SEC Info - Blgi, Inc. - ‘10-Q’ for 1/31/21

Blgi, Inc. – ‘10-Q’ for 1/31/21

Blgi, Inc. – ‘10-Q’ for 1/31/21

On: Monday, 3/22/21, at 5:31pm ET · For: 1/31/21 · Accession #: 1161697-21-165 · File #: 0-55880

Previous ‘10-Q’: ‘10-Q/A’ on 2/19/21 for 7/31/20 · Latest ‘10-Q’: This Filing

Quarterly Report — Form 10-Q
Filing Table of Contents

‘10-Q’ — Form 10-Q Quarterly Report for 01-31-2021

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

On: Monday, 3/22/21, at 5:31pm ET · For: 1/31/21 · Accession #: 1161697-21-165 · File #: 0-55880

Previous ‘10-Q’: ‘10-Q/A’ on 2/19/21 for 7/31/20 · Latest ‘10-Q’: This Filing

Quarterly Report — Form 10-QFiling Table of Contents

‘10-Q’ — Form 10-Q Quarterly Report for 01-31-2021

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly Report — Form 10-Q
Filing Table of Contents

10-Q	1st “Page” of 25	TOC	↑Top	Previous	Next	↓Bottom	Just 1st

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: January 31, 2021

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

For the transition period from ____________to _____________

Commission File Number: 000-55880

BLGI, INC.

(Exact name of registrant as specified in its charter)


Florida	46-2500923
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

207 W. Division Street, Suite 137

Chicago, Illinois 60622

(Address of principal executive offices, Zip Code)

(773) 683-1671

(Registrant’s telephone number, including area code)

N/A

(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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.

Yes [X] No [ ]

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


Large accelerated filer	[_]	Accelerated filer	[_]
Non-accelerated filer	[_]	Smaller reporting company	[X]
		Emerging growth company	[_]

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [_] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: We had a total of 29,112,661 shares of common stock issued and outstanding at March 22, 2021.

10-Q	2nd “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 2nd

TABLE OF CONTENTS

FORM 10-Q

PART I – FINANCIAL INFORMATION


Item 1.	Financial Statements	4

	Balance Sheets as of January 31, 2021 and April 30, 2020	4

	Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended January 31, 2021 and 2020	5

	Statements of Stockholders’ Deficit for the Nine Months Ended January 31, 2021 and 2020	6

	Statements of Cash Flows for the Nine Months Ended January 31, 2021 and 2020	7

	Notes to Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	22

PART II – OTHER INFORMATION


Item 1.	Legal Proceedings	23

Item 1A.	Risk Factors	23

Item 2.	Unregistered Sales of Equity Securities	23

Item 3.	Defaults Upon Senior Securities	24

Item 4.	Mine Safety Disclosures	24

Item 5.	Other Information	24

Item 6.	Exhibits	24

SIGNATURES		25

- 2 -

10-Q	3rd “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 3rd

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, and Section 27A of the Securities Act of 1933, as amended. Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements. Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. These factors include our research and development activities, distributor channel; compliance with regulatory impositions; and our capital needs. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.

All statements other than statements of historical fact are statements that could be deemed forward-looking statements. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law. When used in this quarterly report on Form 10-Q, the terms “BLGI”, “Company”, “we”, “our”, and “us” refer to BLGI, Inc.

- 3 -

10-Q	4th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 4th

PART I. FINANCIAL INFORMATION.

ITEM 1. FINANCIAL STATEMENTS

BLGI, INC.

BALANCE SHEETS

(Expressed in U.S. Dollars)


	January 31,			April 30,
	2021			2020
	(Unaudited)			(Audited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	218		$	—
Prepaid expenses and other assets (Note 5)		8,615			5,331
TOTAL ASSETS	$	8,833		$	5,331

LIABILITIES

CURRENT LIABILITIES
Accounts payable and accrued liabilities (Note 7)	$	531,556		$	380,150
Amount payable for BitReturn (Note 10)		350,000			350,000
Convertible debentures (Note 9)		2,454,974			2,091,477
Loans payable (Note 8)		148,291			88,816
Total Liabilities		3,484,821			2,910,443

STOCKHOLDERS’ DEFICIT
Preferred stock, $0.0001 par value; 10,000,000 shares authorized, no shares issued and outstanding (Note 12)		—			—
Common stock, $0.0001 par value; 200,000,000 shares authorized; 29,111,660 and 8,303,665 shares issued and outstanding as of January 31, 2021 and April 30, 2020, respectively (Note 12)		2,911			830
Shares issuable (Notes 11(a), 11(d))		—			420,000
Additional paid-in capital		11,047,302			7,756,351
Accumulated deficit		(14,526,201	)		(11,082,293	)
Total Stockholders’ Deficit		(3,475,988	)		(2,905,112	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	8,833		$	5,331

Going concern (Note 2)

Commitments (Note 11)

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

- 4 -

10-Q	5th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 5th

BLGI, INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in U.S. Dollars)

(Unaudited)


	For the Three Months Ended January 31,						For the Nine Months Ended January 31,
	2021			2020			2021			2020

OPERATING EXPENSES
Consulting (Note 11(e))	$	425,000		$	—		$	425,000		$	—
General and administrative		5,996			1,036			17,163			3,289
Foreign exchange loss		2,813			—			4,101			—
Investor relations		40,000			—			75,000			—
License fee (Note 11(d))		—			—			1,245,550			—
Professional fees		63,335			7,328			314,583			9,728
Research and development		99,970			—			124,970			—

TOTAL OPERATING EXPENSES	$	(637,114	)	$	(8,364	)	$	(2,206,367	)	$	(13,017	)

OTHER EXPENSES
Accretion of discounts on convertible debentures (Note 9)		(51,584	)		—			(79,894	)		—
Interest expense		(157,614	)		(125,827	)		(412,716	)		(363,508	)
Loss on conversion of convertible debentures (Note 12)		—			—			(744,931	)		—

NET LOSS AND COMPREHENSIVE LOSS	$	(846,312	)	$	(134,191	)	$	(3,443,908	)	$	(376,525	)

NET LOSS PER COMMON SHARE, BASIC AND DILUTED	$	(0.04	)	$	(0.02	)	$	(0.19	)	$	(0.05	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED		22,959,997			8,303,665			18,052,137			8,303,665

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

- 5 -

10-Q	6th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 6th

BLGI, INC.

STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Expressed in U.S. Dollars)

(Unaudited)


										Additional					Total
	Preferred Stock			Common Stock			Shares			Paid-in		Accumulated			Stockholders’
	Shares	Amount		Shares	Amount		Issuable			Capital		Deficit			Deficit

Balance – April 30, 2019	—	$	—	8,303,665	$	830	$	420,000		$	7,712,014	$	(10,485,728	)	$	(2,352,884	)

Net loss for the period	—		—	—		—		—			—		(119,665	)		(119,665	)

Balance – July 31, 2019	—	$	—	8,303,665	$	830	$	420,000		$	7,712,014	$	(10,605,393	)	$	(2,472,549	)

Net loss for the period	—		—	—		—		—			—		(122,669	)		(122,669	)

Balance – October 31, 2019	—	$	—	8,303,665	$	830	$	420,000		$	7,712,014	$	(10,728,062	)	$	(2,595,218	)

Net loss for the period	—		—	—		—		—			—		(134,191	)		(134,191	)

Balance – January 31, 2020	—	$	—	8,303,665	$	830	$	420,000		$	7,712,014	$	(10,862,253	)	$	(2,729,409	)


Balance – April 30, 2020	—	$	—	8,303,665	$	830	$	420,000		$	7,756,351	$	(11,082,293	)	$	(2,905,112	)

Issuance of common shares for license agreement	—		—	11,710,522		1,172		74,498			1,169,880		—			1,245,550

Net loss for the period	—		—	—		—		—			—		(1,551,106	)		(1,551,106	)

Balance – July 31, 2020	—	$	—	20,014,187	$	2,002	$	494,498		$	8,926,231	$	(12,633,399	)	$	(3,210,668	)

Beneficial conversion features associated with convertible debentures	—		—	—		—		—			76,000		—			76,000

Issuance of common shares pursuant to conversion of convertible debentures	—		—	2,052,498		205		—			895,630		—			895,835

Net loss for the period	—		—	—		—		—			—		(1,046,490	)		(1,046,490	)

Balance – October 31, 2020	—	$	—	22,066,685	$	2,207	$	494,498		$	9,897,861	$	(13,679,889	)	$	(3,285,323	)

Beneficial conversion features associated with convertible debentures	—		—	—		—		—			130,647		—			130,647

Issuance of common shares for license agreement	—		—	744,975		74		(74,498	)		74,424		—			—

Issuance of common shares for services	—		—	5,000,000		500		—			424,500		—			425,000

Issuance of common shares for cash	—		—	1,000,000		100		—			99,900		—			100,000

Issuance of common shares for settlement of debt	—		—	300,000		30		(420,000	)		419,970		—			—

Net loss for the period	—		—	—		—		—			—		(846,312	)		(846,312	)

Balance – January 31, 2021	—	$	—	29,111,660	$	2,911	$	—		$	11,047,302	$	(14,526,201	)	$	(3,475,988	)

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

- 6 -

10-Q	7th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 7th

BLGI, INC.

STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)

(Unaudited)


	For the Nine Months Ended January 31,
	2021			2020

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,443,908	)	$	(376,525	)
Adjustments for non-cash amounts expensed:
Accretion of convertible debt discount		79,894			—
Accrued interest on debentures		412,716			363,508
Issuance of common shares for services		425,000			—
Issuance of common shares for license agreement		1,245,550			—
Loss on conversion of convertible debentures		744,931			—

Changes in operating assets and liabilities:
Prepaid expenses		(3,284	)		—
Accounts payable and accrued liabilities		151,163			(11,953	)

Net Cash Used in Operating Activities		(387,938	)		(24,970	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans payable		57,827			24,970
Proceeds from convertible debentures		230,329			—
Issuance of common shares for cash		100,000			—

Net Cash Provided by Financing Activities		388,156			24,970

Change in Cash and Cash Equivalents		218			—

Cash and Cash Equivalents, Beginning of Period		—			—

Cash and Cash Equivalents, End of Period	$	218		$	—

SUPPLEMENTARY CASH FLOW INFORMATION:
Interest paid	$	—		$	—
Income taxes paid	$	—		$	—

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

- 7 -

10-Q	8th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 8th

1. NATURE OF BUSINESS

BLGI, Inc. was incorporated in the State of Florida on April 8, 2013. The address of the head office is Suite 200, 8275 South Eastern Avenue, Las Vegas, Nevada 89123. The Company’s plan is to develop a blockchain technology business. On December 4, 2017, the Company changed its name from Envoy Group Corp. to Black Cactus Global, Inc. On October 15, 2020, the Company changed its name from Black Cactus Global, Inc. to BLGI, Inc.

2. GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not generated revenue or cash flow from operations since inception. As at January 31, 2021, the Company has a working capital deficiency of $3,475,988 and an accumulated deficit of $14,526,201. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise sufficient financing to acquire or develop a profitable business. The Company intends to finance its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including related party advances and term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

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

3. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

These unaudited interim 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.

These unaudited interim financial statements have been prepared in accordance with US GAAP for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by US GAAP to complete financial statements. Therefore, these unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended April 30, 2020, included in the Company’s Annual Report on Form 10-K filed with the SEC.

The financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at January 31, 2021, and the results of its operations for the three and nine months ended January 31, 2021 and cash flows for the nine months ended January 31, 2021. The results of operations for the nine-month period ended January 31, 2021 are not necessarily indicative of the results to be expected for future quarters or the full year.

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.

- 8 -

10-Q	9th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 9th

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.

Level 2

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

Level 3

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

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

Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as of January 31, 2021 and April 30, 2020:


	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	January 31,	April 30,
	(Level 1)	(Level 2)	(Level 3)	2021	2020
Assets:
Cash and cash equivalents	$ —	$ —	$ —	$ 218	$ —

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.

- 9 -

10-Q	10th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 10th

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 potentially dilutive 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 January 31, 2021, the Company had 58,282,826 (April 30, 2020 – 44,993,227) potentially dilutive common shares.

