• Filing Date: 2019-07-11
  • Form Type: 10-K
  • Description: Annual report
Derivative Instruments
12 Months Ended
Apr. 30, 2019
Derivative Instruments [Text Block]
Note 7 Derivative Instruments

In the normal course of business, the Company is exposed to fluctuations in the exchange rates associated with foreign currencies. The Company’s primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk.


Foreign Currency Exchange Rate Risk


A majority of the Company’s revenue activities are transacted in U.S. dollars. However, the Company is exposed to foreign currency exchange rate risk, inherent in conducting business globally in multiple currencies, primarily from its business operations in Canada.


The Company’s foreign currency risk management program includes entering into foreign currency derivatives at various times to mitigate the currency exchange rate risk on Canadian dollar denominated cash flows. These foreign currency forward and option contracts are considered non-designated derivative instruments and are not used for trading or speculative purposes. The changes in fair value and settlements are recorded in change in fair value of derivative instruments, net in the consolidated statement of operations.


During years ended April 30, 2019 and 2018, the Company did not enter into any designated cash flow hedge contracts.

The following table summarizes the notional amounts of the Company’s outstanding derivative instruments:

        April 30,     April 30,  
  Fair value of Undesignated Derivatives     2019     2018  
  Foreign currency option contracts   $  1,500,000   $  –  

The following table presents the fair values of the Company’s derivative instruments on a gross basis as reflected on the Company’s consolidated balance sheets. The Company did not have any outstanding derivative contracts as of April 30, 2018.

        April 30, 2019  
        Derivative     Derivative  
  Fair value of Undesignated Derivatives     Assets     Liabilities  
  Foreign currency option contracts   $  1,178   $  4,512  

During the year ended April 30, 2019, the Company recorded a gain of $3,334 resulting from the change in fair value of derivative instruments. No such gains or losses were recorded in the prior year as the Company did not enter into any forward and option contracts.