The following discussion and analysis of our financial condition and results of
operations for the three and six months ended October 31, 2020 should be read
together with our unaudited financial statements and related notes included
elsewhere in this quarterly report. This discussion contains forward-looking
statements and information relating to our business that reflect our current
views and assumptions with respect to future events and are subject to risks and
uncertainties that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
these forward-looking statements. These forward-looking statements speak only as
of the date of this report. Although we believe that the expectations reflected
in the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, or achievements. Except as required by applicable
law, including the securities laws of the United States, we expressly disclaim
any obligation or undertaking to disseminate any update or revisions of any of
the forward-looking statements to reflect any change in our expectations with
regard thereto or to conform these statements to actual results.
Recent Amendments to the Articles of Incorporation
On October 8, 2020, pursuant to the authorization of a majority holder of the
Company's common stock, par value $0.0001 per share (the "Common Stock"), by
written consent, the Company filed an Amended and Restated Articles of
Incorporation (the "Amended and Restated Articles") upon which the Company (i)
effected a reverse split of all its outstanding shares of Common Stock, by a
ratio of 1-for-20 (the "Reverse Stock Split"); (ii) reduced the number of
authorized shares of Common Stock from 490,000,000 shares to 200,000,000 shares,
(iii) changed the name of the Company from Black Cactus Global, Inc. to BLGI,
Inc.; and (iv) terminated the designation of 10,000 shares of Series A Preferred
Stock, none of which were issued and outstanding, and amended the authorization
to issue 10,000,000 shares of Preferred Stock, par value $0.0001 per share, to
provide for 10,000,000 shares of "blank check" preferred stock, par value
$0.0001 per share.
The Common Stock began trading on a split-adjusted basis on the Pink Open Market
on October 16, 2020 under the new CUSIP number 091844209. All Common Stock share
numbers, warrants to purchase Common Stock, prices and exercise prices have been
retroactively adjusted to reflect the Reverse Stock Split. The par value of the
Common Stock outstanding was not adjusted for the Reverse Stock Split.
Company Overview
The Company was incorporated in the State of Florida on April 8, 2013, with a
fiscal year end of April 30. Until June 2017, we had not established any
business operations and had not achieved any revenues. Until then, we were in
the process of identifying and evaluating feasible business opportunities in the
consumer products and technology industries.
The address of the head office is 207 W. Division Street, Suite 137 Chicago,
Illinois 60622. On November 13, 2017, the Company changed its name to "Black
Cactus Global, Inc." with a plan to engage in the development of commercial
Blockchain technology and Smart Contract software applications for healthcare,
Fintech, logistics and energy solutions worldwide. Effective October 8, 2020,
the Company changed its name to "BLGI, Inc." pursuant to the Amended and
Restated Articles, as mentioned above. Our website address is www.blgi.net. The
information contained in or accessible through our website is not part of this
report and is intended for informational purposes only.
We are currently focused on developing blockchain software platforms. Our plan
is to develop or license intellectual property to build blockchain platforms for
a variety of uses. Our initial efforts will focus on utilizing the intellectual
property in two ways: to develop secure blockchain based supply chain and
inventory control systems, and to develop a blockchain based trading platform in
order to facilitate securities trading using either a fiat currency or
cryptocurrency.
On August 24, 2019, the Company entered into a Software License Agreement
("License Agreement") with Charteris, Mackie, Baillie & Cummins Limited ("CMBC")
to acquire a non-exclusive license for Black Cactus blockchain development
software platform and related intellectual property ("Software") which are
licensed to CMBC from Black Cactus LLC. As consideration, the License Agreement
provides for the payment of a royalty to CMBC in the amount of five percent (5%)
of the gross revenue received from the sublicense of the Software, due on a
quarterly basis, and issue or assign an equivalent number of common shares to
CMBC that will represent 60% of the then issued shares of the Company. In
addition, the License Agreement provides for the issuance of an option for CMBC
to acquire additional shares at par value ($0.0001) per share up to 60% of any
shares issued under the existing Securities Purchase Agreements with Bellridge
Capital LP ("Bellridge"). The closing of the License Agreement was subject to,
among certain
- 18 -
--------------------------------------------------------------------------------
other conditions: (1) the Company obtaining a written agreement with Bellridge
to increase its line of credit from $1,500,000 to $5,000,000; (2) the
resignation of all the directors of the Company serving on the Board, during the
quarterly period ended July 31, 2019, which was satisfied by the resignation of
all of such directors on September 13, 2019, and the appointment of Lawrence P.