RECENT ACCOUNTING PRONOUNCEMENTS

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

4. 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 January 31, 2021, the Company has a working capital deficiency of $3,475,988 and requires additional funding to meet its current obligations. The Company’s current obligations include accounts payable and accrued liabilities which have contractual maturities of less than 60 days and are subject to normal trade terms, loans payable which are due on demand, and convertible debentures which have defaulted and are due on demand. The Company requires additional financing to meet its current obligations. The ability of the Company to continue to identify and evaluate feasible business opportunities, develop products and generate working capital is dependent on its ability to secure additional equity or debt financing.

FOREIGN EXCHANGE RISK

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

5. 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.

6. RELATED PARTY TRANSACTIONS AND BALANCES

The Company has entered into agreements to borrow funds from Bellridge Capital L.P. (“Bellridge”), a shareholder of the Company. The arrangements, balances and transactions are described in Notes 8(d), 9, 11(b), 11(c) and 11(d).

The Company has entered into a Business Development and Advisory Agreement with Hodson Ltd (“Hodson”), a company owned by a trust in which the Chief Financial Officer (“CFO”) of the Company is the trustee. The CFO is also a director of Hodson. The agreement is described in Note 11(e).

- 10 -

10-Q	11th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 11th

7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following:


	January 31, 2021		April 30, 2020

Accounts payable	$	523,092	$	295,273
Accrued liabilities		8,464		84,877
	$	531,556	$	380,150

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 was due on July 15, 2018. As at January 31, 2021, the Company has received gross loan proceeds of $54,176. Upon receipt of the funds, the Company recorded fair value discounts of $6,836. During the year ended April 30, 2017, the Company repaid $10,600 of principal and recognized accretion of the discount of $2,067. During the year ended April 30, 2018, the Company repaid $5,000 of principal and recognized accretion of the discount of $3,918. During the year ended April 30, 2019, the Company repaid $nil of principal and recognized accretion of the discount of $851. At January 31, 2021, the net carrying value of the loan was $38,576 (April 30, 2020 - $38,576) which is due on demand.

(b)	As at January 31, 2021, the Company was indebted for loans amounting to $500 (April 30, 2020 - $500). The amounts are unsecured, non-interest bearing and due on demand.

(c)	On February 14, 2018, the Company entered into a loan agreement for a principal balance of $25,000. The loan bears interest at 10% per annum and was due on February 13, 2019. The loan remains unpaid at January 31, 2021. During the nine months ended January 31, 2021, the Company accrued interest expense of $1,891(2019 – $1,891). As of January 31, 2021, the interest payable totaled $5,000 (April 30, 2020 - $3,109), which has been included in accounts payable and accrued liabilities on the balance sheet.

(d)	As at January 31, 2021, the Company was indebted for loans amounting to $84,215 (April 30, 2020 - $24,740) owing to Bellridge Capital L.P. (“Bellridge”). The amounts are unsecured, non-interest bearing and due on demand. During the nine months ended January 31, 2021, the Company received loans from Bellridge totaling $57,827 (2020 - $24,970). The foreign exchange losses on the loans payable to Bellridge totaled $1,648 for the nine months ended January 31, 2021.

9. CONVERTIBLE DEBENTURES


(a)	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 method. In addition, the Company issued 7,894,737 warrants to Bellridge exercisable after a period of six months at an exercise price equal to the lesser of (i) $2.00 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 139,665 shares to Bellridge in connection with the loan. The interest on the outstanding principal due under the Note accrued at a rate of 5% per annum. All principal and accrued interest under the Note was due on November 27, 2018 and is convertible into shares of the Company’s Common Stock at a conversion price equal to the lesser of (i) $2.00 and (ii) 70% of the lowest traded market price in the 20 consecutive trading days prior to the conversion date.

	The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The terms of the contracts did not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features were not required to be separated from the host instrument and accounted for separately. As a result, at January 31, 2021, the conversion features and non-standard anti-dilutions provisions would not meet derivative classification.

- 11 -

10-Q	12th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 12th


	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 $1.26. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company recognized the relative fair value of the shares issuable of $100,832 and an equivalent discount that reduced the carrying value of the convertible debt to $425,484. The Company then recognized the relative fair value of the warrants of $284,751 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $140,733. The beneficial conversion feature of $54,417, the OID of $26,316 and debt financing costs of $60,000 discounted the convertible debenture such that the carrying value of the convertible debt on the date of issue was $0. The discount was being expensed over the term of the loan to increase the carrying value to the face value of the loan. The Company determined that there was no derivative liability associated with the debenture under ASC 815-15 Derivatives and Hedging.

	On November 27, 2018, the Company defaulted on the convertible note, resulting in the note becoming immediately due and payable. Upon default, the interest rate increased to 29% per annum and the Company incurs a late fee at an interest rate equal to 18% per annum on any overdue and unpaid interest under the convertible note. Additionally, the total amount owed on the convertible note upon default is equal to 130% of the outstanding principal and accrued and unpaid interest. During the year ended April 30, 2019, the Company recorded a 30% default penalty of $191,297 as a result of default, which included $25,694 of interest accrued up to the point of default. The default penalty increased the carrying value of the loan principal to $717,613. During the nine months ended January 31, 2021, the Company issued 2,052,498 shares of common stock upon the conversion of $150,904 of the Note, comprising of $107,769 principal amount and $43,135 interest (Note 12). As at January 31, 2021, the carrying value of the principal amount was $609,844 (April 30, 2020 - $684,211), and the Company has recorded accrued interest of $481,036 (April 30, 2020 - $372,243).

