1, 2019
Risk-free interest rate	1.52%	1.52%
Expected life of warrants	0.16 to 2.80 years	0.16 to 2.93 years
Expected annualized volatility	92.2% to 125.2%	115.6% to 127.5%
Dividend	Nil	Nil
Forfeiture rate	0%	0%