Cummins, Karyn Augustinus and three non-executive independent Directors
nominated by CMBC Limited; (3) the resignation of all the officers of the
Company serving, during the quarterly period ended July 31, 2019, which was
satisfied by the resignation of all of such officers on September 13, 2019, and
the appointment of Lawrence P. Cummins as its President (after undertaking a
review of the future plans of the Company, the Board of Directors will appoint a
Chief Executive Officer); (4) proof satisfactory to CMBC Limited that fair
resolutions have been entered into with certain persons, including Harpreet
Sangha, the former Chairman of the Board and Chief Financial Officer of the
Company, along with his family and known associates for the cancellation of the
shares of the Company currently owned by them; (5) CMBC Limited is satisfied
with the possibility of lifting the Cease Trade Order issued by the British
Columbia Securities Commission on May 6, 2016, to the Company, ordering all
persons to cease trading in the Company's securities until the Company files the
required records completed in accordance with the Securities Act, R.S.B.C. 1996
and the Executive Director revokes the Order; (6) the cancellation of $350,000
amount allegedly outstanding under the terms of the Definitive Acquisition
Agreement, dated as of June 18, 2017, between the Company and the selling
shareholders of BitReturn.ca; (7) repayment by the majority shareholder of the
Company of $169,729 owed by such shareholder to the Company; and (8) the
Company's becoming current in its periodic filing with the SEC.
On November 15, 2019, the Company entered into an Assignment Agreement with CMBC
to acquire the assignment of a non-exclusive software license ("License") for
Software from Benchmark Advisors Limited (the "Benchmark Assignment Agreement"
and together with the License Agreement, the "CMBC License Agreements"). As
consideration for the assignment of the License, the Assignment Agreement
provides for the payment of $250,000 to CMBC directly from Bellridge on behalf
of the Company as part of the increased line of credit of $5,000,000. The
closing of the Assignment Agreement was subject to the same conditions required
to be satisfied for consummation of the License Agreement.
As of June 29, 2020, CMBC and the Company entered into a waiver and agreement
(the "Waiver Agreement"), pursuant to which the Company and CMBC agreed to close
the following two pending licensing arrangements: (1) the License Agreement, and
(2) the Benchmark Assignment Agreement.
The closings of the license and assignment pursuant to the CMBC License
Agreements were subject to a number of conditions, most of which had not been
satisfied on or before the date of the closings. Pursuant to the Waiver
Agreement, CMBC, among other things, waived all of the conditions that had not
been satisfied in order to consummate the closings of the license and assignment
pursuant to the CMBC License Agreements.
As of June 29, 2020, as consideration for the licenses provided under License
Agreement and in satisfaction of its payment obligations under the License
Agreement, the Company authorized the issuance of 12,455,497 restricted shares
Common Stock to Black Cactus Holdings LLC ("Black Cactus Holdings"), the
designee of CMBC, to be issued in two certificates each in the name of "Black
Cactus Holdings LLC", as follows: (i) one certificate representing 8,705,497
shares of Common Stock, which was issued and delivered to Black Cactus Holdings,
and (ii) one certificate representing 3,750,000 shares of Common Stock, which
was supposed to be issued to Black Cactus Holdings, but was reduced to 3,005,025
shares of Common Stock because the Company did not have enough authorized and
unissued shares of Common Stock to issue all of such shares.