(a)	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 4,250,000 shares of the Company’s common stock at an exercise price of $2.00 per share. The Company also issued a senior secured convertible promissory note in the aggregate principal amount of $315,790 (“Note”) for an aggregate purchase price of $295,000, net of a $15,790 OID and $5,000 of legal fees. The Company also incurred additional debt issuance costs of $30,000 and issued a warrant to purchase 28,036 shares of the Company’s common stock at an exercise price of $2.00 per share. The total debt issue costs of $50,672 have been netted against the principal and will be amortized over the term of the loan using the effective interest method. The interest on the outstanding principal due under the Note accrued at a rate of 5% per annum. All principal and accrued interest under the Note was due on December 20, 2018 and was convertible into shares of the Company’s Common Stock at a conversion price equal to the lesser of (i) $2.00 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 $0.02. As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company recognized the relative fair value of the warrants of $258,792, as additional-paid-in capital and an equivalent discount that reduced the carrying value of the convertible debt to $56,998. The beneficial conversion feature of $6,208, the OID of $15,790 and debt financing costs of $35,000 discounted the convertible debenture such that the carrying value of the convertible debt on the date of issue was $0. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan. The Company determined that there was no derivative liability associated with the debenture under ASC 815-15 Derivatives and Hedging.

	On December 20, 2018, the Company defaulted on the convertible note, resulting in the note becoming immediately due and payable. Upon default, the interest rate increased to 29% per annum and the Company incurs a late fee at an interest rate equal to 18% per annum on any overdue and unpaid interest under the convertible note. Additionally, the total amount owed on the convertible note upon default is equal to 130% of the outstanding principal and accrued and unpaid interest. During the year ended April 30, 2019, the Company recorded a 30% default penalty of $109,341 as a result of default, which included $11,234 of interest accrued up to the point of default. The default penalty increased the carrying value of the loan principal to $425,131. During the nine months ended January 31, 2021, the Company recorded accretion of discount of $Nil (2019 - $Nil). As at January 31, 2021, the carrying value of the principal amount was $425,131 (April 30, 2020 - $410,527), and the Company has recorded accrued interest of $321,756 (April 30, 2020 - $206,584).

(b)	On June 1, 2018, the Company issued a senior secured convertible promissory note in the aggregate principal amount of $210,527 (“Note”) for an aggregate purchase price of $200,000, net of a $10,527 OID. The Company also incurred additional debt issuance costs of $20,000. The total debt issue costs of $30,527 have been netted against the principal and will be amortized over the term of the loan using the effective interest method. The interest on the outstanding principal due under the Note accrues at a rate of 5% per annum. All principal and accrued interest under the Note is due on June 1, 2019 and is convertible into shares of the Company’s Common Stock at a conversion price equal to the lesser of (i) $2.00 and (ii) 70% of the lowest traded market price in the 20 consecutive trading days prior to the conversion date.

- 12 -

10-Q	13th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 13th


	As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company then recognized the beneficial conversion feature of $144,908 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $65,619. The OID of $10,570 and debt financing costs of $20,000 discounted the convertible debenture such that the carrying value of the convertible debt on the date of issue was $35,092. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan. The Company determined that there was no derivative liability associated with the debenture under ASC 815-15 Derivatives and Hedging.

	On December 20, 2018, the Company defaulted on the convertible note, resulting in the note becoming immediately due and payable. Upon default, the interest rate increased to 29% per annum and the Company incurs a late fee at an interest rate equal to 18% per annum on any overdue and unpaid interest under the convertible note. Additionally, the total amount owed on the convertible note upon default is equal to 130% of the outstanding principal and accrued and unpaid interest. During the year ended April 30, 2019, the Company recorded a 30% default penalty of $70,836 as a result of default, which included $5,906 of interest accrued up to the point of default. The default penalty increased the carrying value of the loan principal to $281,363. As at January 31, 2021, the carrying value of the principal amount was $281,363 (April 30, 2020 - $273,685), and the Company has recorded accrued interest of $212,944 (April 30, 2020 - $135,152).

	As part of the SPA, Bellridge is loaning the Company a minimum of $500,000 to a maximum of $1,500,000 (“Loan”). The first three tranches were the $1,000,000 in the form of the Notes above. The next and final tranche of $500,000 will be funded upon the effectiveness of the registration statement that the Company is required to file covering the shares of common stock issuable upon conversion of the Notes.

	As part of the Bellridge Agreements, the Company also executed Registration Rights Agreement, Intellectual Property Security Interest Agreement, Subsidiary Guaranty and a Security Interest Agreement in all the Company’s assets to Bellridge.

(c)	On February 20, 2020, the Company entered into an additional securities purchase agreement with Bellridge, pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of $54,271 (“Note”) for an aggregate purchase price of $44,337, net of a $4,934 OID and $5,000 of legal fees. The total debt issue costs of $9,934 have been netted against the principal and will be amortized over the term of the loan using the effective interest rate method. The interest on the outstanding principal due under the Note accrues at a rate of 10% per annum. All principal and accrued interest under the Note is due on February 20, 2021. At any time after 180 days from the issuance date, the Note is convertible into shares of the Company’s Common Stock at a conversion price equal to the lesser of (i) $0.094 and (ii) 70% of the lowest traded market price in the 20 consecutive trading days prior to the conversion date.

	As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company then recognized the beneficial conversion feature of $44,337 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $9,934. The OID of $4,934 and debt financing costs of $5,000 discounted the convertible debenture such that the carrying value of the convertible debt on the date of issue was $0. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan. The Company determined that there was no derivative liability associated with the debenture under ASC 815-15 Derivatives and Hedging. During the nine months ended January 31, 2021, the Company recorded accretion of discount of $38,265 increasing the carrying value of the loan to $46,285. As at January 31, 2021, the Company has recorded accrued interest of $5,216 (April 30, 2020 - $1,055).

(d)	On September 9, 2020, the Company entered into an additional securities purchase agreement with Bellridge, pursuant to which the Company issued a convertible promissory note for loans provided in tranches, up to an aggregate principal amount of $1,000,000 (“September 2020 Note”). Each tranche provided under the terms of the Note is to be provided at an original issue discount (“OID”) of 10%.

	On September 17, 2020, the first tranche of the September 2020 Note was funded in the aggregate principal amount of $50,600 for an aggregate purchase price of $46,000, net of a $4,600 OID. The total debt issue costs of $4,600 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 September 2020 Note accrues at a rate of 10% per annum. All principal and accrued interest under the September 2020 Note is due on September 9, 2021 and is convertible into shares of the Company’s Common Stock at a conversion price equal to the lesser of (i) $0.14 and (ii) 70% of the lowest traded market price in the 20 consecutive trading days prior to the conversion date.

