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EX-32 - CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. SECTION 1350 - BLACK CACTUS GLOBAL, INC.ex_32-2.htm
EX-32 - CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350 - BLACK CACTUS GLOBAL, INC.ex_32-1.htm
EX-31 - CERTIFICATION OF CFO PURSUANT TO RULE 13A-14(A)/15D-14(A) - BLACK CACTUS GLOBAL, INC.ex_31-2.htm
EX-31 - CERTIFICATION OF CEO PURSUANT TO RULE 13A-14(A)/15D-14(A) - BLACK CACTUS GLOBAL, INC.ex_31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-K

(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, 2018


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


Black Cactus Global, 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.)

 

 

 

8275 S. Eastern Avenue, Suite 200

Las Vegas, NV

 

89123

(Address of principal executive offices)

 

(Zip Code)


Registrant’s telephone number  (702) 595-2247


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 [X] No [  ]


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

[X]

 

 


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 number of shares issued and outstanding of the Company’s $0.0001 Par Value Common Stock as August 14, 2018 was 166,073,296 and 116,073,296.


State the aggregate market value of the voting and non-voting common equity computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $12,748,044 as of October 31, 2017.


DOCUMENTS INCORPORATED BY REFERENCE:


None.




TABLE OF CONTENTS

FORM 10-K


 

 

 

 

Page

 

 

 

Part I

 

 

 

 

 

 

Item 1.

 

BUSINESS

 

1

 

Item 1A.

 

RISK FACTORS

 

2

 

Item 1B.

 

UNRESOLVED STAFF COMMENTS

 

2

 

Item 2.

 

PROPERTIES

 

2

 

Item 3.

 

LEGAL PROCEEDINGS

 

2

 

Item 4.

 

MINE SAFETY DISCLOSURES

 

2

 

 

 

 

 

 

Part II

 

 

 

 

 

 

Item 5.

 

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

2

 

Item 6.

 

SELECTED FINANCIAL DATA

 

3

 

Item 7.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

3

 

Item 7A.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

6

 

Item 8.

 

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

6

 

Item 9.

 

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

6

 

Item 9A.

 

CONTROLS AND PROCEDURES

 

6

 

Item 9B.

 

OTHER INFORMATION

 

7

 

 

 

 

 

 

Part III

 

 

 

 

 

 

Item 10.

 

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

7

 

Item 11.

 

EXECUTIVE COMPENSATION

 

8

 

Item 12.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

9

 

Item 13.

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

10

 

Item 14.

 

PRINCIPAL ACCOUNTING FEES AND SERVICES

 

12

 

 

 

 

 

 

Part IV

 

 

 

 

 

 

Item 15.

 

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

12

 

 

 

SIGNATURES

 

14

 


- ii -



Part I


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


Information contained in this Annual Report on Form 10-K contains “forward-looking statements.” These forward-looking statements are contained principally in the sections titled “Business,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. The forward-looking statements herein represent our expectations, beliefs, plans, intentions or strategies concerning future events, including, but not limited to: our future financial performance; the continuation of historical trends; the sufficiency of our cash balances for future needs; our future operations; the relative cost of our operation methods as compared to our competitors; new production projects, entry and expansion into new markets; achieving status as an industry leader; our competitive advantages over our competitors; brand image; our ability to meet market demands; the sufficiency of our resources in funding our operations; our intention to engage in mergers and acquisitions; and our liquidity and capital needs. Our forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that any projections or other expectations included in any forward-looking statements will come to pass. Moreover, our forward-looking statements are subject to various known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. These risks, uncertainties and other factors include but are not limited to: the risks of limited management, labor and financial resources; the risks generally associated with develop stage companies; our ability to establish and maintain adequate internal controls; our ability to develop and maintain a market in our securities; and our ability obtain financing, if and when needed, on terms that are acceptable. Except as required by applicable laws, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.


As used in this Annual Report on Form 10-K “we”, “our”, “us”, the “Company” and “Black Cactus” refer to Black Cactus Global, Inc. unless the context requires otherwise.


Item 1. BUSINESS.


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 Suite 200, 8275 South Eastern Avenue, Las Vegas, Nevada 89123. The Company’s plan is to develop a technology business in digital currency mining. On December 4, 2017, the Company changed its name to “Black Cactus Global, Inc.”


Employees


As of April 30, 2018, we had no employees. Our officers provided services to our company on a contract basis as needed.


Emerging Growth Company


We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.


- 1 -



Jumpstart Our Business Startups Act of 2012.


The JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. Pursuant to Section 107(b) of the JOBS Act, we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging growth company.” This election will permit us to delay the adoption of new or revised accounting standards that will have different effective dates for public and private companies until such time as those standards apply to private companies. Upon the issuance of a new or revised accounting standard that applies to our financial statements and has a different effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt said accounting standard. We may take advantage of the extended transition period until the first to occur of the date we (i) are no longer an “emerging growth company” or (ii) affirmatively and irrevocably opt out of the extended transition period. Consequently, our financial statements may not be comparable to companies that comply with public company effective dates.


For additional discussion regarding the JOBS Act and the exemptions available to “emerging growth companies” thereunder, please refer to the risk factor entitled “We are an “emerging growth company” and we cannot be certain if we will be able to maintain such status or if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.”


Item 1A. Risk Factors.


Not required for smaller reporting companies.


Item 1B. Unresolved Staff Comments.


None.


Item 2. Properties.


We currently require only limited office space for the administration of our business. This space is currently provided to us free of charge at the office of Mr. Sangha, an officer and director of the company.


Item 3. Legal Proceedings.


None.


Item 4. Mine Safety Disclosures


Not applicable.


Part II


Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.


Our Common Stock is currently quoted on the OTC Pink Sheets, which is sponsored by OTC Markets Group, Inc. The OTC Pink Market is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current “bids” and “asks,” as well as volume information. Our shares are quoted on the OTC Pinks under the symbol “BLGI.”


The following table sets forth the range of high and low bid quotations for our Common Stock for each of the periods indicated as reported by the OTC Pinks. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.