The certificate for 3,005,025 shares of Common Stock was issued by the Company
on July 21, 2020 and is being held in escrow by the Company. The Company is in
the process of issuing the certificate for the additional 744,975 shares of
Common Stock that will also be held in escrow by the Company, until such time as
an aggregate of 2,5000,000 shares of Common Stock issued to three former
directors, one of whom is also a former officer, and a former director's
relative (the "Individual Defendants"), have been cancelled on the certified
shareholder records of the Company or as otherwise provided in the Waiver
Agreement(the "Cancellable Shares"). Promptly after the date upon which the
Cancellable Shares have all been cancelled, the Company will instruct the
Company's transfer agent to cancel the shares held in escrow. In the event that
all of the Cancellable Shares have not been cancelled on or before July 9, 2021,
the Company will release to Black Cactus Holdings one and one-half (1.5) shares
of Common Stock for each Cancellable Share that has not been cancelled by such
date and any remaining shares of Common Stock represented by the Escrowed
Certificate will be cancelled.
Effective as of June 29, 2020, Jeremy Towning notified the Company that he was
resigning from his position as the Company's Chief Executive Officer, but
continues as the Chief Financial Officer and a director of the Company.
In connection with the closing of the License Agreement, effective as of June
29, 2020, the Board, pursuant to its powers under the Company's bylaws,
appointed Karyn Augustinus and Lawrence P. Cummins as members of the Company's
board of directors (the "Board"), Lawrence P. Cummins as Chief Executive
Officer, and Lawrence C. Cummins as Vice President.
- 19 -
--------------------------------------------------------------------------------
On September 9, 2020, the Company issued a convertible senior secured promissory
note to Bellridge for loans provided in tranches, up to an aggregate principal
amount of $1,000,000 (the "September 2020 Note"). On September 21, 2020, the
Company and Bellridge entered into a correction to convertible secured
promissory note (the "Convertible Note Correction), which provides that each
tranche provided under the terms of the September 2020 Note is to be provided at
an original issue discount ("OID") of 10%. During the period covered by this
quarterly report, Bellridge has funded the September 2020 Note in the aggregate
principal amount of $83,600 for an aggregate purchase price of $76,000, net of a
$7,600 OID. For a detailed discussion regarding this transaction, please refer
to the Unregistered Sales of Equity Securities section in Part II of Item 2 of
this quarterly report.
On October 14, 2020, the Company filed a complaint (the "Complaint") in the
Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida
against the Individual Defendants seeking the cancelation of the Cancellable
Shares. The Complaint alleges that the Cancellable Shares were transferred in
error, and without any intention to transfer possession of the Cancellable
Shares to the Individual Defendants, since the Individual Defendants, as of such
date had not, and at no time thereafter, performed the services that were to be
rendered in consideration for the grant of the Cancellable Shares. The Complaint
seeks, among other things, the cancelation and return of the Cancellable Shares
to the status of authorized and unissued shares of the Company. Service of
process on the Individual Defendants has not yet occurred.
Critical Accounting Policies
As of October 31, 2020, there were no critical accounting policies. See the
footnotes to our unaudited financial statements, included elsewhere in this
quarterly report on Form 10-Q, for a complete summary of the significant
accounting policies used in the presentation of our financial statements. The
summary is presented to assist the reader in understanding the financial
statements. The accounting policies used conform to accounting principles
generally accepted in the United States of America and have been consistently
applied in the preparation of the financial statements.
Concentrations, Risks, and Uncertainties
The Company did not have a concentration of business with suppliers or customers
constituting greater than 10% of the Company's gross sales during the reporting
period.
Recently Issued Accounting Standards
The Company has implemented all new accounting pronouncements that are in effect
and that may impact its financial statements and does not believe that there are
any other new accounting pronouncements that have been issued that might have a
material impact on its financial position or results of operations.
Results of Operations
The following discussion of the Company's financial condition and the results of
operations should be read in conjunction with the unaudited financial statements
and notes thereto appearing elsewhere in this quarterly report on Form 10-Q.
There is no historical financial information about us upon which to base an
evaluation of our performance. We had net loss of $1,046,490 and $122,669 for
the three months ended October 31, 2020 and 2019, respectively and $2,597,596
and $242,334 for the six months ended October 31, 2020 and 2019, respectively.