- 13 -

10-Q	14th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 14th


	As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company then recognized the beneficial conversion feature of $46,000 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $4,600. The OID of $4,600 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 nine months ended January 31, 2021, the Company recorded accretion of discount of $11,567 increasing the carrying value of the loan to $11,567. As at January 31, 2021, the Company has recorded accrued interest of $1,911 (April 30, 2020 - $Nil).

	On September 18, 2020, the second tranche of the September 2020 Note was funded in the aggregate principal amount of $33,000 for an aggregate purchase price of $30,000, net of a $3,000 OID. The total debt issue costs of $3,000 have been netted against the principal and will be amortized over the term of the loan using the effective interest rate method.

	As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company then recognized the beneficial conversion feature of $30,000 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $3,000. The OID of $3,000 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 nine months ended January 31, 2021, the Company recorded accretion of discount of $7,514 increasing the carrying value of the loan to $7,514. As at January 31, 2021, the Company has recorded accrued interest of $1,237 (April 30, 2020 - $Nil).

	On November 12, 2020, the third tranche of the September 2020 Note was funded in the aggregate principal amount of $55,000 for an aggregate purchase price of $50,000, net of a $5,000 OID. The total debt issue costs of $5,000 have been netted against the principal and will be amortized over the term of the loan using the effective interest rate method.

	As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company then recognized the beneficial conversion feature of $50,000 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $5,000. The OID of $5,000 discounted the convertible debenture such that the carrying value of the convertible debt on the date of issue was $0. The discount is being expensed over the term of the loan to increase the carrying value to the face value of the loan. The Company determined that there was no derivative liability associated with the debenture under ASC 815-15 Derivatives and Hedging. During the nine months ended January 31, 2021, the Company recorded accretion of discount of $9,451 increasing the carrying value of the loan to $9,451. As at January 31, 2021, the Company has recorded accrued interest of $1,222 (April 30, 2020 - $Nil).

	On November 25, 2020, the fourth tranche of the September 2020 Note was funded in the aggregate principal amount of $65,262 for an aggregate purchase price of $59,329, net of a $5,933 OID. The total debt issue costs of $5,933 have been netted against the principal and will be amortized over the term of the loan using the effective interest rate method.

	As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company then recognized the beneficial conversion feature of $35,647 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $29,615. The OID of $5,933 discounted the convertible debenture such that the carrying value of the convertible debt on the date of issue was $23,682. 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 nine months ended January 31, 2021, the Company recorded accretion of discount of $6,419 increasing the carrying value of the loan to $30,101. As at January 31, 2021, the Company has recorded accrued interest of $1,215 (April 30, 2020 - $Nil).

	On December 21, 2020, the fifth tranche of the September 2020 Note was funded in the aggregate principal amount of $22,000 for an aggregate purchase price of $20,000, net of a $2,000 OID. The total debt issue costs of $2,000 have been netted against the principal and will be amortized over the term of the loan using the effective interest rate method.

- 14 -

10-Q	15th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 15th


	As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company then recognized the beneficial conversion feature of $20,000 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $2,000. The OID of $2,000 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 nine months ended January 31, 2021, the Company recorded accretion of discount of $3,064 increasing the carrying value of the loan to $3,064. As at January 31, 2021, the Company has recorded accrued interest of $251 (April 30, 2020 - $Nil).

	On December 29, 2020, the sixth tranche of the September 2020 Note was funded in the aggregate principal amount of $27,500 for an aggregate purchase price of $25,000, net of a $2,500 OID. The total debt issue costs of $2,500 have been netted against the principal and will be amortized over the term of the loan using the effective interest rate method.

	As the stock price at the issuance date was greater than the effective conversion price, it was determined that there was a beneficial conversion feature. The Company then recognized the beneficial conversion feature of $25,000 as additional-paid-in capital and an equivalent discount that further reduced the carrying value of the convertible debt to $2,500. The OID of $2,500 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 nine months ended January 31, 2021, the Company recorded accretion of discount of $3,614 increasing the carrying value of the loan to $3,614. As at January 31, 2021, the Company has recorded accrued interest of $252 (April 30, 2020 - $Nil).

10. PRODUCT DEVELOPMENT AND WEBSITE COSTS

On June 18, 2017, the Company entered into a Definitive Acquisition Agreement involving the internet domain and brand BitReturn. The Agreement represented the Company’s development of a plan to create a technology business in mining digital currency with an operating name of BitReturn. The Company issued 500,000 shares of restricted common stock with a fair value of $1,900,000 as payment under the terms of the Agreement, which was recognized as and included in product development and website costs. The Company is also to make cash payments totaling $350,000 under the terms of the Agreement, and as at January 31, 2021, $350,000 (April 30, 2020 - $350,000) is recorded as an amount payable for BitReturn. Product development and website expenses represent costs of acquiring the brand BitReturn, development of the crypto currency mining product, and creation of the website. These costs did not meet the criteria for capitalization, and therefore were treated as an operating expense in fiscal 2018. During the year ended April 30, 2019, the Company determined it would not proceed with its plan to create a technology business in mining digital currency.

11. COMMITMENTS


(a)	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 400,000 shares and pay the employee GBP250,000 in exchange for services. On July 9, 2018, the Company and the employee entered into a Settlement and General Release Agreement pursuant to which, the Company agreed to issue the employee 300,000 shares of common stock in exchange for release from the Employment Agreement and the fair value of $420,000 of the shares issuable was expensed in July 2018. During the nine-month period ended January 31, 2021, the Company issued the 300,000 shares of common stock (refer to Note 12).

(b)	On August 24, 2019, the Company entered into a Software License Agreement (“License Agreement”) with Charteris, Mackie, Baillie & Cummins Limited (“CMBC Limited”) to acquire a non-exclusive license for Black Cactus blockchain development software platform and related intellectual property (“Software”) which are licensed to CMBC Limited from Black Cactus LLC. As consideration, the Company shall pay CMBC Limited a royalty in the amount of five percent (5%) of the gross revenue received from the sublicense of the Software (“royalty”), due on a quarterly basis, and issue or assign an equivalent number of common shares to CMBC Limited that will represent 60% of the then issued shares of the Company. In addition, the Company will issue an option for CMBC Limited to acquire additional shares at par value $(0.002) per share up to 60% of any shares issued under the existing Securities Purchase Agreements with Bellridge (Note 9). The closing of the License Agreement is conditional on the Company obtaining a written agreement with Bellridge to increase its line of credit from $1,500,000 to $5,000,000 (Note 9), and the assignment of a separate Software License Agreement between CMBC Limited and Benchmark Advisors Limited (“Benchmark”) originally granted to Benchmark on February 20, 2019. The closing of the License Agreement was completed on July 21, 2020 (refer to Note 11(d)).