- 2 -



Trading Market


 

 

Closing Price

 

 

 

High

 

Low

 

 

 

 

 

 

 

 

 

Year Ended April 30, 2017

 

 

 

 

 

 

 

First Quarter

 

$

0.13

 

$

0.06

 

Second Quarter

 

$

0.83

 

$

0.03

 

Third Quarter

 

$

0.70

 

$

0.01

 

Fourth Quarter

 

$

0.60

 

$

0.03

 

 

 

 

 

 

 

 

 

Year Ended April 30, 2018

 

 

 

 

 

 

 

First Quarter

 

$

0.83

 

$

0.03

 

Second Quarter

 

$

0.32

 

$

0.08

 

Third Quarter

 

$

0.66

 

$

0.09

 

Fourth Quarter

 

$

0.40

 

$

0.06

 


The high and low bid price for shares of our Common Stock on April 30, 2018, was $0.14 and $0.12, respectively, based upon bids that represent prices quoted by broker-dealers on the OTCQB.


Holders


As of August 14, 2018, there were 35 holders of record of our common stock.


Equity Compensation Plan Information


The Company does not have any equity compensation plans.


Dividend Policy


To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.


Item 6. Selected Financial Data.


Not required for smaller reporting companies.


Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


Company Overview


We were 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.  Currently, the Company is evaluating the development of a technology business in digital currency applications and mining.


Critical Accounting Policies


See “Footnotes” section to the financial statements 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. Because of our election to not opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, our financial statements may not be comparable to companies that comply with public company effective dates.


- 3 -



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.


Stock Based Compensation


For purposes of determining the variables used in the calculation of stock compensation expense under the provisions of FASB ASC Topic 505, “Equity” and FASB ASC Topic 718, “Compensation — Stock Compensation,” management would perform an analysis of current market data and historical company data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, management uses these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of stock options granted, any fluctuations in these calculations could have a material effect on the results presented in the Company’s statement of operations and other comprehensive income. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on the Company’s financial statements.


Recently Issued Accounting Standards:


In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09’’). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition” and some cost guidance included in ASC Subtopic 605-35, Revenue Recognition -Construction-Type and Production-Type Contracts”. ASU 2014-09 requires the disclosure of sufficient information to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The Company will also be required to disclose information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. Early adoption is not allowed. ASU 2014-09 provides two methods of retrospective application. The first method would require the Company to apply ASU 2014-09 to each prior reporting period presented. The second method would require the Company to retrospectively apply with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application.


Results of Operations


The following discussion of the Company’s financial condition and the results of operations should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this document.


The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that in addition to the description of historical facts contained herein, this report contains certain forward-looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company’s other filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those, described in the forward-looking statements. These factors include, among others: (a) the Company’s fluctuations in sales and operating results; (b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) product development risks; (e) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; and (f) pending litigation.


Management’s Plan of Operation


We do not have adequate funds to satisfy our working capital requirements for the next twelve months.


We do not have adequate funds to satisfy our working capital requirements for the next twelve months.  We have borrowed a total of $800,000 from Bellridge Capital LP (“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 purchase $800,000 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 will receive the third tranche of $200,000 from Bellridge five days after we receive the first set of SEC comments (if the comments are reasonable in the opinion of Bellridge).  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 third and fourth Notes.  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 $700,000 of funding from Bellridge, in the interim, we may not be able to completely implement and commence our proposed plan of operations.


- 4 -



As of April 30, 2018, we had not yet had any revenues from our services in the digital currency mining field.


Results of Operations


There is no historical financial information about us upon which to base an evaluation of our performance. We have incurred losses of $5,988,299 and $81,974 in our operations for the years ended April 30, 2018 and 2017, respectively.


We did not generate any revenues from our operations for the years ended April 30, 2018 or 2017. 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.


Since inception, the majority of our time has been spent refining its business plan and preparing for a primary financial offering.


Our results of operations are summarized below:


 

 

For the Year Ended April 30, 2018

 

For the Year Ended April 30, 2017

 

Revenue

 

 

 

 

 

Cost of Revenue

 

 

 

 

 

Expenses

 

$

5,988,299

 

$

81,974

 

Net Loss -

 

$

(5,988,299

)

$

(81,974

)

Net Loss per Share - Basic and Diluted

 

 

(0.05

)

 

(0.00

)

Weighted Average Number Shares Outstanding - Basic and Diluted

 

 

124,267,460

 

 

80,789,299

 


Liquidity and Capital Resources


As of April 30, 2018, we had not generated any revenues from our business operations. As at April 30, 2018, there were 166,073,296 shares of common stock issued and 116,073,296 shares of common stock outstanding. Total cash proceeds received from common share issuance since inception to April 30, 2018 is $90,500.


As of April 30, 2018, we had $252 cash on hand. As of April 30, 2018, we had a working capital deficiency of $415,940 and an accumulated deficit of $6,190,876.  Our cash is 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.  We also may sell additional secured, convertible promissory notes.


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 year ended April 30, 2018, we spent $5,988,299 on general and administrative operating expenses. We relied on loans to fund general and administrative operating expenses. As of April 30, 2017, we had no working capital.


As of April 30, 2018, 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 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 arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.


- 5 -



Critical Accounting Policies


As of April 30, 2018, there were no critical accounting policies.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk.


Not required for smaller reporting companies.


Item 8. Financial Statements and Supplementary Data.


The financial statements required by this Item 8 are included at the end of this Annual Report on Form 10-K beginning on page F-1.


Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.


None.


Item 9A. Controls and Procedures.


Evaluation of Disclosure Controls and Procedures


We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of disclosure controls and procedures as of April 30, 2018 pursuant to Rule 13a-15(b) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective to ensure that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.


Management’s Annual Report on Internal Control over Financial Reporting


Our management is responsible for the preparation of our consolidated financial statements and related information. Management uses its best judgment to ensure that the consolidated financial statements present fairly, in material respects, our financial position and results of operations in conformity with generally accepted accounting principles. Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in the Exchange Act. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. There are inherent limitations in the effectiveness of any system of internal controls including the possibility of human error and overriding of controls. Consequently, an effective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.


Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that, in reasonable detail, accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and that the receipts and expenditures of company assets are made in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention of or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.


Under the supervision of management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission and subsequent guidance prepared by the Commission specifically for smaller public companies. Based on that evaluation, our management concluded that our internal control over financial reporting was not effective as of April 30, 2018, primarily as a result of the fact that, as of April 30, 2018, we had limited resources, including the absence of a financial staff with accounting and financial expertise.


