Blgi (BLGI) 10-K/A 2020 FY Annual report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K /A

Amendment No. 1

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended April 30, 2020

Or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 000-55880

BLGI, INC.

(Exact name of registrant as specified in its charter)

Florida	46-2500923
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
207 W. Division Street, Suite 137 Chicago, Illinois	60622
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number  (773) 683-1671

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act: Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [X]

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ]	Smaller reporting company	[X]
(Do not check if a smaller reporting company)
Emerging growth company	[  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

The aggregate market value of the common stock held by non-affiliates of the registrant, as of October 31, 2019, the last business day of the second fiscal quarter, was approximately $1,295,371.71 based on a total number of shares of our common stock outstanding on that day of 166,073,296 and a closing price of $0.0078. Shares of common stock held by each director, each officer and each person who owns 10% or more of the outstanding common stock have been excluded from this calculation in that such persons may be deemed to be affiliates. The determination of affiliate status is not necessarily conclusive.

The registrant had 29,112,661 shares of its common stock issued and outstanding as of February 17, 2021 .

DOCUMENTS INCORPORATED BY REFERENCE:

None.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 to BLGI, Inc.’s (the “Company”) Annual Report on Form 10-K for the fiscal year ended April 30, 2020 (“Form 10-K/A”) is to submit Exhibit 101 to the Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 30, 2020 (the “Form 10-K”), in accordance with Rule 405 of Regulation S-T. Exhibit 101 consists of the Interactive Data Files (the “Interactive Data Files”) required to be filed with the Form 10-K.

The following events, each of which occurred after the original filing date of the Form 10-K, are applicable with respect to the change of the Company’s name, since the original filing date of the Form 10-K, and differences in the number of outstanding shares, since the original filing date of the Form 10-K:

● Effective October 15, 2020, the Company changed its name from Black Cactus Global, Inc. to BLGI, Inc.; and

● Effective October 15, 2020, the Company effected a 1-for-20 reverse stock split of its shares of common stock, par value $0.0001 per share; provided, however, that no changes or adjustments have been made to the financial information in the Form 10-K to reflect such reverse stock split.

Additionally, this Form 10-K/A corrects a typographical error in the STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS in the financial statements, on page F-3 of this Form 10-K/A, under the column reporting information for the “Year ended April 30, 2020,” in the line item “Foreign Exchange Gain,” which incorrectly stated a value of “$(3,015).” The value has been corrected to “$(3,095).”

Except as described above, no other changes, revisions, or updates have been made to the Form 10-K in this Form 10-K/A, which speaks as of the original filing date of the Form 10-K and does not reflect any events that may have occurred subsequent to the filing date of the Form 10-K.

Part IV

Item 15. Exhibits and Financial Statement Schedules.

(a) Financial Statements.

Report of Independent Registered Public Accounting Firm	F-2
Balance Sheets	F-3
Statements of Operations and Comprehensive Loss	F-4
Statements of Stockholders’ Deficit	F-5
Statements of Cash Flows	F-6
Notes to the Financial Statements	F-7

(b) Exhibits

Exhibit Number	Description
3.1(i)	Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the registrant’s registration statement on Form S-1 filed with the Commission on May 23, 2013).
3.1(ii)	Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.3 to the registrant’s Current Report on Form 8-K filed with the Commission on June 9, 2014).
3.1(iii)	Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the Commission on December 1, 2017).
3.2	By-Laws (incorporated by reference to Exhibit 3.2 to the registrant’s registration statement on Form S-1 filed with the Commission on May 23, 2013).
4.1	Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 to the registrant’s registration statement on Form S-1 filed with the Commission on May 23, 2013).
4.2	Senior Secured Convertible Promissory Note (incorporated by reference to Exhibit 4.1 to the registrant’s Current Report on Form 8-K filed with the Commission on December 15, 2017)
4.3	Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to the registrant’s Current Report on Form 8-K filed with the Commission on December 15, 2017)
4.4	Security Agreement (incorporated by reference to Exhibit 4.3 to the registrant’s Current Report on Form 8-K filed with the Commission on December 15, 2017)
4.5	Intellectual Property Security Agreement (incorporated by reference to Exhibit 4.4 to the registrant’s Current Report on Form 8-K filed with the Commission on December 15, 2017)
4.6	Subsidiary Guarantee Agreement (incorporated by reference to Exhibit 4.5 to the registrant’s Current Report on Form 8-K filed with the Commission on December 15, 2017)
4.7	Form of Senior Secured Convertible Promissory Note issued to Bellridge Capital, L.P. in November 2017 (incorporated by reference to Exhibit 4.7 to the registrant’s Registration Statement on Form S-1 filed with the Commission on April 24, 2018)
4.8	Form of Financial Advisory Common Stock Purchase Warrant issued to Aegis Capital Corp. (incorporated by reference to Exhibit 4.8 to the registrant’s Registration Statement on Form S-1 filed with the Commission on April 24, 2018)
4.9	Form of Common Stock Purchase Warrants issued to Bellridge Capital, L.P. in April 2017 (incorporated by reference to Exhibit 4.9 to the registrant’s Registration Statement on Form S-1 filed with the Commission on April 24, 2018)
4.10	Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.10 to the registrant’s Current Report on Form 10-K filed with the Commission on June 30, 2020)
10.1	Definitive Acquisition Agreement dated June 18, 2017 by and among the registrant and the BitReturn shareholders (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Commission on June 27, 2017).
10.2	Securities Purchase Agreement dated November 27, 2017 by and among the registrant and Black Cactus, LLC (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Commission on December 15, 2017)
10.3	Registration Rights Agreement dated November 27, 2017 by and among the Registrant and Black Cactus, LLC (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the Commission on December 15, 2017)
10.4	Amendment to Registration Rights Agreement, dated November 27, 2017 (Amendment dated April 13, 2018) (incorporated by reference to Exhibit 10.4 to the registrant’s Registration Statement on Form S-1 filed with the Commission on April 24, 2018)

