DERIVATIVE LIABILITIES

3 Months Ended

Jul. 31, 2016

Notes to Financial Statements

NOTE 9 - DERIVATIVE LIABILITIES

In a series of subscription agreements, we have issued warrants that contain certain anti-dilution provisions that we have identified as derivatives.

During the three months ended July 31, 2016, we had the following activity in our derivative liabilities:

Balance, April 30, 2016	$	395,619
Change in fair value of derivative liabilities		(85,695	)
Balance, July 31, 2016	$	309,924

The Company calculated the fair value of the derivatives using a multinomial lattice model simulation. The model is based on a probability weighted discounted cash flow model using projections of the various potential outcomes.

Key inputs and assumptions used in valuing the Company’s derivative liabilities are as follows for issuances of warrants:

• Stock prices on all measurement dates were based on the fair market value

• Risk-free interest rates ranging from 1.03% – 2.49%

• The probability of future financing was estimated at 100%

• Computed volatility ranging from 103% to 249%

These inputs are subject to significant changes from period to period and to management's judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.