Derivative Liability

12 Months Ended

Jul. 31, 2020

Notes to Financial Statements

Derivative Liability

Note 13 – Derivative Liability  

The Company issued convertible notes with variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment is tainted, and all additional convertible debentures and warrants are included in the value of the derivative liabilities. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion options and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and revalued at each reporting period.

Based on the various convertible notes described in Note 9, the fair value of applicable derivative liabilities on notes, warrants and change in fair value of derivative liability are as follows as of July 31, 2020:

following table presents the activity for derivative liabilities measured at estimated fair value:

	Derivative Liability - Convertible Notes			Derivative Liability - Warrants			Derivative Liability - Downside Protection			Total
Balance as of July 31, 2018	$	—		$	—		$	—		$	—
Additions during the period		5,178,241			353,465			6,424,338			11,956,044
Change in fair value		988,267			(28,214	)		(3,085,502	)		(2,125,449	)
Change due to exercise / redemptions		(2,010,312	)		—			—			(2,010,312	)
Balance as of July 31, 2019		4,156,196			325,251			3,338,836			7,820,283
Additions during the period		1,864,239			30,353			—			1,894,592
Change in fair value		(716,143	)		255,197			5,061,164			4,600,218
Change due to exercise / redemptions		(4,561,901	)		(36,435	)		—			(4,598,336	)
Expiration of downside protection		—			—			(8,400,000	)		(8,400,000	)
Balance as of July 31, 2020	$	742,391		$	574,366		$	—		$	1,316,757