- 2 -

continued

Exhibit Number	Description
10.5	Amendment to Securities Purchase Agreement, dated November 27, 2017 (Amendment dated April 5, 2018) (incorporated by reference to Exhibit 10.5 to the registrant’s Registration Statement on Form S-1 filed with the Commission on April 24, 2018)
10.6	Securities Purchase Agreement, dated April 5, 2018 (incorporated by reference to Exhibit 10.6 to the registrant’s Registration Statement on Form S-1 filed with the Commission on April 24, 2018)
10.7	Registration Rights Agreement, dated April 13, 2018 (incorporated by reference to Exhibit 10.7 to the registrant’s Registration Statement on Form S-1 filed with the Commission on April 24, 2018)
10.8	Software License Agreement, dated August 24, 2019, between Charteris, Mackie, Baillie & Cummins Limited and Black Cactus Global, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report for the quarter ended October 31, 2018 filed with the Commission on June 29, 2020)
10.9	Assignment Agreement, dated November 15, 2019, between Charteris, Mackie, Ballie & Cummins Limited and Black Cactus Global, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report for the quarter ended October 31, 2018 filed with the Commission on June 29, 2020)
10.10	Waiver and Agreement, dated June 29, 2020, by and between Black Cactus Global, Inc. and Charteris, Mackie, Baillie and Cummins Limited (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on July 13, 2020)
10.11	Form of Securities Purchase Agreement, dated February 20, 2020, between Bellridge Capital, L.P. and Black Cactus Global, Inc. (1)
10.12	Form of 10% Convertible Promissory Note, dated February 20, 2020, between Bellridge Capital, L.P. and Black Cactus Global, Inc. (1)
21.1	Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the registrant’s Current Report on Form 10-K filed with the Commission on June 30, 2020)
31.1 *	Certification of CEO pursuant to Rule 13a-14(a)/15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 *	Certification of CFO pursuant to Rule 13a-14(a)/15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 *	Certification of CEO pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 *	Certification of CFO pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance File
101.SCH	XBRL Schema File
101.CAL	XBRL Calculation File
101.DEF	XBRL Definition File
101.LAB	XBRL Label File
101.PRE	XBRL Presentation File

__________

* filed herewith

(1) filed previously as an Exhibit to the Form 10-K.

- 3 -

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BLGI, INC.
Date: February 19, 2021	By:	/s/ Lawrence P. Cummins
		Lawrence P. Cummins, Chief Executive Officer and Director (Principal Executive Officer)
Date: February 19, 2021	By:	/s/ Jeremy Towning
		Jeremy Towning, Chief Financial Officer and Director (Principal Financial Officer and Principal Accounting Officer)

- 4 -

INDEX TO THE FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-1
Balance Sheets	F-2
Statements of Operations and Comprehensive Loss	F-3
Statements of Stockholders’ Deficit	F-4
Statements of Cash Flows	F-5
Notes to the Financial Statements	F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the board of directors of

Black Cactus Global, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Black Cactus Global, Inc. (the “Company”) as of April 30, 2020 and 2019, the related statements of operations and comprehensive loss, stockholders’ deficit and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2020 and 2019, and the results of its operations and its cash flows for the years ended then, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 the Company has not generated revenue or cash flow from operations since inception. As at April 30, 2020, the Company has a working capital deficiency of $2,905,112 and an accumulated deficit of $11,082,293. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Manning Elliot LLP

Vancouver, British Columbia, Canada

July 29, 2020

We have served as the Company’s auditor since 2015.

F-1

BLACK CACTUS GLOBAL, INC.

BALANCE SHEETS

(Expressed in U.S. Dollars)

	April 30,			April 30,
	2020			2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—		$	—
Prepaid expenses and other assets (Note 6)		5,331			3,230
TOTAL ASSETS	$	5,331		$	3,230
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities (Note 8)	$	380,150		$	348,195
Amount payable for BitReturn (Note 11)		350,000			350,000
Convertible debentures (Note 10)		2,091,477			1,593,843
Loans payable (Note 9)		88,816			64,076
Total Liabilities		2,910,443			2,356,114
STOCKHOLDERS’ DEFICIT
Preferred stock, $0.0001 par value; 10,000,000 shares authorized, of which 10,000 shares designated as Series A, no shares issued and outstanding (Note 13)		—			—
Common stock, $0.0001 par value; 490,000,000 shares authorized; 166,073,296 and 166,073,296 shares issued and outstanding as of April 30, 2020 and 2019, respectively (Note 13)		16,608			16,608
Shares issuable (Note 12 (d))		420,000			420,000
Additional paid-in capital		7,740,573			7,696,236
Accumulated deficit		(11,082,293	)		(10,485,728	)
Total Stockholders’ Deficit		(2,905,112	)		(2,352,884	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	5,331		$	3,230

Going concern (Note 2)

Commitments (Note 12)

Subsequent events (Note 16)

The accompanying notes are an integral part of these financial statements.