- 6 -



To the extent reasonably possible, given our limited resources, our goal is to bring on additional financial staff and expand our current board of directors to include additional individuals willing to perform directorial functions. Since the recited remedial actions will require that we hire or engage additional personnel, this material weakness may not be overcome in the near term due to our limited financial resources. Until such remedial actions can be realized, we will continue to rely on the advice of outside professionals and consultants.


This annual report on Form 10-K does not include an attestation report of our independent auditors regarding internal control over financial reporting. Because the Company is a smaller reporting company, management’s report was not subject to attestation by our independent auditors.


Changes in Internal Control over Financial Reporting


There have been no changes in our internal controls over financial reporting that occurred during the year ended April 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Item 9B. Other Information.


None.


Part III


Item 10. Directors, Executive Officers and Corporate Governance.


Officers and Directors


Our directors will serve until their successors are elected and qualified. Our officers are appointed by the board of directors to a term of one year and serve until their successor is duly appointed, or until they are removed from office. The board of directors has no nominating, auditing or compensation committees.


The name, address, age and position of our president, secretary/treasurer, directors and vice president is set forth below:


NAME

 

AGE

 

POSITION(S)

 

 

 

 

 

Harpreet Sangha

 

53

 

Chairman of the Board, Principal Financial Officer

 

 

 

 

 

Dr. Ravindranath Kancherla

 

63

 

Director

 

 

 

 

 

Dr. Pruthvinath Kancherla

 

34

 

Director

 

 

 

 

 

Dr. Ramesh Para

 

45

 

Chief Executive Officer, Director


Business Experience


Harpreet Sangha


Mr. Sangha has been a founder, CEO and board member of several public companies and brings 31 years of entrepreneurial, operational and capital market experience to Black Cactus Global, Inc. In 1986, he started his career as Investment Advisor and gained his affinity for raising capital for numerous startups and early stage public companies. Mr. Sangha departed this position in March 2006 to apply his unique ability of bringing capital to early stage projects and founded Douglas Lake Minerals. In the role of CEO, his leadership in Douglas Lake overcame rigorous operational challenges in the African environment and brought the value of the company to $240 million. He has also served as CEO, Secretary, and director of Sharprock Resources Inc. (OTCBB: SHRK) where he raised capital to explore a preproduction gold project in the Chukotka Region of Russia. He joined Rango Energy, Inc. in 2012 as Chairman of the Board and Chief Executive Officer. Mr. Sangha has established many valuable contacts and relationships with institutional clients worldwide.


- 7 -



Dr. Ravindranath Kancherla


On December 11, 2017, Dr. Ravindranath Kancherla was appointed Director of the Company.  Dr. Kancherla is a distinguished and internationally recognized Gastrointestinal Endosurgeon and a Fellow of both the Royal College of Surgeons of Edinburgh and Glasgow. Dr. Kancherla is the founder of Global Hospitals Group, India’s first multi-organ transplant center. Dr. Kancherla is currently its chairman and has served in that position since 2006.  Dr. Kancherla became a Fellow of the Royal College of Surgeons of Edinburgh in 1985 as well as the Royal College of Surgeons, Glasgow in 1985.  Dr. Kancherla received his Master of Science from Madras University in 1984 and was granted his Bachelor of Medicine / Bachelor of Surgery in 1980 from Sri Venkateswara Medical College, in Tirupati, AP, India.


Dr. Pruthvinath Kancherla


Dr. Pruthvinath Kancherla is the director of Global Hospitals Group, a multi super specialty tertiary care multi organ transplant facility having facilities in four major metro cities of India. Dr. Kancherla is a medical doctor who also has a Masters in Hospital Administration. Dr. Kancherla joined the Board of Global Hospitals as a full-time director in 2011 and has been closely involved in its growth. In 2015, Dr. Kancherla became a part-time director of Global Hospitals so that he might focus on fintech and cyber security areas. Dr. Kancherla has extensive investment experience at home and abroad. Dr. Kancherla’s hands on experience both in India and UK, more particularly in technology areas, is expected to bring immense value to the Company.


Dr. Ramesh Para


Dr. Ramesh Para has been a Director of Sysveda UK Limited since December 2011. As part of his duties, Dr. Para is responsible for the support of an in-house back office system, incident investigation and for defining functionalities for one of Sysveda’s client. He coordinates the offshore development team of 350 employees during development, planning user acceptance testing and system code review for the same client. Dr. Para has a track record of managing profitable companies of various sizes and looking after Information Technology for over 17 years and his expertise in IT management and development will assist the Company in its proposed operations. Dr. Para has a PhD in Management Information Systems, a Master’s in Business Administration and a Bachelor’s of Technology in Computer Science.


Family Relationships


Dr. Ravindranath Kancherla and Dr. Pruthvinath Kancherla are father and son.  There are no other family relationships between any of our directors or executive officers.


Board Committees


Our Board of Directors has not yet appointed an audit committee, a compensation committee, or a nominating and corporate governance committee due to the small size of the Company and our Board. We have no current plans to establish an independent audit committee, compensation committee or corporate governance committee.


Code of Ethics


The Board of Directors adopted a Code of Ethics for the Company on April 8, 2013.


Item 11. Executive Compensation.


Summary Compensation Table


The table below summarizes all compensation awarded to, earned by, or paid to each named executive officer for our last two completed fiscal years for all services rendered to us.


SUMMARY COMPENSATION TABLE

Name and

principal position

 

Year

 

Salary

($)

 

Bonus

($)

 

Stock Awards

($)

 

Option

Awards

($)

 

Non-Equity

Incentive Plan

Compensation

($)

 

Nonqualified

Deferred

Compensation

Earnings ($)

 

All Other

Compensation

($)

 

Total

($)

Harpreet Sangha,

 

2018

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

CFO

 

2017

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

Dr. Ramesh  Para,

 

2018

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

CEO

 

2017

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0


- 8 -



We do not have employment agreements with any of our executive officers. We also do not have pension, health, annuity, insurance, stock options, profit sharing, or similar benefit plans. However, we may adopt plans in the future.


