NOTE

: CAPITAL STOCK

A summary of share purchase warrants outstanding and exercisable at

January 31, 2020

is as follows:

Weighted Average Exercise Price		Number of Warrants Outstanding		Weighted Average Remaining Contractual Life (Years)	Expiry Date
$	1.25		150,000	0.90	December 23, 2020
	1.50		150,000	0.90	December 23, 2020
	2.05		7,063,253	1.17	April 3, 2021
	2.30		308,728	2.52	August 9, 2022
	1.64		50,000	3.30	May 21, 2023
$	2.03		7,721,981	1.23

A continuity schedule of outstanding share purchase warrants for the

six

months ended

January 31, 2020

is as follows:

	Number of Warrants			Weighted Average Exercise Price
Balance, July 31, 2019		19,443,910			1.94
Issued		300,000			1.38
Expired		(12,021,929	)		1.87
Balance, January 31, 2020		7,721,981		$	2.03

Stock Options

January 31, 2020,

we had

one

stock option plan, our

2019

Stock Incentive Plan, which superseded and replaced our

2018

Stock Incentive Plan (now, the “Stock Incentive Plan”).

A summary of stock options granted by the Company during the

six

months ended

January 31, 2020,

including corresponding grant date fair values and assumptions using the Black Scholes option pricing model is as follows:

Date		Options Granted				Exercise Price				Term (Years)				Fair Value				Expected Life (Years)				Risk-Free Interest Rate				Dividend Yield				Expected Volatility
August 7, 2019			597,650			$	0.91				10.00			$	303,160				5.00				1.51	%			0.00	%			66.10	%

These stock options are subject to a

-month vesting provision whereby at the end of the

first

three

and

six

months from the grant date,

12.5%

of the stock options granted become exercisable, and whereby at the end of each of

12,

and

months from the grant date,

25%

of the total stock options become exercisable.

A continuity schedule of outstanding stock options for the underlying shares for the

six

months ended

January 31, 2020,

is as follows:

	Number of Stock Options			Weighted Average Exercise Price
Balance, July 31, 2019		15,738,350		$	1.30
Granted		597,650			0.91
Expired		(5,990,000	)		1.34
Balance, October 31, 2019		10,346,000		$	1.25
Forfeited		(21,875	)		1.19
Expired		(37,500	)		1.20
Balance, January 31, 2020		10,286,625		$	1.25

A continuity schedule of outstanding unvested stock options at

January 31, 2020,

and the changes during the period, is as follows:

	Number of Unvested Stock Options			Weighted Average Grant-Date Fair Value
Balance, July 31, 2019		3,310,600		$	0.59
Granted		597,650			0.51
Vested		(645,550	)		0.61
Balance, October 31, 2019		3,262,700		$	0.57
Forfeited		(21,875	)		0.59
Vested		(806,534	)		0.62
Balance, January 31, 2020		2,434,291		$	0.55

January 31, 2020,

unrecognized stock-based compensation expense related to the unvested portion of stock options totaled

$701,836

to be recognized over the next

0.99

years.

January 31, 2020,

the aggregate intrinsic value under the provisions of ASC

718

of all outstanding stock options was estimated at

$Nil

(vested:

$Nil

and unvested:

$Nil

A summary of stock options outstanding and exercisable at

January 31, 2020

is as follows:

			Options Outstanding						Options Exercisable
Range of Exercise Prices			Outstanding at January 31, 2020		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Exercisable at January 31, 2020		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
$0.91	to	$0.99		4,227,625	$	0.94		6.11		2,309,334	$	0.94		3.30
$1.00	to	$1.49		3,572,500		1.22		1.92		3,531,250		1.22		1.89
$1.50	to	$3.75		2,486,500		1.84		2.95		2,011,750		1.91		2.83
				10,286,625	$	1.25		3.89		7,852,334	$	1.31		2.54

Restricted Stock Units

During Fiscal

2019,

the Company granted

465,000

restricted stock units (each, a “RSU”) to certain directors and officers of the Company under our Stock Incentive Plan.

During the

three

and

six

months ended

January 31, 2020,

stock-based compensation relating to the RSUs totaled

$66,928

and

$133,856

(

three

and

six

months ended

January 31, 2019:

$Nil

and

$Nil

), respectively. At

January 31, 2020,

outstanding unvested RSUs totaled

465,000

(

July 31, 2019:

465,000

) and unrecognized compensation costs relating to unvested RSUs totaled

$304,220,

which is expected to be recognized over a period of approximately

2.50

years.

Performance Based Restricted Stock Units

During Fiscal

2019,

the Company granted

445,000

performance based restricted stock units (each, a “PRSU”) to the Company’s executive officers under our Stock Incentive Plan.

During the

three

and

six

months ended

January 31, 2020,

stock-based compensation relating to the PRSUs totaled

$68,165

and

$136,330

(

three

and

six

months ended

January 31, 2019:

$Nil

and

$Nil

), respectively. At

January 31, 2020,

outstanding unvested PRSUs totaled

445,000

(

July 31, 2019:

445,000

) and unrecognized compensation costs relating to unvested PRSUs totaled

$375,682,

which is expected to be recognized over a period of approximately

2.50

years.

Stock

Based Compensation

A summary of stock-based compensation expense is as follows:

	Three Months Ended January 31,				Six Months Ended January 31,
	2020		2019		2020			2019
Stock-Based Compensation for Consultants
Common stock issued for consulting services	$	126,150	$	229,806	$	233,758		$	360,610
Amortization of stock option expenses		53,554		30,319		100,525			84,720
		179,704		260,125		334,283			445,330
Stock-Based Compensation for Management
Common stock issued to management		34,100		35,639		68,807			70,983
Amortization of stock option expenses		162,728		139,900		406,105			356,704
Amortization of RSU & PRSU expenses		135,093		-		270,186			-
		331,921		175,539		745,098			427,687
Stock-Based Compensation for Employees
Common stock issued to employees		129,997		124,872		258,025			248,695
Amortization of stock option expenses		156,628		186,806		393,419			467,154
		286,625		311,678		651,444			715,849

Settlement of share issuance obligation		-		-		(15,189	)		-
	$	798,250	$	747,342	$	1,715,636		$	1,588,866

During the

six

months ended

January 31, 2020,

we issued

188,914

shares with a fair value of

$171,911

under our Stock Incentive Plan as settlement of our then share issuance obligations totaling

$187,100,

which represented the fair value of the Fiscal

2019

share bonuses made by the Company at

July 31, 2019

under the Stock Incentive Plan. The change in fair value of

$15,189

between the measurement date of

July 31, 2019

and the issuance date was recorded as a credit to the stock-based compensation for the

six

months ended

January 31, 2020.