F-2

BLACK CACTUS GLOBAL, INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in U.S. Dollars)

	For the Years Ended April 30,
	2020			2019
OPERATING EXPENSES
Consulting (Note 12)	$	—		$	108,133
General and administrative		4,146			28,602
Foreign exchange gain		( 3,095	)		—
Investor relations		—			71,333
Professional fees		95,360			158,772
Stock-based compensation (Note 13)		—			1,875,000
TOTAL OPERATING EXPENSES	$	(96,411	)	$	(2,241,840	)
OTHER EXPENSES
Accretion of discounts on convertible debentures (Note 10)		(8,020	)		(972,750	)
Allowance for receivables (Note 7(a))		—			(339,554	)
Loss on settlement of debt (Note 9(c))		—			(201,500	)
Interest expense		(492,134	)		(539,208	)
NET LOSS AND COMPREHENSIVE LOSS	$	(596,565	)	$	(4,294,852	)
NET LOSS PER COMMON SHARE, BASIC AND DILUTED	$	(0.00	)	$	(0.02	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED		166,073,296			194,033,844

The accompanying notes are an integral part of these financial statements.

F-3

BLACK CACTUS GLOBAL, INC.

STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Expressed in U.S. Dollars)

													Additional					Total
	Preferred Stock			Common Stock				Treasury			Shares		Paid-in		Accumulated			Stockholders’
	Shares	Amount		Shares		Amount		Amount			Issuable		Capital		Deficit			Deficit
Balance – April 30, 2018	—	$	—	166,673,296		$	11,347	$	1		$	420,000	$	5,343,588	$	(6,190,876	)	$	(415,940	)
Issuance of common stock to settle loans payable	—		—	2,600,000			260		—			—		337,740		—			338,000
Beneficial conversion features and warrants associated with convertible debt	—		—	—			—		—			—		144,908		—			144,908
Stock-based compensation	—		—	—			5,000		—			—		1,870,000		—			1,875,000
Cancellation of treasury stock	—		—	(3,200,000)	)		1		(1	)		—		—		—			—
Net loss for the year	—		—	—			—		—			—		—		(4,294,852	)		(4,294,852	)
Balance – April 30, 2019	—	$	—	166,073,296		$	16,608	$	—		$	420,000	$	7,696,236	$	(10,485,728	)	$	(2,352,884	)
Beneficial conversion features associated with convertible debt	—		—	—			—		—			—		44,337		—			44,337
Net loss for the year	—		—	—			—		—			—		—		(596,565	)		(596,565	)
Balance – April 30, 2020	—	$	—	166,073,296		$	16,608	$	—		$	420,000	$	7,740,573	$	(11,082,293	)	$	(2,905,112	)

The accompanying notes are an integral part of these financial statements.

F-4

BLACK CACTUS GLOBAL, INC.

STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)

	For the Years Ended
	April 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(596,565	)	$	(4,294,852	)
Adjustments for non-cash amounts expensed:
Accretion of loan discounts		—			851
Accretion of convertible debt discount		8,020			972,750
Accrued interest on debentures		489,614			529,251
Allowance for receivables		—			339,554
Loss on settlement of debt		—			201,500
Stock-based compensation		—			1,875,000
Changes in operating assets and liabilities:
Prepaid expenses		(2,101	)		160,790
Accounts payable and accrued liabilities		76,292			61,917
Net Cash Used in Operating Activities		(24,740	)		(153,239	)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related party, net of repayments		—			(13,599	)
Proceeds from issuance of convertible debt, net of debt financing costs		—			180,000
Proceeds from (repayments of) loans payable		24,740			(15,000	)
Net Cash Provided by Financing Activities		24,740			151,401
Net effect of exchange rate changes on cash		—			1,586
Change in Cash and Cash Equivalents		—			(252	)
Cash and Cash Equivalents, Beginning of Year		—			252
Cash and Cash Equivalents, End of Year	$	—		$	—
SUPPLEMENTARY CASH FLOW INFORMATION:
Interest paid	$	—		$	—
Income taxes paid	$	—		$	—

The accompanying notes are an integral part of these financial statements.

F-5

BLACK CACTUS GLOBAL, INC.

Notes to the Financial Statements

For the Years Ended April 30, 2020 and 2019

1. NATURE OF BUSINESS

Black Cactus Global, Inc. was incorporated in the State of Florida on April 8, 2013. The address of the head office is Suite 200, 8275 South Eastern Avenue, Las Vegas, Nevada 89123. The Company’s plan is to develop a blockchain technology business. On December 4, 2017, the Company changed its name from Envoy Group Corp. to Black Cactus Global, Inc.

2. GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not generated revenue or cash flow from operations since inception. As at April 30, 2020, the Company has a working capital deficiency of $2,905,112 and an accumulated deficit of $11,082,293. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise sufficient financing to acquire or develop a profitable business. The Company intends to finance its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including related party advances and term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or ability to raise funds. Management continues to monitor the situation.

3. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and are expressed in United States dollars. The Company’s fiscal year-end is April 30.

The significant accounting policies followed are:

USE OF ESTIMATES

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates related to fair value measurements, stock-based compensation and deferred income tax asset valuation allowance. Actual results could differ from those estimates.

FOREIGN CURRENCY TRANSLATION

The Company’s functional and reporting currency is the United States dollar. Occasional transactions may occur in Canadian dollars. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

F-6

BLACK CACTUS GLOBAL, INC.