Outstanding Equity Awards At Fiscal Year-end Table


At the end of our last completed fiscal year, our named executive officers did not have any outstanding unexercised options, stock that have not vested, or equity incentive plan awards.


Compensation of Directors


Our directors did not receive any compensation for their services as a director of the Company.


Background and Qualifications of Directors.


When considering whether directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Board of Directors focuses primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. As more specifically described in the biographies set forth above, our directors possess relevant knowledge and experience in the finance, accounting and business fields generally, which we believe enhances the Board’s ability to oversee, evaluate and direct our overall corporate strategy.


Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.


The following table provides the names and addresses of each person known to Envoy to own more than 5% of the outstanding common stock as of August 10, 2018 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.


Name and Address of Shareholders

 

Amount and Nature of

Shareholders Ownership

 

Percent

of Class

 

 

 

 

 

 

 

Harpreet Sangha (1)

 

23,200,000

 

13.92%

 

8275 S. Eastern Avenue #200

 

 

 

 

 

Las Vegas, NV 89123

 

 

 

 

 

 

 

 

 

 

 

Rich Team Consultants Ltd.

 

10,630,000

 

6.38%

 

 

 

 

 

 

 

All officers and directors as a group (4 persons)

 

23,200,000

 

13.92%

 

(1) Officer and/or director

 

 

 

 

 


- 9 -



Item 13. Certain Relationships and Related Transactions, and Director Independence.


As at April 30, 2018, the Company was owed $327,541 from a significant shareholder. As of April 30, 2018, the Company was not indebted to the significant shareholder compared to April 30, 2017 when the Company owed the significant shareholder $1,872 for advances of working capital and expenses paid on behalf of the Company. The amount is unsecured, non-interest bearing and due on demand.


On June 22, 2017, the Company entered into a secured loan with a corporation with a significant shareholder for a loan up to CAD$450,000 for the purpose of purchasing digital currency mining hardware (“Mining Hardware”). The loan was non-interest bearing and due on August 31, 2017. The Mining Hardware purchased with the loaned funds was held as collateral until the loan amount had been fully repaid.  As at September 30, 2017, the Company had not made the required payment of the loan and the Lender took sole possession of the Mining Hardware.


During the year ended April 30, 2018, the Company incurred $228,000 in consulting fees from a former officer and a former director of the Company. As of April 30, 2018, the Company has included in accounts payable $228,000 due to these parties.  As of April 30, 2017, the Company did not owe these parties for consulting fees.


On April 27, 2018, the Company issued 12,500,000 each shares to its directors Dr. Pruthvinath Kancherla and Dr. Ravindranath Kancherla as well 12,500,000 to its CEO and director, Dr. Ramesh Para.  These shares were issued as consideration for a Memorandum of Understanding by and between the Company and Black Cactus Global Technologies Pvt. Limited, a company organized under the laws of India (“Black Cactus India”).  We also issued 12,500,000 to Sai Krishna Para, an unrelated third party, as part of the same transaction.  The proposed agreement calls for the Company to acquire a 29% interest in Black Cactus India in exchange for the share issuances described in the paragraph.  Once we receive approval of regulators in India, we anticipate entering into a formal Share Exchange Agreement with Black Cactus India.  The shares have been returned for cancellation in the event that regulatory approval is not received.


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 due on July 15, 2018. At April 30, 2018, the Company has received gross loan proceeds of $54,716. 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. At April 30, 2018, the net carrying value of the loan was $37,725.


At April 30, 2018, the Company was indebted for loans amounting to $500 (April 30, 2017 - $24,129). The amounts are unsecured, non-interest bearing and due on demand.


At April 30, 2018, the Company had repaid in full a loan of $8,676 (CAD$12,000.00)  which was outstanding as of April 30, 2017.


On September 15, 2017, the Company entered into a loan agreement with a principal balance of $500,000 with an unrelated third party.  The loan was subject to interest at 10% and due on April 30, 2018.  On April 30, 2018, the Company issued 10,630,000 shares of common stock with a fair value of $1,275,600 to settle the $500,000 of principal and $31,250 of interest owed under the loan agreement.  The Company recorded a loss on settlement of debt upon settlement of $744,350.


On February 14, 2018, the Company entered into a loan agreement for a principal balance of $25,000 with an unrelated third party.  The loan bears interest at 10% and is due on February 13, 2019.


On April 23, 2018, the Company entered into a loan agreement for a principal balance of $15,000 with an unrelated third party.  The loan bears interest at 10% and is due on May 15, 2018.


On September 30, 2017, the Company borrowed $130,000 from an unrelated third party which was due April 30,2018.  This debt was in default as of April 30, 2018. Subsequent to our year end, the Company issued 2,600,000 shares of its common stock in settlement of $130,000 in principal and $6,500 in accrued interest.


- 10 -



On November 27, 2017, the Company sold its Note for $500,000 to Bellridge and issued Bellridge 2,793,296 shares of the Company’s common stock as a commitment fee.  The Company also issued Bellridge 7,894,737 warrants to purchase the underlying shares of common stock.  The warrants were to be issued six months after closing of the first Note or May 27, 2018 and have a term of four years.  The warrants are exerciseable at the lower of $0.10 per share or seventy percent (70%) of the lowest traded price of the Company’s common stock during the prior twenty consecutive trading days, subject to adjustments.  On December 20, 2017, Bellridge advanced an additional $300,000 to the Company and the Company issued its second Note for $300,000 on April 5, 2018. The first Note is due November 27, 2018 and  the second Note is due on December 20, 2018.  Both Notes accrue interest at five percent (5%) on an annual basis and may be converted into shares of the Company’s common stock at the lower of $0.10 per share or seventy percent (70%) of the lowest traded price of the Company’s common stock during the prior twenty consecutive trading days, subject to adjustments.


In April, 2018, we issued Bellridge three warrants for an aggregate 85 million shares of common stock with an exercise price of $0.10 for a period of four years.  We also issued a warrant to purchase 560,717 of our common stock at $0.10 per share for a period of four years to our financial advisor in connection with the Bellridge transactions.


As part of the Bellridge Agreements, we 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.