(c)	On November 15, 2019, the Company entered into an Assignment Agreement with CMBC Limited to acquire the assignment of a non-exclusive software license (“License”) for Software from Benchmark. As consideration for the assignment of the License, CMBC will be paid $250,000 directly from Bellridge on behalf of the Company as part of the increased line of credit of $5,000,000. The closing of the Assignment Agreement was completed on July 21, 2020 (refer to Note 11(d)).

- 15 -

10-Q	16th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 16th


(d)	On June 29, 2020, the Company and CMBC Limited entered into a waiver and agreement (the “Waiver Agreement”), pursuant to which the Company and CMBC Limited agreed to close the License Agreement dated August 24, 2019 (Note 11(b)) and the Assignment Agreement dated November 15, 2019 (Note 11(c)). Pursuant to the Waiver Agreement, CMBC Limited, among other things, waived all of the conditions that had not been satisfied in order to consummate the closings of the license and assignment pursuant to the License Agreement and the Assignment Agreement.

	In consideration, the Company authorized the issuance of 12,455,497 restricted shares of the Company’s common stock, to Black Cactus Holdings LLC, the designee of CMBC Limited, to be issued in two certificates each in the name of “Black Cactus Holdings LLC”, as follows: (i) one certificate representing 8,705,497 shares of common stock, which was issued and delivered to Black Cactus Holdings LLC, and (ii) one certificate representing 3,750,000 shares of common stock, which was supposed to be issued to Black Cactus Holdings LLC, but was reduced to 3,005,025 shares of common stock because the Company did not have enough authorized and unissued shares of common stock to issue all of such shares on the date of issuance. The Company intends to issue the remaining shares of common stock to Black Cactus Holdings LLC as soon as they become available. The certificate for 3,005,025 shares is being held in escrow by the Company, and the certificate for the additional shares of common stock will also be held in escrow by the Company, until such time as certain shares of common stock have been cancelled on the certified shareholder records of the Company or as otherwise provided in the Waiver Agreement.

	On July 21, 2020, the Company issued two certificates representing 8,705,497 shares of common stock and 3,005,025 shares of common stock (refer to Note 12) with an aggregate fair value of $1,171,052 based on the quoted market price on June 29, 2020. On January 18, 2021, the Company issued a certificate representing the remaining 744,975 shares of common stock (refer to Note 12) with a fair value of $74,498 based on the quoted market price on June 29, 2020. Management determined that the future economic benefits of the license acquired are not probable upon acquisition and the Company expensed the acquisition fee of $1,245,550 as incurred.

(e)	On January 5, 2021, the Company and Hodson Ltd (“Hodson”) entered into a Business Development and Advisory Agreement. In consideration for the services provided, the Company agreed to issue 5,000,000 shares of common stock with a fair value of $425,000 based on the quoted market price on January 5, 2021 (refer to Note 12). The Company also agreed to pay a monthly fee for future services, which is to negotiated between the Company and Hodson.

12. STOCK

On November 13, 2017, the Company amended its Articles of Incorporation, increasing the number of common stock authorized from 240,000,000 to 490,000,000, par value of $0.0001, leaving the number of preferred stock authorized at 10,000,000, par value of $0.0001, and designated 10,000 shares of its authorized but unissued shares of preferred stock as Series A Preferred Stock.

On October 15, 2020, the Company amended its Articles of Incorporation, reducing the number of common stock authorized from 490,000,000 to 200,000,000, par value of $0.0001, terminating the designation of 10,000 shares of its authorized but unissued shares of preferred stock as Series A Preferred Stock, and amended the authorization to issue 10,000,000 shares of Preferred Stock, par value of $0.0001, to provide for 10,000,000 shares of “blank check” preferred stock, par value of $0.0001.

The terms of the “blank check” preferred stock to be authorized, including, but not limited to, dividend or interest rates, conversion prices, voting rights, redemption prices, maturity dates, and similar matters will be determined by the Board of Directors. Subject to the limitations set forth in the Amended and Restated Articles, and any limitations prescribed by Florida law, the Board of Directors is expressly authorized, without shareholder approval, prior to the issuance of any series of Preferred Stock, to fix by resolution or resolutions providing for the issue of any series the number of shares included in such series and, including but not limited to, the designation, relative powers, preferences and rights, and the qualification, limitations or restrictions of such series.

COMMON STOCK

On July 21, 2020, in connection with the Waiver Agreement dated June 29, 2020 (Note 11(d)), the Company issued an aggregate of 11,710,522 shares of common stock with a fair value of $1,171,052.

On August 4, 2020, the Company issued 407,634 shares of common stock with a fair value of $70,113 pursuant to the conversion of $10,762 of a convertible note, consisting of $7,769 principal amount and $2,992 interest (Note 9(a)). Upon conversion, the Company recognized a loss on conversion of convertible debentures of $59,351.

On August 24, 2020, the Company issued 1,644,865 shares of common stock with a fair value of $825,722 pursuant to the conversion of $140,142 of a convertible note, consisting of $100,000 principal amount and $40,142 interest (Note 9(a)). Upon conversion, the Company recognized a loss on conversion of convertible debentures of $685,580.

- 16 -

10-Q	17th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 17th

On August 14, 2020, the Company’s board of directors approved an amendment to the Articles of Incorporation to effectuate a reverse stock split of all of the Company’s outstanding shares of common stock, by a ratio of one for twenty (1:20). On October 15, 2020, the reverse stock split was approved by the Florida Department of State, Division of Corporations and the Securities and Exchange Commission, and the record date of the reverse stock split was October 16, 2020. All common stock and per share data in these financial statements and footnotes have been retrospectively adjusted to account for this reverse stock split.