Notes to the Financial Statements

For the Years Ended April 30, 2020 and 2019

FINANCIAL INSTRUMENTS

ASC 825, “Financial Instruments”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The financial instruments consist principally of cash and cash equivalents, accounts payable, amount payable, loans payable and convertible debentures. The fair value of cash and cash equivalents when applicable is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. Derivative liabilities are determined based on “Level 2” inputs, which are significant and observable. The Company believes that the recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as of April 30, 2020 and 2019:

	Fair Value Measurements Using
	Quoted Prices in	Significant
	Active Markets	Other	Significant
	For Identical	Observable	Unobservable	Balance as of	Balance as of
	Instruments	Inputs	Inputs	April 30,	April 30,
	(Level 1)	(Level 2)	(Level 3)	2020	2019
Assets:
Cash and cash equivalents	$        —	$        —	$        —	$        —	$        —

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit quality financial institutions.

CASH AND CASH EQUIVALENTS

All cash investments with an original maturity of three months or less are considered to be cash equivalents.

F-7

BLACK CACTUS GLOBAL, INC.

Notes to the Financial Statements

For the Years Ended April 30, 2020 and 2019

INCOME TAXES

The Company accounts for income taxes under ASC 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

NET INCOME (LOSS) PER COMMON SHARE

Net income (loss) per share is calculated in accordance with ASC 260, “Earnings Per Share.” The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised.

Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding. As of April 30, 2020, the Company had 899,864,545 (2019 – 344,082,359) dilutive potential common shares.

RECENT ACCOUNTING PRONOUNCEMENTS

The Company has implemented all new mandatory accounting pronouncements that are in effect and there has been no significant impact on its financial statements. The Company does not believe that there are any new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

4. RECLASSIFICATION OF PRIOR YEAR PRESENTATION

Certain prior year amounts have been reclassified for consistency with the current year presentation. An adjustment has been made to the Balance Sheets for fiscal year ended April 30, 2019, to reclassify accrued interest on debentures from accounts payable and accrued liabilities to convertible debentures. This reclassification had no effect on the reported results of operations.

5. FINANCIAL RISK FACTORS

LIQUIDITY RISK

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at April 30, 2020, the Company has a working capital deficiency of $2,905,112 and requires additional funding to meet its current obligations. The Company’s current obligations include accounts payable and accrued liabilities which have contractual maturities of less than 60 days and are subject to normal trade terms, loans payable which are due on demand, and convertible debentures which have defaulted and are due on demand. The Company requires additional financing to meet its current obligations. The ability of the Company to continue to identify and evaluate feasible business opportunities, develop products and generate working capital is dependent on its ability to secure additional equity or debt financing.

FOREIGN EXCHANGE RISK

Foreign exchange risk is the risk that the Company will be subject to foreign currency fluctuations in satisfying obligations related to foreign activities. Loans payable to unrelated third parties may be denominated in Canadian dollars. Foreign exchange risk arises from purchase transactions as well as financial assets and liabilities denominated in these foreign currencies. The Company does not use derivative instruments to hedge exposure to foreign exchange rate risk. However, management of the Company believes there is no significant exposure to foreign currency fluctuations.

F-8

BLACK CACTUS GLOBAL, INC.

Notes to the Financial Statements

For the Years Ended April 30, 2020 and 2019

6. PREPAID EXPENSES AND OTHER ASSETS

The Company’s prepaid expenses and other assets consists of deposits, retainers and advance payments for various services including investor relations, legal, marketing and other costs.

7. RELATED PARTY TRANSACTIONS AND BALANCES

(a)	During the year ended April 30, 2020, the Company made payments totaling $nil (2019 - $339,554) related to expenses overseen by the former CFO, President and Chairman of the Board. The Company was not provided invoices or other support for these expenses. The Company intends to recover the full amount of $339,554, from the former CFO, President and Chairman of the Board, however ultimate collection was uncertain as at April 30, 2020 and 2019 and the full amount was written off as allowance for receivables during the year ended April 30, 2019.
(b)	During the year ended April 30, 2019, certain directors and a relative of a director received a total of $1,875,000 in stock-based compensation upon a transfer of shares on October 30, 2018 as described in Note 13.
(c)	The Company has entered into agreements to borrow funds from Bellridge Capital L.P. (“Bellridge”), a shareholder of the Company. The arrangements, balances and transactions are described in Notes 9(e) and 10.

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following:

	April 30, 2020		April 30, 2019
Accounts payable	$	295,273	$	345,181
Accrued liabilities		84,877		3,014
	$	380,150	$	348,195

9. LOANS PAYABLE

The balance presented for loans payable consist of the following amounts:

(a)	On July 15, 2016, the Company entered into a loan agreement for a principal balance of up to $50,000 at any given time. The amount is unsecured, non-interest bearing and was due on July 15, 2018. As at April 30, 2020, the Company has received gross loan proceeds of $54,176. Upon receipt of the funds, the Company recorded fair value discounts of $6,836. During the year ended April 30, 2017, the Company repaid $10,600 of principal and recognized accretion of the discount of $2,067. During the year ended April 30, 2018, the Company repaid $5,000 of principal and recognized accretion of the discount of $3,918. During the year ended April 30, 2019, the Company repaid $nil of principal and recognized accretion of the discount of $851. During the year ended April 30, 2020, the Company repaid $nil of principal and recognized accretion of the discount of $nil. At April 30, 2020, the net carrying value of the loan was $38,576 (2019 - $38,576) which is due on demand.
(b)	As at April 30, 2020, the Company was indebted for loans amounting to $500 (2019 - $500). The amounts are unsecured, non-interest bearing and due on demand.
(c)	On September 30, 2017, the Company entered into a loan agreement for a principal balance of $130,000.  The loan was subject to interest at 10% per annum and due on April 30, 2018. On May 24, 2018, the Company issued 2,600,000 shares of common stock to settle the $130,000 of principal and $6,500 of interest owing under the loan agreement (refer to Note 13). The fair value of the shares issued was determined to be $338,000, and as a result, the Company recorded a loss on settlement of debt of $201,500 during the year ended April 30, 2019.
(d)	On February 14, 2018, the Company entered into a loan agreement for a principal balance of $25,000.  The loan bears interest at 10% per annum and is due on February 13, 2019. The loan remains unpaid at April 30, 2020.
(e)	As at April 30, 2020, the Company was indebted for loans amounting to $24,740 (2019 - $nil) owing to Bellridge. The amounts are unsecured, non-interest bearing and due on demand.