Director Independence


We have two independent directors. Because our Common Stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship, which in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:


 

the director is, or at any time during the past three years was, an employee of the company;

 

 

 

 

the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);

 

 

 

 

a family member of the director is, or at any time during the past three years was, an executive officer of the company;

 

 

 

 

the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);

 

 

 

 

the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or

 

 

 

 

the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.


Dr. Ravindranath Kancherla and Dr. Pruthvinath Kancherla are considered independent.  Mr. Sangha and Dr. Para s are not considered independent because they are officers and directors of the Company.


- 11 -



Item 14. Principal Accountant Fees and Services.


The following table shows what the auditor billed for the audit and other services for the years ended April 30, 2017 and 2018.


 

Year Ended

April 30, 2018

 

Year Ended

April 30, 2017

 

 

 

 

 

 

 

 

Audit Fees

$

60,725

 

$

14,500

 

Audit-Related Fees

 

 

 

 

Tax Fees

 

3,750

 

 

1,750

 

All Other Fees

 

 

 

 

Total

$

64,475

 

$

16,250

 


Audit Fees — This category includes the audit of the Company’s annual financial statements, review of financial statements included in the Company’s Form 10-Q Quarterly Reports and services that are normally provided by the independent auditors in connection with engagements for those years.


Audit-Related Fees — N/A


Tax Fees — N/A


Overview — The Company’s Board reviews, and in its sole discretion pre-approves, our independent auditors’ annual engagement letter including proposed fees and all audit and non-audit services provided by the independent auditors. Accordingly, all services described under “Audit Fees,” “Audit-Related Fees,” and “Tax Fees” were pre-approved by our Company’s Board. The Board may not engage the independent auditors to perform the non-audit services proscribed by law or regulation.


Part IV


Item 15. Exhibits and Financial Statement Schedules.


(a) 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


- 12 -



(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)

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)

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)

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

** In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 relating to this 10-K shall be deemed “furnished” and not “filed.”


- 13 -



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.



SIGNATURES

 

TITLE

 

DATE

 

 

 

 

 

/s/ Harpreet Sangha

 

Chief Financial Officer

 

August 14, 2018

Harpreet Sangha

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Dr. Ramesh Para

 

Chief Executive Officer

 

August 14, 2018

Dr. Ramesh Paragha

 

 

 

 



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



SIGNATURES

 

TITLE

 

DATE

 

 

 

 

 

/s/ Harpreet Sangha

 

Chief Financial Officer

 

August 14, 2018

Harpreet Sangha

 

and Chairman of the Board of Directors

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Dr. Ramesh Para

 

Chief Executive Officer, Director

 

August 14, 2018

Dr. Ramesh Para

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Dr. Ravindranath Kancherla

 

Director

 

August 14, 2018

Dr. Ravindranath Kancherla

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Dr. Pruthvinath Kancherla

 

Director

 

August 14, 2018

Dr. Pruthvinath Kancherla

 

 

 

 


- 14 -



BLACK CACTUS GLOBAL, INC.

(Formerly Envoy Group Corp.)



INDEX TO THE 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


F-1



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of

Black Cactus Global, Inc.


We have audited the accompanying balance sheets of Black Cactus Global, Inc. as of April 30, 2018 and 2017 and the related statements of operations and comprehensive loss, stockholders’ deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Black Cactus Global, Inc. as of April 30, 2018 and 2017, and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.


The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has a working capital deficit and has accumulated losses since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ Manning Elliott LLP


CHARTERED PROFESSIONAL ACCOUNTANTS


Vancouver, Canada


August 14, 2018


F-2



BLACK CACTUS GLOBAL, INC.

(Formerly Envoy Group Corp.)

BALANCE SHEETS

(Expressed in U.S. Dollars)


 

 

April 30,

 

April 30,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

 

 

ASSETS



 



 


 



 



 


CURRENT ASSETS



 



 


Cash and cash equivalents

 

$

252

 

$

3

 

Due from related parties (Note 7)

 

 

327,541

 

 

 

Prepaid expenses and other assets (Note 6)

 

 

164,020

 

 

 

TOTAL ASSETS

 

$

491,813

 

$

3

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

304,737

 

$

37,151

 

Amount payable for BitReturn (Note 11)

 

 

350,000

 

 

 

Convertible debentures (Note 9)

 

 

44,791

 

 

 

Due to related parties (Note 7)

 

 

 

 

1,872

 

Loans payable (Note 8)

 

 

208,225

 

 

32,916

 

Total Current Liabilities

 

 

907,753

 

 

71,939

 

 

 

 

 

 

 

 

 

Loans payable (Note 8)

 

 

 

 

33,782

 

Total Liabilities

 

 

907,753

 

 

105,721

 

 

 

 

 

 

 

 

 

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;
166,673,296 and 113,473,296 shares issued and outstanding, respectively as at April 30, 2018; 83,000,000 shares issued and outstanding respectively as at April 30, 2017 (Note 13)

 

 

11,347

 

 

8,300

 

Common stock in treasury, $0.0001 par value; 53,200,000 and nil shares as of April 30, 2018 and April 30, 2017, respectively (Note 13)

 

 

1

 

 

 

Additional paid-in capital

 

 

5,343,588

 

 

74,559

 

Shares issuable (Note 16(b))

 

 

420,000

 

 

14,000

 

Accumulated deficit

 

 

(6,190,876

)

 

(202,577

)

Total Stockholders’ Deficit

 

 

(415,940

)

 

(105,718

)

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

$

491,813

 

$

3

 


Going Concern (Note 2)

Commitments (Note 12)

Subsequent Events (Note 16)


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


F-3



BLACK CACTUS GLOBAL, INC.

(Formerly Envoy Group Corp.)

