NOTE

10:

GOVERNMENT LOAN PAYABLE

April 2020,

our Canadian subsidiary received a loan of

$29,842

(

CAD$40,000

) through the CEBA Program, which provides financial relief for Canadian small businesses during the COVID-

pandemic. The CEBA Loan has an initial term date on

December 31, 2022 (

the “Initial Term Date”) and

may

be extended to

December 31, 2025.

The CEBA Loan is non-revolving, with an interest rate being

per annum prior to the Initial Term Date and

per annum thereafter during any extended term, which is calculated daily and paid monthly. The CEBA Loan can be repaid at any time without penalty and, if at least

75%

of the CEBA Loan is paid prior to the Initial Term Date, the remaining balance of the CEBA Loan will be forgiven. We anticipate repaying the CEBA Loan prior to the Initial Term Date.

April 28, 2020,

we entered into a business loan agreement with Kleberg Bank, N.A., under the PPP Program administered by the Small Business Administration. The PPP Program is a part of the

Coronavirus Aid, Relief, and Economic Security Act

enacted by the U.S. Congress on

March 27, 2020

in response to the COVID-

pandemic. The total loan amount we qualified for was

$277,250,

which was received on

May 5, 2020.

Under the PPP Program the repayment of these loans, including interest, will be forgiven based on payroll, payroll-related and other allowable costs incurred in the

eight

-week period following the funding of the loan pursuant to the following requirements:

●

that

not

less than

60%

of the loan proceeds be applied to eligible payroll costs;

●

that the remaining

40%

of the loan proceeds be applied to any additional payroll costs above

60%,

rent payments on leases dated before

February 15, 2020

and/or utility payments under any services agreements dated before

February 15, 2020;

and

●

to maintain employee compensation levels (subject to specific program requirements).

The PPP Program provides for an initial

six

-month deferral of payments, which was subsequently further deferred by another

months. The PPP Loan has a

two

-year maturity ending on

April 28, 2022

with an interest rate of

per annum.

July 31, 2020,

both the CEBA Loan and the PPP Loan are accounted for as a loan under ASC

470:

Debt, which are reported as Government Loan Payable of

$307,092

(

July 31, 2019:

$Nil

) on our Consolidated Balance Sheets. An income will be recognized in the period when the PPP Loan and the CEBA Loan are forgiven.

Subsequent to

July 31, 2020,

we submitted an application for the forgiveness of the PPP Loan and the application is still in process at the date of these Consolidated Financial Statements.