F-9

BLACK CACTUS GLOBAL, INC.

Notes to the Financial Statements

For the Years Ended April 30, 2020 and 2019

10. CONVERTIBLE DEBENTURES

(a)	On November 27, 2017, the Company entered into and closed on a Securities Purchase Agreement (“SPA”) with Bellridge, pursuant to which the Company issued a senior secured convertible promissory note in the aggregate principal amount of $526,316 (“Note”) for an aggregate purchase price of $500,000, net of a $26,316 original issue discount (“OID”) and $10,000 of legal fees. The Company also incurred additional debt issuance costs of $50,000.  The total debt issue costs of $86,316 have been netted against the principal and will be amortized over the term of the loan using the effective interest method. In addition, the Company issued 7,894,737 warrants to Bellridge exercisable after a period of six months at an exercise price equal to the lesser of (i) $0.10 per share and (ii) 70% of the lowest traded price of the Company’s common stock during the prior twenty consecutive trading days. The Company also agreed to issue 2,793,296 shares to Bellridge in connection with the loan.  The interest on the outstanding principal due under the Note accrued at a rate of 5% per annum. All principal and accrued interest under the Note was due on November 27, 2018 and is convertible into shares of the Company’s Common Stock at a conversion price equal to the lesser of (i) $0.10 and (ii) 70% of the lowest traded market price in the 20 consecutive trading days prior to the conversion date.
	The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The terms of the contracts did not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features were not required to be separated from the host instrument and accounted for separately. As a result, at April 30, 2020, the conversion features and non-standard anti-dilutions provisions would not meet derivative classification.
	The relative fair values of the convertible note, the warrants and the shares were $140,733, $284,751 and $100,832, respectively.  The effective conversion price was then determined to be $0.063. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company recognized the relative fair value of the shares issuable of $100,832 and an equivalent discount that reduced the carrying value of the convertible debt to $425,484.  The Company then recognized the relative fair value of the warrants of $284,751 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $140,733. The beneficial conversion feature of $54,417, the OID of $26,316 and debt financing costs of $60,000 discounted the convertible debenture such that the carrying value of the convertible debt on the date of issue was $0. The discount was being expensed over the term of the loan to increase the carrying value to the face value of the loan. The Company determined that there was no derivative liability associated with the debenture under ASC 815-15 Derivatives and Hedging.
	On November 27, 2018, the Company defaulted on the convertible note, resulting in the note becoming immediately due and payable. Upon default, the interest rate increased to 29% per annum and the Company incurs a late fee at an interest rate equal to 18% per annum on any overdue and unpaid interest under the convertible note. Additionally, the total amount owed on the convertible note upon default is equal to 130% of the outstanding principal and accrued and unpaid interest. During the year ended April 30, 2019, the Company recorded a 30% principal increase of $157,895 as a result of default, increasing the carrying value of the loan to $684,211. During the year ended April 30, 2020, the Company recorded accretion of discount of $Nil (2019 - $490,305). As at April 30, 2020, the Company has recorded accrued interest of $372,243 (2019 - $125,796).
(b)	On April 2, 2018, April 5, 2018 and April 13, 2018, the Company amended (the “Amendments”) the November 27, 2017 Securities Purchase Agreement.  Pursuant to the Amendments the Company issued Bellridge warrants to purchase 85,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share. The Company also issued a senior secured convertible promissory note in the aggregate principal amount of $315,790 (“Note”) for an aggregate purchase price of $295,000, net of a $15,790 OID and $5,000 of legal fees. The Company also incurred additional debt issuance costs of $30,000 and issued a warrant to purchase 560,717 shares of the Company’s common stock at an exercise price of $0.10 per share.  The total debt issue costs of $50,672 have been netted against the principal and will be amortized over the term of the loan using the effective interest method. The interest on the outstanding principal due under the Note accrued at a rate of 5% per annum. All principal and accrued interest under the Note was due on December 20, 2018 and was convertible into shares of the Company’s Common Stock at a conversion price equal to the lesser of (i) $0.10 and (ii) 70% of the lowest traded market price in the 20 consecutive trading days prior to the conversion date.

F-10

BLACK CACTUS GLOBAL, INC.