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in U.S. Dollars)


 

 

For the Year Ended
April 30,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

Consulting (Note 12)

 

$

2,290,710

 

$

 

General and administrative

 

 

122,390

 

 

56,905

 

Investor relations

 

 

105,667

 

 

 

Product development and website costs (Note 11)

 

 

2,349,566

 

 

 

Professional fees

 

 

237,597

 

 

25,069

 

 

 

 

 

 

 

 

 

TOTAL OPERATING EXPENSES

 

$

(5,105,930

)

$

(81,974

)

 

 

 

 

 

 

 

 

Accretion of discounts on convertible debentures (Note 9)

 

 

(44,791

)

 

 

Loss on settlement of debt (Note 8(d))

 

 

(744,350

)

 

 

Interest expense

 

 

(43,228

)

 

 

Write-off on loan advanced

 

 

(50,000

)

 

 

 

 

 

 

 

 

 

 

NET LOSS AND COMPREHENSIVE LOSS

 

$

(5,988,299

)

$

(81,974

)

 

 

 

 

 

 

 

 

NET LOSS PER COMMON SHARE,
BASIC AND DILUTED

 

$

(0.05

)

$

(0.00

)

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED

 

 

124,267,460

 

 

80,789,041

 


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


F-4



BLACK CACTUS GLOBAL, INC.

(Formerly Envoy Group Corp.)

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, 2016

 

$

 

80,000,000

 

$

8,000

 

$

 

$

 

$

38,500

 

$

(120,603

)

$

(74,103

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount on loan payable

 

 

 

 

 

 

 

 

 

 

 

6,359

 

 

 

 

6,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

 

3,000,000

 

 

300

 

 

 

 

 

 

29,700

 

 

 

 

30,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share subscriptions received

 

 

 

 

 

 

 

 

 

14,000

 

 

 

 

 

 

14,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss for the year

 

 

 

 

 

 

 

 

 

 

 

 

 

(81,974

)

 

(81,974

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - April 30, 2017

 

$

 

83,000,000

 

$

8,300

 

$

 

$

14,000

 

$

74,559

 

$

(202,577

)

$

(105,718

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount on loan payable

 

 

 

 

 

 

 

 

 

 

 

477

 

 

 

 

477

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for cash

 

 

 

1,400,000

 

 

140

 

 

 

 

(14,000

)

 

13,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for services

 

 

 

5,650,000

 

 

565

 

 

 

 

 

 

1,376,434

 

 

 

 

1,376,999

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for domain name (Note 11)

 

 

 

10,000,000

 

 

1,000

 

 

 

 

 

 

1,899,000

 

 

 

 

1,900,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock as part of convertible debt financing (Note 9)

 

 

 

2,793,296

 

 

279

 

 

 

 

 

 

100,553

 

 

 

 

100,832

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock to settle loans payable (Note 8(d))

 

 

 

10,630,000

 

 

1,063

 

 

 

 

 

 

1,274,537

 

 

 

 

1,275,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beneficial conversion features and warrants associated with convertible debt (Note 9)

 

 

 

 

 

 

 

 

 

 

 

604,168

 

 

 

 

604,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issuable for services (Note 16(b))

 

 

 

 

 

 

 

 

 

420,000

 

 

 

 

 

 

420,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for executive license agreement (Note 10)

 

 

 

60,000,000

 

 

6,000

 

 

 

 

 

 

6,594,000

 

 

 

 

6,600,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellation of common stock for executive license agreement (Note 10)

 

 

 

(60,000,000

)

 

(6,000

)

 

 

 

 

 

(6,594,000

)

 

 

 

(6,600,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock

 

 

 

53,200,000

 

 

 

 

1

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss for the year

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,988,299

)

 

(5,988,299

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - April 30, 2018

 

$

 

166,673,296

 

$

11,347

 

$

1

 

$

420,000

 

$

5,343,589

 

$

(6,190,876

)

$

(415,940

)


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


F-5



BLACK CACTUS GLOBAL, INC.

(Formerly Envoy Group Corp.)

STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)


 

 

For the Years Ended
April 30,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net loss

 

$

(5,988,299

)

$

(81,974

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Accretion of loan discounts

 

 

3,918

 

 

2,067

 

Accretion of convertible debt discount

 

 

44,791

 

 

 

Issuance of common stock for BitReturn (Note 11)

 

 

1,900,000

 

 

 

Issuance of common shares for services

 

 

1,297,333

 

 

 

Shares issuable for services (Note 16(b))

 

 

420,000

 

 

 

Loss on settlement of debt (Note 8(d))

 

 

744,350

 

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Prepaid expenses

 

 

(84,353

)

 

 

Accounts payable and accrued liabilities

 

 

298,836

 

 

(1,159

)

 

 

 

 

 

 

 

 

Net Cash Used in Operating Activities

 

 

(1,363,424

)

 

(81,066

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advances from related party, net of repayments

 

 

(329,413

)

 

(21,364

)

Proceeds from issuance of common stock

 

 

 

 

30,000

 

Proceeds from issuance of convertible debt, net of debt financing costs

 

 

705,000

 

 

 

Proceeds from loans payable, net

 

 

637,526

 

 

60,654

 

Amount payable for BitReturn

 

 

350,000

 

 

 

Share subscriptions received

 

 

 

 

14,000

 

 

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

 

 

1,363,113

 

 

83,290

 

 

 

 

 

 

 

 

 

Net effect of exchange rate changes on cash

 

 

560

 

 

(2,221

)

 

 

 

 

 

 

 

 

Net Increase in Cash and Cash Equivalents

 

 

249

 

 

3

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents, Beginning of Year

 

 

3

 

 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents, End of Year

 

$

252

 

$

3

 

 

 

 

 

 

 

 

 

SUPPLEMENTARY CASH FLOW INFORMATION:

 

 

 

 

 

 

 

Interest paid

 

$

 

$

 

Income taxes paid

 

$

 

$

 


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


F-6



1. NATURE OF BUSINESS


Black Cactus Global, Inc. (formerly Envoy Group Corp.) (the “Company”), 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 technology business in digital currency mining. On December 4, 2017, the Company changed its name 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 had no revenue or operations, and only incurred losses since inception. As at April 30, 2018, the Company has a working capital deficiency of $415,940 and an accumulated deficit of $6,190,876. In view of these matters, 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. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. 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.


3. SIGNIFICANT ACCOUNTING POLICIES


BASIS OF PRESENTATION


These unaudited 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.


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.


F-7



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, amounts payable for BitReturn, due to related parties, 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, 2018 and April 30, 2017:


 

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)

2018

2017

Assets:

 

 

 

 

 

Cash and cash equivalents

$      252

$        —

$        —

$      252

$        3


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.


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, 2018, the Company had 110,641,291 (2017 – 0) dilutive potential common shares.