On January 18, 2021, in connection with the Waiver Agreement dated June 29, 2020 (Note 11(d)), the Company issued 744,975 shares of common stock with a fair value of $74,498.

On January 18, 2021, in connection with the Business Development and Advisory Agreement dated January 5, 2021 (Note 11(e)), the Company issued 5,000,000 shares of common stock with a fair value of $425,000.

On January 25, 2021, the Company issued 1,000,000 shares of common stock for cash proceeds of $100,000.

On July 9, 2018, the Company entered into a Settlement and General Release Agreement pursuant to which the Company would issue an employee 300,000 shares of common stock in exchange for release from the Employment Agreement (refer to Note 11(a)). The fair value of the shares on the date of settlement of $420,000 is presented as of April 30, 2020 as shares issuable because the shares had not been issued to date. On January 26, 2021, the Company issued the 300,000 shares of common stock in exchange for release from the Employment Agreement. The fair value of the shares of $420,000 was expensed in July 2018.

As at January 31, 2021, there are 29,111,660 (April 30, 2020 – 8,303,665) shares of common stock issued and outstanding.

PREFERRED STOCK

As at January 31, 2021, there are no issued and outstanding Preferred Stock.

13. SHARE PURCHASE WARRANTS

The following table summarizes the continuity of share purchase warrants:

As at January 31, 2021, the following share purchase warrants were outstanding:


Number of warrants	Exercise price $	Expiry date

394,737	0.057*	May 27, 2022
28,036	2.00	March 29, 2023
4,250,000	2.00	April 5, 2023
4,672,773

* The lower of $2.00 and 70% of the lowest traded price of the Company’s common stock during the prior 20 consecutive trading days.

The weighted average remaining life of the warrants outstanding as at January 31, 2021 is 2.10 years.

- 17 -

10-Q	18th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 18th

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations for the three and nine months ended January 31, 2021 should be read together with our unaudited financial statements and related notes included elsewhere in this quarterly report. This discussion contains forward-looking statements and information relating to our business that reflect our current views and assumptions with respect to future events and are subject to risks and uncertainties that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These forward-looking statements speak only as of the date of this report. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements. Except as required by applicable law, including the securities laws of the United States, we expressly disclaim any obligation or undertaking to disseminate any update or revisions of any of the forward-looking statements to reflect any change in our expectations with regard thereto or to conform these statements to actual results.

Recent Amendments to the Articles of Incorporation

On October 8, 2020, pursuant to the authorization of a majority holder of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), by written consent, the Company filed an Amended and Restated Articles of Incorporation (the “Amended and Restated Articles”) upon which the Company (i) effected a reverse split of all its outstanding shares of Common Stock, by a ratio of 1-for-20 (the “Reverse Stock Split”); (ii) reduced the number of authorized shares of Common Stock from 490,000,000 shares to 200,000,000 shares, (iii) changed the name of the Company from Black Cactus Global, Inc. to BLGI, Inc.; and (iv) terminated the designation of 10,000 shares of Series A Preferred Stock, none of which were issued and outstanding, and amended the authorization to issue 10,000,000 shares of Preferred Stock, par value $0.0001 per share, to provide for 10,000,000 shares of “blank check” preferred stock, par value $0.0001 per share.

The Common Stock began trading on a split-adjusted basis on the Pink Open Market on October 16, 2020 under the new CUSIP number 091844209. All Common Stock share numbers, warrants to purchase Common Stock, prices and exercise prices have been retroactively adjusted to reflect the Reverse Stock Split. The par value of the Common Stock outstanding was not adjusted for the Reverse Stock Split.

Company Overview

The Company was incorporated in the State of Florida on April 8, 2013, with a fiscal year end of April 30. Until June 2017, we had not established any business operations and had not achieved any revenues. Until then, we were in the process of identifying and evaluating feasible business opportunities in the consumer products and technology industries.

The address of the head office is 207 W. Division Street, Suite 137 Chicago, Illinois 60622. On November 13, 2017, the Company changed its name to “Black Cactus Global, Inc.” with a plan to engage in the development of commercial Blockchain technology and Smart Contract software applications for healthcare, Fintech, logistics and energy solutions worldwide. Effective October 8, 2020, the Company changed its name to “BLGI, Inc.” pursuant to the Amended and Restated Articles, as mentioned above. Our website address is www.blgi.net. The information contained in or accessible through our website is not part of this report and is intended for informational purposes only.

We are currently focused on developing blockchain software platforms. Our plan is to develop or license intellectual property to build blockchain platforms for a variety of uses. Our initial efforts will focus on utilizing the intellectual property in two ways: to develop secure blockchain based supply chain and inventory control systems, and to develop a blockchain based trading platform in order to facilitate securities trading using either a fiat currency or cryptocurrency.

On August 24, 2019, the Company entered into a Software License Agreement (“License Agreement”) with Charteris, Mackie, Baillie & Cummins Limited (“CMBC”) to acquire a non-exclusive license for Black Cactus blockchain development software platform and related intellectual property (“Software”) which are licensed to CMBC from Black Cactus LLC. As consideration, the License Agreement provides for the payment of a royalty to CMBC in the amount of five percent (5%) of the gross revenue received from the sublicense of the Software, due on a quarterly basis, and issue or assign an equivalent number of common shares to CMBC that will represent 60% of the then issued shares of the Company. In addition, the License Agreement provides for the issuance of an option for CMBC to acquire additional shares at par value ($0.0001) per share up to 60% of any shares issued under the existing Securities Purchase Agreements with Bellridge Capital LP (“Bellridge”). The closing of the License Agreement was subject to, among certain other conditions: (1) the Company obtaining a written agreement with Bellridge to increase its line of credit from $1,500,000 to

