FAIR VALUE MEASUREMENTS

12 Months Ended

Apr. 30, 2013

NOTE 9 - FAIR VALUE MEASUREMENTS

As defined by the ASC, fair value measurements and disclosures establish a hierarchy that prioritizes fair value measurements based on the type of inputs used for the various valuation techniques (market approach, income approach and cost approach). The levels of hierarchy are described below:

Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets, such as interest rates and yield curves that are observable at commonly-quoted intervals.

Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions, as there is little, if any, related market activity.

The following table summarizes the financial liabilities measured at fair value on a recurring basis as of April 30, 2013, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Quoted Prices in								Total Increase
	Active Markets for		Significant Other		Significant				in Fair Value
Balance Sheet	Identical Assets or		Observable Inputs		Unobservable		April 30, 2013		Recorded at
Location	Liabilities (Level 1)		(Level 2)		Inputs (Level 3)		Total		April 30, 2013
Liabilities:
Derivative liability - Notes	$	-	$	-	$	3,088,756	$	3,088,756	$	472,896
Derivative liability - Warrants	$	-	$	-	$	3,858,508	$	3,858,508	$	2,230,352

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 derivative liabilities related to the senior secured convertible notes and warrants for the period ended April 30, 2013.

	Notes		Warrants

Balance at beginning of year	$	-	$	-
Additions to derivative instruments		2,615,861		1,628,155
Change in fair value of derivative liabilities		472,895		2,230,353
Balance at end of year	$	3,088,756	$	3,858,508

The following tables set forth the assets and liabilities measured at fair value on a nonrecurring basis, by input level, in the consolidated financial statements as of April 30, 2013 and 2012:

Quoted Prices in

Total Increase (Reduction)

Active Markets for

Significant Other

Significant

in Fair Value

Balance Sheet

Identical Assets or

Observable Inputs

Unobservable

April 30, 2013

Recorded at

Location

Liabilities (Level 1)

(Level 2)

Inputs (Level 3)

Total

April 30, 2013

Assets:

Goodwill

(1,930,826)

	Quoted Prices in								Total Increase (Reduction)
	Active Markets for		Significant Other		Significant				in Fair Value
Balance Sheet	Identical Assets or		Observable Inputs		Unobservable		April 30, 2012		Recorded at
Location	Liabilities (Level 1)		(Level 2)		Inputs (Level 3)		Total		April 30, 2012
Assets:
Customer list	$	-	$	-	$	381,904	$	381,904	$	(168,604)
Liabilities:
Acquisition-related contingent consideration	$	-	$	-	$	-	$	-	$	83,628

In connection with the acquisition of Pride on November 1, 2009, additional purchase price was to be paid by the Company to the former Pride shareholders upon the achievement of earnings before interest and taxes (EBIT) target. This acquisition-related contingent consideration arrangement required the Company to pay the former Pride shareholders $919,488 if Pride’s EBIT for the twelve month period ended October 31, 2011 exceeded $1,103,386. Pride achieved the contingent consideration arrangements and the Company paid contingent consideration of $1,047,732, including foreign currency exchange fluctuations, as of April 30, 2012. For the year ended April 30, 2012, $83,628 of additional noncash expense was recorded for the change in the fair value of the contingent consideration from the present value of the future payments of this obligation. The Level 3 measurements included an estimated discount rate of 18.02%, future revenue growth rate of 10%, earnings before interest and taxes (EBIT) margins ranging from 7.5% to 13.32%, and weighted probability of EBIT achievement ranging from 0% to 100%.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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