F-8



RECENT ACCOUNTING PRONOUNCEMENTS


In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09’’). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition” and some cost guidance included in ASC Subtopic 605-35, Revenue Recognition -Construction-Type and Production-Type Contracts”. ASU 2014-09 requires the disclosure of sufficient information to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The Company will also be required to disclose information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. Early adoption is not allowed. ASU 2014-09 provides two methods of retrospective application. The first method would require the Company to apply ASU 2014-09 to each prior reporting period presented. The second method would require the Company to retrospectively apply with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating the impact that the adoption of ASU 2014-09 may have on its financial statements.


4. 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, 2018, the Company has a cash balance of $252 and current liabilities of $907,753. The Company’s accounts payable and accrued liabilities have contractual maturities of less than 60 days and are subject to normal trade terms. 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.


5. EQUIPMENT


On June 22, 2017, the Company purchased computer equipment totaling $364,590. The equipment was pledged as security on a loan (See Note 7(b)). Pursuant to the terms of the loan, should the loan remain unpaid past September 30, 2017, the lender would take sole possession of the equipment. The Company did not make the required payment and the equipment was returned to the lender.  As at April 30, 2018, the Company had no equipment.


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)

As at April 30, 2018, the Company was owed $327,541 from a significant shareholder of the Company. As at April 30, 2018 the Company was indebted to the significant shareholder $nil (2017 - $1,872) for advances of working capital and expenses paid on behalf of the Company. The amount is unsecured, non-interest bearing and due on demand.

 

 

(b)

On June 22, 2017, the Company entered into a secured loan with a corporation with a significant shareholder for a loan up to CAD$450,000 for the purpose of purchasing digital currency mining hardware (“Mining Hardware”). The loan was non-interest bearing and due on August 31, 2017. The Mining Hardware purchased with the loaned funds was held as collateral until the loan amount had been fully repaid. As at September 30, 2017, the Company had not made the required payment of the loan and the Lender took sole possession of the Mining Hardware (refer to Note 5).

 

 

(c)

During the year ended April 30, 2018, the Company incurred $228,000 (2017- $nil) in consulting fees from a former officer and a former director of the Company. As at April 30, 2018, the Company has included in accounts payable $89,800 (2017 - $nil) due to these parties.


F-9



8. 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 due on July 15, 2018. As at April 30, 2018, the Company has received gross loan proceeds of $54,716. 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. At April 30, 2018, the net carrying value of the loan was $37,725.

 

 

(b)

As at April 30, 2018, the Company was indebted for loans amounting to $500 (April 30, 2017 - $24,129). The amounts are unsecured, non-interest bearing and due on demand.

 

 

(c)

As at April 30, 2018, the Company was indebted for loans in the amount of $nil (April 30, 2017 - $8,786 (CAD $12,000)). The amount is unsecured, non-interest bearing and due on demand.

 

 

(d)

On September 15, 2017, the Company entered into a loan agreement for a principal balance of $500,000.  The loan was subject to interest at 10% and due on April 30, 2018.  On April 30, 2018, the Company issued 10,630,000 shares of common stock with a fair value of $1,275,600 to settle the $500,000 of principal and $31,250 of interest owed under the loan agreement.  The Company recorded a loss on settlement of debt upon settlement of $744,350.

 

 

(e)

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% and due on April 30, 2018. Subsequent to year end, the Company issued 2,600,000 shares of common stock to settle the $130,000 of principal and $6,500 of interest owed under the loan agreement.

 

 

(f)

On February 14, 2018, the Company entered into a loan agreement for a principal balance of $25,000.  The loan bears interest at 10% and is due on February 13, 2019.

 

 

(g)

On April 23, 2018, the Company entered into a loan agreement for a principal balance of $15,000.  The loan bears interest at 10% and is due on May 15, 2018.


9. CONVERTIBLE DEBENTURES


On November 27, 2017, the Company entered into and closed on a Securities Purchase Agreement (“SPA”) with Bellridge Capital L.P. (“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 rate method. In addition, the Company issued 7,894,737 warrants to Bellridge with a term 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 accrues at a rate of 5% per annum. All principal and accrued interest under the Note is 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 do 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 are not required to be separated from the host instrument and accounted for separately. As a result, at April 30, 2018, the conversion features and non-standard anti-dilutions provisions would not meet derivative classification.


F-10



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 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, 2018, the Company recorded accretion of discount of $36,010 increasing the carrying value of the loan to $36,010. As at April 30, 2018, the Company has recorded accrued interest of $6,417 (2017 - $nil).


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 original issue discount (“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 rate 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 December 20, 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 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. During the year ended April 30, 2018, the Company recorded accretion of discount of $8,781 increasing the carrying value of the loan to $8,781. As at April 30, 2018, the Company has recorded accrued interest of $1,524 (2017 - $nil).


As part of the SPA, Bellridge is loaning the Company a minimum of $500,000 to a maximum of $1,500,000.00 (“Loan”). The first two tranches were the $800,000 in form of the Notes above. The next tranche of $200,000 will be funded in 5 days after the Company receives its first comments concerning the registration statement to be filed and the final tranche of $500,000 will be funded upon the effectiveness of the registration statement that we will file covering the shares of our 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.


10. LICENSE


On November 6, 2017 the Company issued 60,000,000 shares of common stock pursuant to the terms of an Exclusive Software License Agreement (the “Agreement”) with Black Cactus Holdings, LLC (“Black Cactus LLC”) to acquire an exclusive software license for the Black Cactus blockchain development software platform and related intellectual property (the “Software”) and the Agreement includes a service contract with the CEO of Black Cactus LLC to join the Company as a director and officer. The Company did not receive the use of the Software platform and accordingly no asset has been recognized. Consulting costs of $228,000 incurred in connection with the Agreement have been recorded in expenses (see Note 7(c)). On April 25, 2018, the Company and Black Cactus LLC agreed to terminate the Agreement and the 60,000,000 shares of common stock issued pursuant to the agreement were returned to the Company for cancellation.


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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 represents 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 have been 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, 2018, $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 do not meet the criteria for capitalization, and therefore have been treated as an operating expense.