Notes to the Financial Statements

For the Years Ended April 30, 2020 and 2019

	The relative fair values of the convertible note, the warrants and the shares were $6,208, $118 and $258,674, respectively.  The effective conversion price was then determined to be $0.001. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company recognized the relative fair value of the warrants of $258,792, as additional-paid-in capital and an equivalent discount that reduced the carrying value of the convertible debt to $56,998. The beneficial conversion feature of $6,208, the OID of $15,790 and debt financing costs of $35,000 discounted the convertible debenture such that the carrying value of the convertible debt on the date of issue was $0. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan. The Company determined that there was no derivative liability associated with the debenture under ASC 815-15 Derivatives and Hedging.
	On December 20, 2018, the Company defaulted on the convertible note, resulting in the note becoming immediately due and payable. Upon default, the interest rate increased to 29% per annum and the Company incurs a late fee at an interest rate equal to 18% per annum on any overdue and unpaid interest under the convertible note. Additionally, the total amount owed on the convertible note upon default is equal to 130% of the outstanding principal and accrued and unpaid interest. During the year ended April 30, 2019, the Company recorded a 30% principal increase of $94,737 as a result of default, increasing the carrying value of the loan to $410,527. During the year ended April 30, 2020, the Company recorded accretion of discount of $Nil (2019 - $307,009). As at April 30, 2020, the Company has recorded accrued interest of $206,584 (2019 - $61,101).
(c)	On June 1, 2018, the Company issued a senior secured convertible promissory note in the aggregate principal amount of $210,527 (“Note”) for an aggregate purchase price of $200,000, net of a $10,527 OID. The Company also incurred additional debt issuance costs of $20,000.  The total debt issue costs of $30,527 have been netted against the principal and will be amortized over the term of the loan using the effective interest method. The interest on the outstanding principal due under the Note accrues at a rate of 5% per annum. All principal and accrued interest under the Note is due on June 1, 2019 and is convertible into shares of the Company’s Common Stock at a conversion price equal to the lesser of (i) $0.10 and (ii) 70% of the lowest traded market price in the 20 consecutive trading days prior to the conversion date.
	As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company then recognized the beneficial conversion feature of $144,908 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $65,619. The OID of $10,570 and debt financing costs of $20,000 discounted the convertible debenture such that the carrying value of the convertible debt on the date of issue was $35,092. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan. The Company determined that there was no derivative liability associated with the debenture under ASC 815-15 Derivatives and Hedging.
	On December 20, 2018, the Company defaulted on the convertible note, resulting in the note becoming immediately due and payable. Upon default, the interest rate increased to 29% per annum and the Company incurs a late fee at an interest rate equal to 18% per annum on any overdue and unpaid interest under the convertible note. Additionally, the total amount owed on the convertible note upon default is equal to 130% of the outstanding principal and accrued and unpaid interest. During the year ended April 30, 2019, the Company recorded a 30% principal increase of $63,158 as a result of default, increasing the carrying value of the loan to $273,685. During the year ended April 30, 2020, the Company recorded accretion of discount of $Nil (2019 – $175,435). As at April 30, 2020, the Company has recorded accrued interest of $135,152 (2019 - $38,542).
	As part of the SPA, Bellridge is loaning the Company a minimum of $500,000 to a maximum of $1,500,000 (“Loan”). The first three tranches were the $1,000,000 in the form of the Notes above. The next and final tranche of $500,000 will be funded upon the effectiveness of the registration statement that the Company is required to file covering the shares of common stock issuable upon conversion of the Notes.
	As part of the Bellridge Agreements, the Company also executed Registration Rights Agreement, Intellectual Property Security Interest Agreement, Subsidiary Guaranty and a Security Interest Agreement in all the Company’s assets to Bellridge.
(d)	On February 20, 2020, the Company entered into an additional securities purchase agreement with Bellridge, pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of $54,271 (“Note”) for an aggregate purchase price of $44,337, net of a $4,934 OID and $5,000 of legal fees. The total debt issue costs of $9,934 have been netted against the principal and will be amortized over the term of the loan using the effective interest rate method. The interest on the outstanding principal due under the Note accrues at a rate of 10% per annum. All principal and accrued interest under the Note is due on February 20, 2021. At any time after 180 days from the issuance date, the Note is convertible into shares of the Company’s Common Stock at a conversion price equal to the lesser of (i) $0.0047 and (ii) 70% of the lowest traded market price in the 20 consecutive trading days prior to the conversion date.

F-11

BLACK CACTUS GLOBAL, INC.

Notes to the Financial Statements

For the Years Ended April 30, 2020 and 2019

As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company then recognized the beneficial conversion feature of $44,337 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $9,934. The OID of $4,934 and debt financing costs of $5,000 discounted the convertible debenture such that the carrying value of the convertible debt on the date of issue was $0. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan. The Company determined that there was no derivative liability associated with the debenture under ASC 815-15 Derivatives and Hedging. During the year ended April 30, 2020, the Company recorded accretion of discount of $8,020 increasing the carrying value of the loan to $8,020. As at April 30, 2020, the Company has recorded accrued interest of $1,055.

11. PRODUCT DEVELOPMENT AND WEBSITE COSTS

On June 18, 2017, the Company entered into a Definitive Acquisition Agreement involving the internet domain and brand BitReturn. The Agreement represented the Company’s development of a plan to create a technology business in mining digital currency with an operating name of BitReturn. The Company issued 10,000,000 shares of restricted common stock with a fair value of $1,900,000 as payment under the terms of the Agreement, which was recognized as and included in product development and website costs. The Company is also to make cash payments totaling $350,000 under the terms of the Agreement, and as at April 30, 2020, $350,000 (2019 - $350,000) is recorded as an amount payable for BitReturn. Product development and website expenses represent costs of acquiring the brand BitReturn, development of the crypto currency mining product, and creation of the website. These costs did not meet the criteria for capitalization, and therefore were treated as an operating expense in fiscal 2018. During the year ended April 30, 2019, the Company determined it would not proceed with its plan to create a technology business in mining digital currency.

