Derivative Liabilities

6 Months Ended

Oct. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liabilities

NOTE 11 - DERIVATIVE LIABILITIES

At April 30, 2018, the Company had determined that the conversion feature on its convertible notes and stock warrants should be classified as a derivative liability, under the ASC 815 guidance, since the conversion rate was tied to the market price of the Company’s common stock and, accordingly, there was no explicit limit to the number of shares issuable upon conversion due to contingencies affecting the conversion rate.

The Company determined that its derivative liabilities must be classified in Level 3 of the three-level hierarchy for measuring fair value (please see Note 3) and uses a multi-nominal lattice model to calculate the fair value of these liabilities. The multi-nominal lattice model requires six basic data inputs: (1) the exercise, conversion or strike price, (2) the expected life (in years), (3) the risk-free interest rate, (4) the current stock price, (5) the expected volatility for the Company’s common stock, and (6) the expected dividend yield. Changes to these inputs could result in a significantly higher or lower fair value measurement.

During the three months ended October 31, 2018, the Company repaid the convertible notes with a variable conversion rate, a conversion rate tied to the market price of the Company’s common stock. The remaining convertible notes and warrants outstanding at October 31, 2018 have a fixed conversion rate and, accordingly, the number of shares issuable upon conversion is determinable with certainty. As a result, the Company recognized a decrease in its derivative liability resulting in the beneficial conversion feature associated with the remaining convertible notes and warrants of $1,187,242 (recognized as an increase to additional paid-in capital) and a gain on fair value of derivatives liabilities of $20,015,840.

The following weighted-average assumptions were used when valuing our derivative liabilities:

	Six months ended October 31, 2018		Period from May 5, 2017 (Inception) to October 31, 2017
Expected term (in years)	1.0-5.0		0.31 – 1.0
Expected average volatility	107% - 237	%	126% - 330	%
Expected dividend yield	-		-
Risk-free interest rate	1.65% - 2.96	%	0.99% - 1.34	%

The following table summarizes the changes in the derivative liabilities included in our consolidated balance sheet for the six months ended October 31, 2018:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Balance – April 30, 2018	$	30,488,655
Addition of new derivatives recognized as debt discounts		325,000
Other addition of new derivatives		679,032
Reclassification of derivatives due to tainted instruments		258,132
Change in fair value of the derivative		(10,547,737	)
Reclassification of derivative to additional paid-in capital		(1,187,242	)
Change in derivative liabilities recognized as gain on derivative		(20,015,840	)
Balance - October 31, 2018	$	-

The following table summarizes the (loss) gain on derivative liability included in our consolidated statement of operation for the six months ended October 31, 2018 and the period from May 5, 2017 (inception) to October 31, 2017:

	Six months ended October 31, 2018			Period from May 5, 2017 (Inception) to October 31, 2017
Day-one loss due to derivative liabilities on convertible notes payable and warrants	$	(678,941	)	$	(2,099,349	)
Change in derivative liabilities		20,015,840			-
Gain from marked-to-market adjustments		10,547,737			976,758
Net gain (loss) on change in fair value of derivative liabilities	$	29,884,636		$	(1,122,591	)