Derivative Liability

3 Months Ended

Oct. 31, 2020

Notes to Financial Statements

Derivative Liability

Note 8 – Derivative Liability 

The Company issued debts that consist of the issuance of 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 7, and the sale of common stock in a private investment in public equity (“PIPE”) 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 October 31, 2020:

	Derivative Liability - Convertible Notes			Derivative Liability - Warrants			Total
Balance as of July 31, 2020	$	742,391		$	574,366		$	1,316,757
Additions during the period		—			21,574,216			21,574,216
Change in fair value		111,150			(4,131,002	)		(4,019,852	)
Change due to conversion / exercise		(538,084	)		(1,840,530	)		(2,378,614	)
Balance as of October 31, 2020	$	315,457		$	16,177,050		$	16,492,507