Convertible Debentures

12 Months Ended

Jan. 31, 2022

Convertible Debenture

10. Convertible Debentures

	Convertible Debentures $
Balance, January 31, 2019		3,476,690
Repayments		(3,500,000	)
Debt modification		(250,000	)
Accretion		331,803
Interest payments		(58,493	)
Balance, January 31, 2020		–
Proceeds from issuances of convertible debentures		800,000
Transfer of conversion component to equity		(12,671	)
Repayment		(200,000	)
Conversion to common shares		(100,000	)
Accretion		12,671
Balance, January 31, 2021		500,000
Repayment		(250,000	)
Debt modification		(56,264	)
Accretion and interest		44,144
Balance, January 31, 2022		237,880

(a) On March 2, 2018, the Company issued convertible debentures with two non-related parties totaling $5,000,000. The debentures were secured under a General Security Agreement, bore interest at 10% per annum payable quarterly and matured on March 2, 2019. The notes were convertible into common shares at a conversion price equal to $17.40 per common share. The effective interest rate had been determined as 29% per annum after deducting all the loan discounts.

On October 22, 2018, $1,500,000 of the convertible debentures were settled through the issuance of 375,000 units of the Company with each unit consisting of one common share and one share purchase warrant with an exercise price of $6.00 and three year expiry.

On October 22, 2018, the Company modified the conversion price on the remainder of the convertible debentures, totaling $3,500,000, to $4.20 per common share. The Company did not consider the modification to be an extinguishment of the $3,500,000 of the convertible debentures.

On March 2, 2019, the Company repaid $750,000 of the convertible debentures and extended the maturity of the remainder of the convertible debentures to June 2, 2019 for an extension fee of $250,000. The Company considered the extension to be a modification of the convertible debentures. The effective interest rate for the remaining terms of the convertible debentures had been determined as 46% per annum.

On May 16, 2019, the Company issued 59,524 common shares pursuant to the conversion of $250,000 of the Company convertible debentures (Note 12(w)). On the same date, the Company repaid the remaining principal amount of the convertible debentures of $2,500,000. Interest accretion expense on convertible debentures for the year ended January 31, 2020 was $380,754.

(b) On September 4, 2020, the Company issued an unsecured convertible debenture with a non-related party for $500,000. The debenture bears interest at 8% per annum, had an original maturity date of December 3, 2020 and is convertible into common shares at a conversion price equal to $1.15 per common share. On April 1, 2021, the maturity date was amended to May 3, 2022. On June 3, 2021, $250,000 of the note was repaid. The Company considered the extension and the repayment to be modifications of the convertible debenture and recorded a gain on debt modification of $56,264 during the year ended January 31, 2022. The effective interest rate for the remaining terms of the convertible debentures had been determined as 12% per annum.

On September 23, 2020, the Company issued an unsecured convertible debenture with a non-related party for $200,000. The debenture bears interest at 8% per annum and matures on December 22, 2020. The note is convertible into common shares at a conversion price equal to $1.15 per common share. The principal and accrued interest was repaid in full on November 1, 2020.

On September 25, 2020, the Company issued an unsecured convertible debenture with a non-related party for $100,000. The debenture bears interest at 8% per annum and matures on December 24, 2020. The note is convertible into common shares at a conversion price equal to $1.15 per common share. On January 14, 2021, 89,034 common shares were issued pursuant to the conversion of the outstanding principal and accrued interest on this convertible debenture totalling $102,389 (Note 12(o)).

The convertible debentures contain no financial covenants. The liability components of the convertible debentures were determined by using discounted cash flows to measure the fair values of similar liabilities that exclude convertibility features. The effective interest rates for the above convertible debentures have been determined as 14.4% per annum after deducting all the loan discounts. Accretion expense on convertible debentures for the year ended January 31, 2022 was $1,076 (2021 - $12,671; 2020 - $380,754). As at January 31, 2022, accrued interest of $43,068 is included in convertible debenture (2021 - $16,329; 2020 - $nil).