Long-Term Debt

9 Months Ended

Sep. 30, 2020

12. Long-Term Debt

		Credit			Credit			Corporate			Mortgage			Canada Emergency		September 30,			December 31,
		Facility			Facility			Term Loan			Payable			Business Account		2020 Total			2019 Total
		(a)			(b)			(c)			(d)			(e)
Long-Term Debt	$	736,341		$	411,003		$	2,500,082		$	1,947,112		$	59,976	$	5,654,514		$	5,793,677
Current portion		(736,341	)		(411,003	)		(2,500,082	)		(1,947,112	)		—	$	(5,594,538	)		(5,793,677	)
Long-term portion	$	—		$	—		$	—		$	—		$	59,976	$	59,976		$	—

On March 31, 2020, PACE and the Company reached an agreement with respect to the repayment of the outstanding balances owing to PACE ((a), (b) and (c) above). One of the credit facilities, in the amount of $34,391 ($48,788 CAD), was repaid in full on April 3, 2020, as noted below and the remaining credit facilities and the corporate term loan are due on or before September 30, 2020. On April 3, 2020, the Company provided PACE with funds, held in trust on March 31, 2020, to bring the remaining credit facilities and the corporate term loan current. The funds remaining, which were held in trust on March 31, 2020 are to be used to satisfy the principal and interest payments on the noted debt partially, through August 2020. Included in prepaid expenses and deposits in the interim condensed consolidated financial statements is $50,797 ($69,224 CAD) relating to prepaid principal and interest payments. In addition, the letter of credit the Company has with PACE in favor of the Ministry of the Environment, Conservation and Parks (the "MECP"), was renewed to September 30, 2020. On April 3, 2020, the shares previously pledged as security to PACE, were released and are currently held as security for the personal guarantee from the CEO and charge against the Haute leased premises. This long-term debt is considered to be in default as a result of defaults on the convertible promissory notes (see note 14). As a result, PACE may demand repayment before September 30, 2020.

Refer also to going concern, note 2 and subsequent events, note 20 (a).

The remaining PACE long-term debt was initially payable as noted below:

(a)	The credit facility bears interest at the PACE base rate of 7.00% plus 1.25% per annum, currently 8.25%, is payable in monthly blended installments of principal and interest of $6,570 ($8,764 CAD) and matures on September 2, 2022. The first and only advance on the credit facility on February 2, 2017, in the amount of $1,199,520 ($1,600,000 CAD), is secured by a business loan general security agreement, a $1,199,520 ($1,600,000 CAD) personal guarantee from the CEO and a charge against the Haute leased premises. Also pledged as security are the shares of the wholly-owned subsidiaries, and a limited recourse guarantee against each of these parties. As noted above, the pledged shares were delivered by PACE and are currently held as security for the personal guarantee from the CEO and charge against the Haute leased premises. The credit facility is fully open for prepayment at any time without notice or bonus.

(b)	The credit facility advanced on June 15, 2017, in the amount of $449,820 ($600,000 CAD), bears interest at the PACE base of 7.00% plus 1.25% per annum, currently 8.25%, is payable in monthly blended installments of principal and interest of $3,674 ($4,901 CAD), and matures on September 2, 2022. The credit facility is secured by a variable rate business loan agreement on the same terms, conditions and security as noted above.

(c)	The corporate term loan advanced on September 13, 2017, in the amount of $2,791,993 ($3,724,147 CAD), bears interest at PACE base rate of 7.00% plus 1.25% per annum, currently 8.25%, is payable in monthly blended installments of principal and interest of $22,274 ($29,711 CAD), and matures September 13, 2022. The corporate term loan is secured by a business loan general security agreement representing a floating charge over the assets and undertakings of the Company, a first priority charge under a registered debenture and a lien registered under the Personal Property Security Act in the amount of $2,999,533 ($4,000,978 CAD) against the assets including inventory, accounts receivable and equipment. The corporate term loan also included an assignment of existing contracts included in the asset purchase agreement (the "APA").

For the three and nine-month periods ended September 30, 2020, $70,105 ($93,162 CAD) and $225,346 ($304,893 CAD) (2019-$78,919; $104,202 CAD and $234,441; $311,592 CAD) respectively, in interest was incurred on the PACE long-term debt. As at September 30, 2020 $57,063 ($76,114 CAD) (December 31, 2019-$124,926; $162,263 CAD) in accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheets.

(d) The Company obtained a 1st. mortgage provided by private lenders to finance the acquisition of the shares of 1684567 and to provide funds for additional financing needs. The mortgage has a principal amount of $1,949,220 ($2,600,000 CAD), is repayable interest only on a monthly basis at an annual rate of the higher of the Royal Bank of Canada's prime rate plus 6.05% per annum (currently 8.50%) and 10% per annum with a maturity date of October 19, 2020. The mortgage payable is secured by the shares held of 1684567, a first mortgage on the land described in note 9, long-lived assets, in the interim condensed consolidated balance sheets with a carrying value of $1,422,931 ($1,898,000 CAD), a general assignment of rents, and a fire insurance policy. Financing fees on the mortgage totaled $115,155 ($156,929 CAD). As at September 30, 2020, $7,924 ($10,570 CAD) (December 31, 2019-$8,138; $10,570 CAD) of accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheets. In addition, as at September 30, 2020, there is $2,107 ($2,811 CAD) (2019-$74,219; $97,133 CAD) of unamortized finance fees.

For the three and nine-month periods ended September 30, 2020, $48,809 ($65,000 CAD) and $144,125 ($195,000 CAD) (2019-$34,162; $45,343 CAD and 47,845; $63,590 CAD) respectively, in interest was incurred on the mortgage payable

Refer also to subsequent events, note 20 (b) for details of an additional advance on this 1st. mortgage.

(e) As a result of the COVID-19 virus, the Government of Canada launched the Canada Emergency Business Account (the "CEBA"), a program to ensure that small businesses have access to the capital they need to see them through the current challenges and better position them to quickly return to providing services to their communities and creating employment. The program is administered by Canadian chartered banks and credit unions.

On April 27, 2020, the Company received a total of $59,976 ($80,000 CAD) under this program, from its Canadian chartered bank.

Under the initial term date of the loans, which is detailed in the CEBA term loan agreements, the amount is due on December 31, 2022 and is interest-free. If the loans are not repaid by December 31, 2022, the Company can make payments, interest only, on a monthly basis at an annual rate of 5%, under the extended term date, beginning January 31, 2023, maturing December 31, 2025. In addition, if 75% of the loans are repaid by the initial term, December 31, 2022, the Company's Canadian chartered bank will forgive the balance. The CEBA term loan agreements contain a number of positive and negative covenants, for which the Company is not in full compliance.