Financial instruments and financial risk factors

9 Months Ended

12 Months Ended

Jul. 31, 2021

Oct. 31, 2020

Financial instruments and financial risk factors

10.	Financial instruments and financial risk factors

Fair values

The Company’s financial instruments consist of cash, accounts receivables, accounts payable and accrued liabilities, loans payable. The fair values of the cash, trade receivables, accounts payable and accrued liabilities approximate their carrying amounts because of their current nature.

Fair value hierarchy levels 1 to 3 are based on th

degree to which the fair value is observable:

•

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

•

Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

•

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company’s financial assets measured at fair value on a recurring basis were calculated as follows:


	Balance $		Quoted prices in active markets for identical assets (Level 1) $		Significant other observable inputs (Level 2) $		Significant unobservable inputs (Level 3) $
As at July 31 , 2021
Accounts receivable		3,255,981		—		3,255,981		—

		3,255,981		—		3,255,981		—

As at October 31, 2020
Accounts receivable		890,229		—		890,229		—

		890,229		—		890,229		—

See note 3 above for additional details related to measurement of accounts receivable. The Company’s financial liabilities measured at fair value on a recurring basis were calculated as follows:


	Balance $		Quoted prices in active markets for identical assets (Level 1) $		Significant other observable inputs (Level 2) $		Significant unobservable inputs (Level 3) $
As at July 31 , 2021
Restricted share units		3,259,010		—		3,259,010		—

		3,259,010		—		3,259,010		—

As at October 31, 2020
Restricted share units		171,849		—		171,849		—

		171,849		—		171,849		—

Currency risk

It is management’s opinion that the Company is not exposed to significant currency risk as its cash is denominated in both Canadian and U.S. dollars and funds its operations accordingly.

Interest rate risk

Interest rate risk is the risk arising from the effect of changes in prevailing interest rates on the Company’s financial instruments. The Company is not exposed to significant interest rate risk, as it has no variable interest rate debt.

Credit, liquidity, and market risks

Credit risks associated with cash are minimal as the Company deposits majority of its cash with a large Canadian financial institution. The Company’s credit risks associated with receivables are managed and

exposure to potential loss is assessed as minimal. Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Company’s short-term, medium and long-term funding and liquidity requirements. Market risks associated with short-term investments are assessed as minimal as they are considered short

-term

in nature.

Capital risk management

The Company manages its capital to ensure that entities in the Company will be able to continue a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt (borrowings after deducting cash and bank balances) and equity of the Company (comprising issued share capital, contributed surplus and accumulated deficit as disclosed in Note 9).

The Company is not subject to any externally imposed capital requirements. The Company’s Board of Directors reviews the capital structure on a semi-annual basis. As part of this review, the Board considers the cost of capital and the risks associated with each class of capital.

10.	Financial instruments and financial risk factors

Fair values

The Company’s financial instruments consist of cash, accounts receivables, accounts payable and accrued liabilities, loans payable, convertible debt and the conversion feature of the convertible debt. The fair values of the cash, trade receivables, accounts payable and accrued liabilities approximate their carrying amounts because of their current nature.

Fair value hierarchy levels 1 to 3 are based on the degree to which the fair value is observable:

•

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

•

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

There were no transfers between the levels during the current or prior year.

The Company’s financial assets measured at fair value on a recurring basis were calculated as follows:


	Balance		Quoted prices in active markets for identical assets		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	$		$		$		$
As at October 31, 2020
Accounts receivable		890,229		—		890,229		—

		890,229		—		890,229		—

As at October 31, 2019
Accounts receivable		822,679		—		822,679		—

		822,679		—		822,679		—

The Company’s financial liabilities measured at fair value on a recurring basis were calculated as follows:


	Balance		Quoted prices in active markets for identical assets		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	$		$		$		$
As at October 31, 2020
Restricted share units		171,849		—		171,849		—

		171,849		—		171,849		—

As at October 31, 2019
Conversion feature of convertible debt		94,985		—		94,985		—

		94,985		—		94,985		—

Currency risk

It is management’s opinion that the Company is not exposed to significant currency risk as its cash is denominated in both Canadian and US dollars and funds its operations accordingly.

Interest rate risk

Credit, liquidity, and market risks

-term

in nature.

All of the Company’s financial liabilities have maturities as follows:


	Carrying amount		Contractual cash flows		Year 1		Year 2		Year 3		Year 4		Year 5		Thereafter
	$		$		$		$		$		$		$		$
As at October 31, 2020
Accounts payable and accrued liabilities		4,364,372		4,364,372		4,364,372		—		—		—		—		—
Restricted share units		171,849		171,849		171,849		—		—		—		—		—
Lease liabilities		3,613,170		4,529,662		805,946		680,943		568,434		584,269		479,833		1,410,237
Loan payable		2,247,878		2,628,652		1,782,888		845,763		—		—		—		—
Restoration provisions		321,400		333,866		—		81,166		—		—		52,627		200,074

		10,718,669		12,028,401		7,125,055		1,607,872		568,434		584,269		532,460		1,610,311

As at October 31, 2019
Accounts payable and accrued liabilities		1,148,986		1,148,986		1,148,986		—		—		—		—		—
Convertible debt		384,207		471,126		—		—		471,126		—		—		—
Conversion feature of convertible debt		94,985		—		—		—		—		—		—		—
Loan payable		87,381		87,381		7,282		7,282		7,282		7,282		7,282		50,971

		1,715,559		1,707,493		1,156,268		7,282		478,408		7,282		7,282		50,971

Capital risk management

The Company manages its capital to ensure that entities in the Company will be able to continue a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.

The capital structure of the Company consists of net debt (borrowings disclosed in notes 8 after deducting cash and bank balances) and equity of the Company (comprising issued share capital, contributed surplus and accumulated deficit as disclosed in Note 9).

The Company is not subject to any externally imposed capital requirements. The Company’s risk management committee reviews the capital structure on a semi-annual basis. As part of this review, the committee considers the cost of capital and the risks associated with each class of capital.