12. COMMITMENTS

(a)	On July 1, 2017, the Company entered into a Strategic Management and Advisory Agreement for consulting services and investor relations services to be provided over a period of 12 months commencing July 1, 2017. In consideration, the Company paid a total monthly fee of $3,000 cash and issued a total of 1,000,000 shares of common stock. On July 26, 2017, the Company issued 1,000,000 shares of common stock with a fair value of $260,000, which was recorded as a prepaid expense and will be amortized over the term of the agreement. During the year ended April 30, 2020, the Company recognized $Nil (2019 - $43,333) of consulting expense.
(b)	On November 8, 2017, the Company entered into a Financial Advisor Agreement with an unrelated third party for consulting services and investor relations services to be provided over a period of three months commencing November 8, 2017. In consideration, the Company paid an initial fee of $20,000 cash. In addition, if the Company closed any transactions made with any introduction made by the unrelated third party, the Company would pay an industry-standard cash fee of 10% on all equity or equity-linked capital invested, which will be recorded as debt financing costs. On November 27, 2017, the Company entered into and closed on a Securities Purchase Agreement (refer to Note 10) whereby the introduction was made by the unrelated third party. During the year ended April 30, 2018, the Company recognized $100,000 of debt financing costs (refer to Note 10) and issued 560,717 warrants exercisable at $0.10 pursuant to the agreement. During the year ended April 30, 2020, the Company recognized $nil (2019 - $20,000) of debt financing costs (refer to Note 10).
(c)	On January 4, 2018, the Company entered into an Equity Research Service Agreement for investor relations services to be provided over a period of 12 months commencing January 4, 2018. In consideration, on January 16, 2018, the Company issued 150,000 shares of common stock with a fair value of $57,000, which was recorded as a prepaid expense and amortized over the term of the agreement. During the year ended April 30, 2020, the Company recognized $nil (2019 - $28,500) of consulting expense.
(d)	On February 14, 2018, the Company entered into an Employment Agreement with a term of three years. Pursuant to the Employment Agreement, the Company agreed to issue 8,000,000 shares and pay the employee GBP250,000 in exchange for services.  On July 9, 2018, the Company and the employee entered into a Settlement and General Release Agreement pursuant to which, the Company agreed to issue the employee 6,000,000 shares of common stock in exchange for release from the Employment Agreement and the fair value of $420,000 of the shares issuable (refer to Note 13) was expensed in July 2018.

F-12

BLACK CACTUS GLOBAL, INC.

Notes to the Financial Statements

For the Years Ended April 30, 2020 and 2019

(e)

On August 24, 2019, the Company entered into a Software License Agreement (“License Agreement”) with Charteris, Mackie, Baillie & Cummins Limited (“CMBC Limited”) to acquire a non-exclusive license for Black Cactus blockchain development software platform and related intellectual property (“Software”) which are licensed to CMBC Limited from Black Cactus LLC. As consideration, the Company shall pay CMBC Limited a royalty in the amount of five percent (5%) of the gross revenue received from the sublicense of the Software (“royalty”), due on a quarterly basis, and issue or assign an equivalent number of common shares to CMBC Limited that will represent 60% of the then issued shares of the Company. In addition, the Company will issue an option for CMBC Limited 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 (Note 10). The closing of the License Agreement is conditional on the Company obtaining a written agreement with Bellridge to increase its line of credit from $1,500,000 to $5,000,000 (Note 10), and the assignment of a separate Software License Agreement between CMBC Limited and Benchmark Advisors Limited (“Benchmark”) originally granted to Benchmark on February 20, 2019. The closing of the License Agreement was completed subsequent to April 30, 2020 (refer to Note 16).

(f)

On November 15, 2019, the Company entered into an Assignment Agreement with CMBC Limited to acquire the assignment of a non-exclusive software license (“License”) for Software from Benchmark. As consideration for the assignment of the License, CMBC will be paid $250,000 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 completed subsequent to April 30, 2020 (refer to Note 16).

13. STOCK

On November 13, 2017, the Company amended its Articles of Incorporation, increasing the number of common stock authorized from 240,000,000 to 490,000,000, par value of $0.0001, and leaving the number of preferred stock authorized at 10,000,000, par value of $0.0001.

At the time of the amendment, the Company designated 10,000 shares of its authorized but unissued shares of preferred stock as Series A Preferred Stock. The 10,000 Series A Preferred Stock shall have an aggregate voting power of 45% of the combined voting power of the entire Company’s shares, common stock and preferred stock, as long as the Company is in existence. Each holder of the Series A Preferred Stock shall have full voting rights and powers equal to the voting rights and powers of the holders of common stock, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the by-laws of the Company, and shall be entitled to vote, together with holders of common stock, with respect to any question upon which holders of common stock have the right to vote. Without the vote or consent of holders of at least a majority of the shares of Series A Preferred Stock then outstanding, the Company may not (i) authorize, create or issue, or increase the authorized number of shares of, any class or series of capital stock ranking prior to or on a parity with the Series A Preferred Stock, (ii) authorize, create or issue any class or series of common stock of the Company other than the common stock, (iii) authorize any reclassification of the Series A Preferred Stock, (iv) authorize, create or issue any securities convertible into or exercisable for capital stock prohibited by (i) or (ii), (v) amend this Certificate of Designations or (vi) enter into any merger or reorganization, or disposal of assets involving 20% of the total capitalization of the Company.

Subject to the rights of the holders of any other series of preferred stock ranking senior to or on a parity with the Series A Preferred Stock with respect to liquidation and any other class or series of capital stock of the Company ranking senior to or on a parity with the Series A Preferred Stock with respect to liquidation, in the event of any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, the holders of record of the issued and outstanding shares of Series A Preferred Stock shall be entitled to receive, out of the assets of the Company available for distribution to the holders of shares of Series A Preferred Stock, prior and in preference to any distribution of any of the assets of the Company to the holders of common stock and any other series of preferred stock ranking junior to the Series A Preferred Stock with respect to liquidation.

