Derivative Liabilities

3 Months Ended

Jul. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liabilities

NOTE 12 - DERIVATIVE LIABILITIES

The Company analyzed the conversion option for derivative accounting consideration under ASC 815 and determined that the Company’s convertible notes and stock warrants outstanding at April 30, 2018 should be classified as a liability, under the ASC 815 guidance, since the conversion options become effective at issuance and there is no explicit limit to the number of shares issuable upon conversion due to contingencies affecting the conversion rate.

The Company classifies its derivative liabilities under 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 data inputs including: (1) the exercise or conversion price, (2) the expected term (in years), (3) the expected volatility for the Company’s common stock, (4) the current stock price, (5) the risk-free interest rate, and (6) the expected dividend yield. Changes to these inputs could result in a significantly higher or lower fair value measurement.

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

	Three Months Ended July 31, 2018
Expected term (in years)		1.0-5.0
Expected average volatility		180% - 255%
Expected dividend yield		-
Risk-free interest rate		1.65% - 2.85%

The following table summarizes the activity for the derivative liabilities included in our consolidated balance sheet:

Fair Value Measurements Using Significant Observable 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		634,536
Reclassification of derivatives due to tainted instruments		226,949
Gain on change in fair value of the derivative		(608,699	)
Balance - July 31, 2018	$	31,066,441

The following table summarizes the (loss) gain on derivative liability included in our consolidated statement of operation:

	Three months ended July 31, 2018
Day-one loss due to derivative liabilities on convertible notes payable and warrants	$	634,536
Gain on change in fair value of the derivative		(608,699	)
Loss on change in fair value of derivative liabilities	$	25,837