The following discussion and analysis of our financial condition and results of
operations for the three months ended July 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.
Company Overview
Black Cactus Global, Inc. (formerly Envoy Group Corp.) (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, IL
60622. On December 4, 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.
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 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.
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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 249,109,944 restricted shares
of the Company's common stock, par value $0.0001 per share (the "Common Stock")
to Black Cactus Holdings LLC, 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 174,109,944 shares of Common Stock, which was
issued and delivered to Black Cactus Holdings LLC, and (ii) one certificate
representing 75,000,000 shares of Common Stock, which was supposed to be issued
to Black Cactus Holdings LLC, but was reduced to 60,100,500 shares of Common
Stock because the Company does not currently have enough authorized and unissued
shares of Common Stock to issue all of such shares. The Company intends to
issue the remaining shares of Common Stock to Black Cactus Holdings LLC as soon
as they become available. The certificate for 60,100,500 shares is being held
in escrow by the Company, and the certificate for the additional shares of
Common Stock will also be held in escrow by the Company, until such time as
certain shares of Common Stock have been cancelled on the certified shareholder
records of the Company or as otherwise provided in the Waiver Agreement.
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.
During the quarterly period ended July 31, 2020, we were not deemed an "emerging
growth company" as defined in the Jumpstart Our Business Startups Act of 2012
(the "Jobs Act"). A company continues to be deemed an "emerging growth company"
until the last day of the fiscal year of the issuer following the fifth
anniversary of the date of the first sale of common equity securities of the
issuer pursuant to an effective registration statement under the Securities Act
of 1933. Our first sale of common equity pursuant to an effective registration
statement was during the three months ended October 31, 2013, and last day of
the fiscal year of the fifth anniversary of the date of the first sale of our
common equity securities was April 30, 2019. As a result, after April 30, 2019,
we were no longer an "emerging growth company".
Critical Accounting Policies
As of July 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.
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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 $1,551,106 and $119,665 for
the three months ended July 31, 2020 and 2019, respectively. The increase of
$1,431,441 in net loss, between the two periods, is primarily due to an increase
in license fees of $1,245,550, an increase in professional fees of $152,013, and
an increase in interest expenses of $19,929.
We did not generate any revenues from our operations for the three months ended
July 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 July 31, 2020 and 2019, we had operating expenses
of $1,408,295 and $3,148, respectively. The increase of $1,405,147 in operating
expenses, between the two periods, is primarily due to an increase in license
fees of $1,245,550, and an increase in professional fees of $152,013.
Since inception, the majority of our time has been spent refining our business
plan and preparing for a primary financial offering.
Our results of operations are summarized below:
For the Three For the Three
Months Ended Months Ended
July 31, 2020 July 31, 2019
Revenue - -
Cost of Revenue - -
Net Loss and Comprehensive Loss $ (1,551,106 ) $ (119,665 )
Net Loss per Common Share, Basic and Diluted $ (0.01 ) $ (0.00 )Weighted Average Number of Common Shares Outstanding,
Basic and Diluted
191,530,953 166,073,296
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 July 31, 2020, we had not yet had any revenues from our services in the
digital currency mining field or from any other source.
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Liquidity and Capital Resources
As of July 31, 2020, we had not generated any revenues from our business
operations. As at July 31, 2020, there were 400,283,740 shares of common stock
issued and outstanding. Total cash proceeds received from common share issuance
since inception to July 31, 2020 is $90,500.
As of July 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.
During the three months ended July 31, 2020 and 2019, we had operating expenses
of $1,408,295 and $3,148, respectively. Historically, we have relied on loans to
fund general and administrative operating expenses. As of July 31, 2020, we had
a working capital deficiency of $3,210,668.
As of July 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.
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