The holders of the Series A Preferred Stock shall not be entitled to receive dividends per share of Series A Preferred Stock. The Company shall have no rights to redeem Series A Preferred Stock.

F-13

BLACK CACTUS GLOBAL, INC.

Notes to the Financial Statements

For the Years Ended April 30, 2020 and 2019

COMMON STOCK

On January 16, 2018, the Company authorized 3,200,000 shares of common stock to be issued pursuant to the Share Purchase Agreement with an unrelated third party and these shares remained held in treasury. Under the terms of the Agreement, the Company will purchase all the issued ordinary shares of the unrelated third party from its shareholders, thereby acquiring all the intellectual property, research and development, contracts, accounts receivable and licenses owned by the unrelated third party. In exchange, the Company will issue 3,200,000 shares of its common stock to the unrelated third party’s shareholders. The Agreement will not close and the acquisition will not be complete until the Company receives the source code and software to the unrelated third party’s intellectual property for all of the unrelated third party’s programs, platforms and products and these assets have been independently verified. Additionally, if the shares issued to the unrelated third party shareholders do not have an aggregate value of $2,000,000 by January 15, 2019, the unrelated third party shareholders are entitled to have additional shares issued to them so that they hold shares equal to $2,000,000 as of that date. As the Company has not received the source code and software relating to the intellectual property, the Agreement was terminated, and the 3,200,000 common shares held in treasury were cancelled on May 23, 2018.

On May 24, 2018, the Company issued 2,600,000 shares of common stock to settle the $130,000 of principal and $6,500 owed under the loan agreement described in Note 9(c).

On July 9, 2018, the Company entered into a Settlement and General Release Agreement pursuant to which the Company would issue an employee 6,000,000 shares of common stock in exchange for release from the Employment Agreement (refer to Note 12(d)). The fair value of the shares on the date of settlement of $420,000 is presented as of April 30, 2020 as shares issuable because the shares have not been issued to date.

On April 27, 2018, the Company issued an aggregate of 50,000,000 shares of common stock in certificated form to three directors and a relative of one of the directors. These four certificates were maintained in the possession of the Company and/or its transfer agent until October 30, 2018, on which date all 50,000,000 shares were transferred into book entry form registered in the name of the four individuals. The Company’s financial statements prior to October 30, 2018, reflected the 50,000,000 shares as treasury shares. Upon the transfer of such shares of common stock into book entry form, on October 30, 2018, the shares became issued and outstanding shares of the Company and are no longer reflected as treasury shares in the Company’s financial statements. Based upon the quoted market price, the total value of the shares was $1,875,000 on the date of the transfer which was recorded as a stock-based compensation expense on October 30, 2018 as no assets were received by the Company in exchange for the shares.

As at April 30, 2020 and 2019, there are 166,073,296 shares of common stock issued and outstanding.

PREFERRED STOCK - SERIES A

As at April 30, 2020, there are no issued and outstanding Series A Preferred Stock.

14. SHARE PURCHASE WARRANTS

The following table summarizes the continuity of share purchase warrants:

	Number of warrants	Weighted average exercise price $
Balance, April 30, 2018	93,455,454		0.10
Issued	—		—
Balance, April 30, 2019	93,455,454		0.10
Issued	—		—
Balance, April 30, 2020	93,455,454		0.10

F-14

BLACK CACTUS GLOBAL, INC.

Notes to the Financial Statements

For the Years Ended April 30, 2020 and 2019

As at April 30, 2020, the following share purchase warrants were outstanding: 

Number of warrants	Exercise price $	Expiry date
7,894,737	0.0031*	May 27, 2022
560,717	0.10	March 29, 2023
85,000,000	0.10	April 5, 2023
93,455,454

* The lower of $0.10 and 70% of the lowest traded price of the Company’s common stock during the prior twenty consecutive trading days.

The weighted average remaining life of the warrants outstanding as at April 30, 2020 is 2.86 years.

15. INCOME TAXES

The Company is subject to United States federal and state income taxes at an approximate rate of 21%. The reconciliation of the provision for income taxes at the United States federal and state statutory rate compared to the Company’s income tax expense as reported is as follows:

	April 30, 2020 $			April 30, 2019 $
Net loss	$	596,565		$	4,294,852
Income tax rate		21%			21%
Expected income tax benefit		(125,279	)		(901,919	)
Accretion		1,684			204,278
Loss on settlement of debt		—			42,315
Valuation allowance change		123,595			655,326
Provision for income taxes	$	—		$	—

The significant components of deferred income tax assets at April 30, 2020 and 2019, are as follows:

	April 30, 2020 $			April 30, 2019 $
Net operating loss carryforward	$	1,902,786		$	1,779,191
Valuation allowance		(1,902,786	)		(1,779,191	)
Net deferred income tax asset	$	—		$	—

The Company has net operating loss carryforwards of approximately $9,060,882 available to offset taxable income in future years which expires beginning in fiscal 2033. The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years.

F-15

16. SUBSEQUENT EVENTS

On June 29, 2020, the Company and CMBC Limited entered into a waiver and agreement (the “Waiver Agreement”), pursuant to which the Company and CMBC Limited agreed to close the License Agreement dated August 24, 2019 (Note 12(e)) and the Assignment Agreement dated November 15, 2019 (Note 12(f)). Pursuant to the Waiver Agreement, CMBC Limited, 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 License Agreement and the Assignment Agreement.

In consideration, the Company authorized the issuance of 249,109,944 restricted shares of the Company’s common stock, to Black Cactus Holdings LLC, the designee of CMBC Limited, 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.

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