NOTE 3 – FAIR VALUE MEASURENTS OF FINANCIAL INSTRUMENTS

Our financial instruments consist of cash equivalents, if any, accounts receivable, notes receivable, investments in unconsolidated entities, accounts payable, notes payable and derivative liabilities. The carrying amounts of cash equivalents, if any, accounts receivable, notes receivable, and accounts payable approximate their respective fair values due to the short-term nature of these financial instruments.

We measure on a recurring basis and disclose the fair value of our financial instruments under the provisions of ASC 820, as amended. We define “fair value” as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level hierarchy for measuring fair value and requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There were no transfers between the levels of the fair value hierarchy during the periods covered by the accompanying consolidated financial statements.

Consistent with the valuation hierarchy contained in ASC 820, we categorized certain of our financial assets and liabilities as follows:

The Company investments in unconsolidated entities are reported at cost in its consolidated financial statements and are $20,000 and $207,500 at April 30, 2020 and 2019, respectively. The investments are valued for purposes of this disclosure using unobservable inputs, since there are no observable market transactions for such investments. Please see Note 8 below for more information about our investments in unconsolidated entities. The fair values of accounts receivable, related party, and investments in unconsolidated entities approximate the carrying value of such assets.

At April 30, 2020 and 2019, convertible notes payable (including current maturities) are reported in our consolidated financial statements at amortized cost of $150,000 and $905,000, less unamortized debt discount of $34,255 and $34,433, respectively. Our notes and convertible notes payable are valued for purposes of this disclosure using the multi-nominal valuation model and observable inputs whenever available. There are no observable market transactions for our notes and convertible notes. Please see Notes 9 and 11 below for more information about our notes and convertible notes payable.