We did not generate any revenues from our operations for the three months ended
October 31, 2020 or 2019 or for the six months ended October 31, 2020 or 2019.
We cannot guarantee we will be successful in our business operations. Our
business is subject to risks inherent in the establishment of a new business
enterprise, including the financial risks associated with the limited capital
resources currently available to us for the implementation of our business
strategies.
During the three months ended October 31, 2020 and 2019, we had operating
expenses of $160,958 and $1,505, respectively. The increase in operating
expenses is primarily due to an increase in professional fees of $96,835, an
increase in investor relations of $35,000, and an increase in research and
development expenses of $25,000.
During the six months ended October 31, 2020 and 2019, we had operating expenses
of $1,569,253 and $4,653, respectively. The increase in operating expenses is
primarily due to an increase in license fees of $1,245,550, an increase in
professional fees of $248,848, an increase in investor relations of $35,000, and
an increase in research and development expenses of $25,000.
Since inception, the majority of our time has been spent refining its business
plan and preparing for a primary financial offering.
- 20 -
--------------------------------------------------------------------------------
Our results of operations are summarized below:
For the Three For the Three
Months Ended Months Ended
October 31, 2020 October 31, 2019
Revenue - -
Cost of Revenue - -
Net Loss (Income) and Comprehensive (Loss) Income $ (1,046,490 ) $ (122,669 )
Net Loss (Income) per Common Share, Basic and Diluted $
(0.12 ) $ (0.01 )
Weighted Average Number of Common Shares Outstanding,
Basic and Diluted 8,696,110 8,303,665
For the Six For the Six
Months Ended Months Ended
October 31, 2020 October 31, 2019
Revenue - -
Cost of Revenue - -
Net Loss (Income) and Comprehensive (Loss) Income $ (2,597,596 ) $ (242,334 )
Net Loss (Income) per Common Share, Basic and Diluted $
(0.17 ) $ (0.03 )
Weighted Average Number of Common Shares Outstanding,
Basic and Diluted
14,992,857 8,303,665
Management's Plan of Operation
We do not have adequate funds to satisfy our working capital requirements for
the next twelve months. Prior to the additional loan made to us in February
2020, discussed below, we had borrowed a total of $1,000,000 from Bellridge to
fund our planned plan of operations in digital currency mining. We sold
Bellridge our Senior, Secured Convertible Promissory Notes (the "Notes"). Thus
far, Bellridge has purchased $1,000,000 in Notes. Pursuant to the terms of our
agreements with Bellridge, we were required to file a registration statement
with the SEC to register the shares of Common Stock to be issued under those
agreements. We filed the registration statement on April 24, 2018 but it has not
yet been declared effective. We received the third tranche of $200,000 from
Bellridge after the first set of SEC comments. We may not receive the fourth
and final tranche of $500,000 unless and until the registration statement is
declared effective by the SEC. We cannot estimate when our registration
statement will be declared effective by the SEC. Under certain conditions,
Bellridge may not have to purchase the fourth Note. These conditions include
any acts constituting default under any of the Notes or the agreements entered
into at the time of the first purchase of the Note issued on November 27, 2017.
Until such time as we receive the final $500,000 of funding from Bellridge, in
the interim, we may not be able to completely implement and commence our
proposed plan of operations.
In February 2020, we entered into a securities purchase agreement with
Bellridge, pursuant to which we issued a convertible promissory note in the
principal amount of $54,271. The funds were used for operating expenses during
the year ended April 30, 2020.
As of October 31, 2020, we had not yet had any revenues from our services in the
digital currency mining field.
Liquidity and Capital Resources
As of October 31, 2020, we had not generated any revenues from our business
operations. As at October 31, 2020, there were 22,066,685 shares of common stock
issued and outstanding. Total cash proceeds received from common share issuance
since inception to October 31, 2020 is $90,500.
As of October 31, 2020, and 2019, we had no cash on hand. Our cash was not
sufficient to meet the obligations associated with being a company that is fully
reporting with the SEC. We believe we will require additional financing in the
form of share issuance proceeds or advances from our directors.