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 twelve months commencing July 1, 2017. In consideration, the Company will pay a total monthly fee of $3,000 cash and issue 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 has been recorded as a prepaid expense and will be amortized over the term of the agreement (Refer to Note 13). During the year ended April 30, 2018, the Company recognized $216,666 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 will pay an initial fee of $20,000 cash. In addition, if the Company closes any transactions made with any introduction made by the unrelated third party, the Company shall 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, entered into and closed on a Securities Purchase Agreement (refer to Note 9) 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 9) and issued 560,717 warrants exercisable at $0.10 pursuant to the agreement.

 

 

(c)

On December 19, 2017, the Company entered into a Business Development Consultant Agreement for consulting services to be provided over a period of twelve months commencing December 19, 2017. In consideration, the Company will pay a total monthly fee of GBP10,000 cash and issue a total of 2,000,000 shares of common stock. During the year ended April 30, 2018, the Company issued 2,000,000 shares of common stock with a fair value of $660,000 recognized as consulting expense. On April 26, 2018, the Company and the consultant entered into a Termination Agreement pursuant to which the agreement was terminated.  Pursuant to the Termination Agreement, no further consideration is due and the consultant will retain the 2,000,000 shares of common stock.

 

 

(d)

On January 4, 2018, the Company entered into an Equity Research Service Agreement for investor relations services to be provided over a period of twelve months commencing January 4, 2018. In consideration, the Company will issue a total of 150,000 shares of common stock. On January 16, 2018, the Company issued 150,000 shares of common stock with a fair value of $57,000, which has been recorded as a prepaid expense and will be amortized over the term of the agreement. During the year ended April 30, 2018, the Company recognized $19,000 of consulting expense.

 

 

(e)

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.  Subsequent to April 30, 2018, the Company and the employee entered into a Settlement and General Release Agreement pursuant to which, the Company would issue the employee 6,000,000 shares of common stock in exchange for release from the Employment Agreement. The fair value of the shares on the date of settlement of $420,000 was accrued at April 30, 2018 as shares issuable.


13. STOCKHOLDERS’ DEFICIT


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.


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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.


COMMON STOCK


On June 26, 2017, the Company issued 1,400,000 shares of common stock for gross proceeds of $14,000, which was received during the year ended April 30, 2017.


On June 27, 2017, the Company issued 10,000,000 shares of common stock with a fair value of $1,900,000 for BitReturn pursuant to a Definitive Acquisition Agreement (refer to Note 11).


On July 1, 2017, the Company issued 1,000,000 shares of common stock with a fair value of $260,000 for investor relations services pursuant to a Strategic Management and Advisory Agreement (refer to Note 12).


On July 26, 2017, the Company issued 2,500,000 shares of common stock with a fair value of $400,000 as signing bonuses pursuant to service agreements and the $400,000 fair value was expensed and included in consulting fees.


On November 6, 2017, the Company issued 60,000,000 shares of common stock with a fair value of $6,600,000 for a license fee pursuant to the Exclusive Software License Agreement.  On April 27, 2018, the agreement was terminated and the 60,000,000 shares were cancelled (refer to Note 10).


On January 16, 2018, the Company issued 3,200,000 shares of common stock pursuant to the Share Purchase Agreement with an unrelated third party. 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 were cancelled subsequent to April 30, 2018.


On January 16, 2018, the Company issued 150,000 shares of common stock with a fair value of $57,000 for investor relations services pursuant to an Equity Research Services Agreement (refer to Note 12(d)).


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On February 5, 2018, the Company issued 2,000,000 shares of common stock with a fair value of $660,000 for consulting services pursuant to a Business Development Agreement (refer to Note 12(c)).


On April 20, 2018, the Company issued 2,793,296 shares of common stock with a fair value of $100,832 as financing fees pursuant to the Securities Purchase Agreement described in Note 9.


On April 30, 2018, the Company issued 10,630,000 shares of common stock to settle the $500,000 of principal and $31,250 of interest owed under the loan agreement described in Note 8(d).


As at April 30, 2018, 53,200,000 shares of common stock are held in treasury.


As at April 30, 2018, there are 166,673,296 shares of common stock issued and 113,473,296 shares of common stock outstanding.


PREFERRED STOCK - SERIES A


As at April 30, 2018, 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, 2017

 

 

 

$ —

 

Issued

 

93,455,454

 

 

$ 0.10

 

Balance, April 30, 2018

 

93,455,454

 

 

$ 0.10

 


As at April 30, 2018, the following share purchase warrants were outstanding:


Expiry date

 

Number of
warrants

 

Exercise
price

 

 

 

 

 

 

 

May 27, 2022

 

7,894,737

 

$ 0.049

*

March 29, 2023

 

560,717

 

$ 0.10

 

April 5, 2023

 

85,000,000

 

$ 0.10

 

 

 

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.


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,
2018

 

April 30,
2017

 

 

 

 

 

 

 

 

 

Net loss

 

$

5,988,299

 

$

81,974

 

Income tax rate

 

 

21%

 

 

21%

 

Expected income tax benefit

 

 

(1,257,543

)

 

(17,215

)

Accretion

 

 

9,406

 

 

 

Loss on settlement of debt

 

 

156,314

 

 

 

Write-off loan advanced

 

 

10,500

 

 

 

Valuation allowance change

 

 

1,081,323

 

 

17,215

 

Provision for income taxes

 

$

 

$

 


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The significant components of deferred income tax assets at April 30, 2017 and 2016, are as follows:


 

 

April 30,
2018

 

April 30,
2017

 

 

 

 

 

 

 

 

 

Net operating loss carryforward

 

$

1,123,864

 

$

42,541

 

Valuation allowance

 

 

(1,123,864

)

 

(42,541

)

Net deferred income tax asset

 

$

 

$

 


The Company has net operating loss carry forwards of approximately $5,351,735 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.


16. SUBSEQUENT EVENTS


(a)

On May 23, 2018, the Share Purchase Agreement described in Note 13 was terminated and 3,200,000 common shares included in treasury stock were cancelled.

 

 

(b)

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 described in Note 12(e).

 

 

(c)

On May 24, 2018, the Company entered into an Exchange Agreement pursuant to which, the Company would issue 2,600,000 shares of common to settle the loan payable of $130,000 plus interest of $6,500 as described in Note 8(e).


F-15