Our business expansion will require significant capital resources that may be
funded through the issuance of common stock or of notes payable or other debt
arrangements that may affect our debt structure. Despite our current financial
status, we believe that we may be able to issue notes payable or debt
instruments in order to start executing our business plan. However, there can be
no assurance that we will be able to raise money in this fashion and have not
entered into any agreements that would obligate a third party to provide us with
capital.
- 21 -
--------------------------------------------------------------------------------
During the six months ended October 31, 2020 and 2019, we had operating expenses
of $1,569,253 and $4,653, respectively. Historically, we have relied on loans to
fund general and administrative operating expenses. As of October 31, 2020, we
had a working capital deficiency of $3,285,323.
As of October 31, 2020, the Company had no external sources of liquidity such as
arrangements with credit institutions or off-balance sheet arrangements that
will have or are reasonably likely to have a current or future effect on our
financial condition or immediate access to capital.
Our independent auditor has expressed substantial doubt about our ability to
continue as a going concern and believes that our ability is dependent on our
ability to implement our business plan, raise capital and generate revenues. See
Note 2 of our financial statements.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect or change on the Company's financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors. The term
"off-balance sheet arrangement" generally means any transaction, agreement or
other contractual arrangement to which an entity unconsolidated with the Company
is a party, under which the Company has (i) any obligation under a guarantee
contract that has any of the characteristics identified in FASB ASC paragraph
460-10-15-4 (Guarantees Topic), as may be modified or supplemented, and that is
not excluded from the initial recognition and measurement provisions of FASB ASC
paragraphs 460-10-15-7, 460-10-25-1, and 460-10-30-1; (ii) a retained or
contingent interest in assets transferred to an unconsolidated entity or similar
arrangement that serves as credit, liquidity or market risk support to such
entity for such assets; (iii) any obligation, including a contingent obligation,
under a contract that would be accounted for as a derivative instrument, except
that it is both indexed to the registrant's own stock and classified in
stockholders' equity in the registrant's statement of financial position, and
therefore excluded from the scope of FASB ASC Topic 815, Derivatives and
Hedging, pursuant to FASB ASC subparagraph 815-10-15-74(a), as may be modified
or supplemented; or (iv) any obligation, including a contingent obligation,
arising out of a variable interest (as defined in the FASB ASC Master Glossary),
as may be modified or supplemented) in an unconsolidated entity that is held by,
and material to, the registrant, where such entity provides financing,
liquidity, market risk or credit risk support to, or engages in leasing, hedging
or research and development services with, the registrant.
Subsequent Events
On November 12, 2020, the third tranche of the September 2020 Note was funded in
the aggregate principal amount of $55,000 for an aggregate purchase price of
$50,000, net of a $5,000 OID. On November 25, 2020, the fourth tranche of the
September 2020 Note was funded in the aggregate principal amount of $65,262 for
an aggregate purchase price of $59,329, net of a $5,933 OID.
On November 25, 2020, the Company entered into a subscription agreement
("Subscription Agreement") for a private placement ("Private Placement") of its
Common Stock, with an accredited investor ("Investor"), pursuant to which
Subscription Agreement the Company agreed to issue and sell 1,000,000 restricted
shares of Common Stock at a price of $0.10 per share ("Purchase Price") for
total gross proceeds of $100,000. The closing of the Private Placement occurred
concurrently with the execution of the Subscription Agreement by the parties and
the receipt of the Company of $100,000 in funds from the Investor. The Company
is in the process of issuing the 1,000,000 shares of Common Stock to the
Investor.
Pursuant to the Subscription Agreement, the issuance of the Common Stock is
exempt from the registration requirements of the Securities Act of 1933, as
amended, pursuant to Regulation D promulgated thereunder and such Common Stock
will therefore be restricted. The Investor gave representations that he is
purchasing the Common Stock without a present view toward a distribution of the
Common Stock and that he is an "accredited investor" (as defined under Rule 501
of Regulation D).
© Edgar Online, source Glimpses
BLGI, INC. 