- 18 -

10-Q	19th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 19th

$5,000,000; (2) the resignation of all the directors of the Company serving on the Board, during the quarterly period ended July 31, 2019, which was satisfied by the resignation of all of such directors on September 13, 2019, and the appointment of Lawrence P. Cummins, Karyn Augustinus and three non-executive independent Directors nominated by CMBC Limited; (3) the resignation of all the officers of the Company serving, during the quarterly period ended July 31, 2019, which was satisfied by the resignation of all of such officers on September 13, 2019, and the appointment of Lawrence P. Cummins as its President (after undertaking a review of the future plans of the Company, the Board of Directors will appoint a Chief Executive Officer); (4) proof satisfactory to CMBC Limited that fair resolutions have been entered into with certain persons, including Harpreet Sangha, the former Chairman of the Board and Chief Financial Officer of the Company, along with his family and known associates for the cancellation of the shares of the Company currently owned by them; (5) CMBC Limited is satisfied with the possibility of lifting the Cease Trade Order issued by the British Columbia Securities Commission on May 6, 2016, to the Company, ordering all persons to cease trading in the Company’s securities until the Company files the required records completed in accordance with the Securities Act, R.S.B.C. 1996 and the Executive Director revokes the Order; (6) the cancellation of $350,000 amount allegedly outstanding under the terms of the Definitive Acquisition Agreement, dated as of June 18, 2017, between the Company and the selling shareholders of BitReturn.ca; (7) repayment by the majority shareholder of the Company of $169,729 owed by such shareholder to the Company; and (8) the Company’s becoming current in its periodic filing with the SEC.

On November 15, 2019, the Company entered into an Assignment Agreement with CMBC to acquire the assignment of a non-exclusive software license (“License”) for Software from Benchmark Advisors Limited (the “Benchmark Assignment Agreement” and together with the License Agreement, the “CMBC License Agreements”). As consideration for the assignment of the License, the Assignment Agreement provides for the payment of $250,000 to CMBC directly from Bellridge on behalf of the Company as part of the increased line of credit of $5,000,000. The closing of the Assignment Agreement was subject to the same conditions required to be satisfied for consummation of the License Agreement.

As of June 29, 2020, CMBC and the Company entered into a waiver and agreement (the “Waiver Agreement”), pursuant to which the Company and CMBC agreed to close the following two pending licensing arrangements: (1) the License Agreement, and (2) the Benchmark Assignment Agreement.

The closings of the license and assignment pursuant to the CMBC License Agreements were subject to a number of conditions, most of which had not been satisfied on or before the date of the closings. Pursuant to the Waiver Agreement, CMBC, among other things, waived all of the conditions that had not been satisfied in order to consummate the closings of the license and assignment pursuant to the CMBC License Agreements.

As of June 29, 2020, as consideration for the licenses provided under License Agreement and in satisfaction of its payment obligations under the License Agreement, the Company authorized the issuance of 12,455,497 restricted shares Common Stock to Black Cactus Holdings LLC (“Black Cactus Holdings”), the designee of CMBC, to be issued in two certificates each in the name of “Black Cactus Holdings LLC”, as follows: (i) one certificate representing 8,705,497 shares of Common Stock, which was issued and delivered to Black Cactus Holdings, and (ii) one certificate representing 3,750,000 shares of Common Stock, which was supposed to be issued to Black Cactus Holdings, but was reduced to 3,005,025 shares of Common Stock because the Company did not have enough authorized and unissued shares of Common Stock to issue all of such shares.

The certificate for 3,005,025 shares of Common Stock was issued by the Company on July 21, 2020 and is being held in escrow by the Company (the “July Escrowed Certificate”). The certificate for 744,975 shares of Common Stock was issued by the Company on January 18, 2021 and is being held in escrow by the Company (together with the July Escrowed Certificate, the “Escrowed Certificates”), until such time as an aggregate of 2,5000,000 shares of Common Stock issued to three former directors, one of whom is also a former officer, and a former director’s relative (the “Individual Defendants”), have been cancelled on the certified shareholder records of the Company or as otherwise provided in the Waiver Agreement(the “Cancellable Shares”). Promptly after the date upon which the Cancellable Shares have all been cancelled, the Company will instruct the Company’s transfer agent to cancel the shares held in escrow. In the event that all of the Cancellable Shares have not been cancelled on or before July 9, 2021, the Company will release to Black Cactus Holdings one and one-half (1.5) shares of Common Stock for each Cancellable Share that has not been cancelled by such date and any remaining shares of Common Stock represented by the Escrowed Certificates will be cancelled.

Effective as of June 29, 2020, Jeremy Towning notified the Company that he was resigning from his position as the Company’s Chief Executive Officer, but continues as the Chief Financial Officer and a director of the Company.

In connection with the closing of the License Agreement, effective as of June 29, 2020, the Board, pursuant to its powers under the Company’s bylaws, appointed Karyn Augustinus and Lawrence P. Cummins as members of the Company’s board of directors (the “Board”), Lawrence P. Cummins as Chief Executive Officer, and Lawrence C. Cummins as Vice President.

- 19 -

10-Q	20th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 20th

On September 9, 2020, the Company issued a convertible senior secured promissory note to Bellridge for loans provided in tranches, up to an aggregate principal amount of $1,000,000 (the “September 2020 Note”). On September 21, 2020, the Company and Bellridge entered into a correction to convertible secured promissory note (the “Convertible Note Correction), which provides that each tranche provided under the terms of the September 2020 Note is to be provided at an original issue discount (“OID”) of 10%. During the period covered by this quarterly report, Bellridge has funded the September 2020 Note in the aggregate principal amount of $169,762 for an aggregate purchase price of $154,329 net of a $15,433 OID. For a detailed discussion regarding this transaction, please refer to the Unregistered Sales of Equity Securities section in Part II of Item 2 of this quarterly report.

On October 14, 2020, the Company filed a complaint (the “Complaint”) in the Circuit Court of the 17^th Judicial Circuit in and for Broward County, Florida against the Individual Defendants seeking the cancelation of the Cancellable Shares. The Complaint alleges that the Cancellable Shares were transferred in error, and without any intention to transfer possession of the Cancellable Shares to the Individual Defendants, since the Individual Defendants, as of such date had not, and at no time thereafter, performed the services that were to be rendered in consideration for the grant of the Cancellable Shares. The Complaint seeks, among other things, the cancelation and return of the Cancellable Shares to the status of authorized and unissued shares of the Company. The Company has attempted to serve process on all of the Individual Defendants and has successfully done so with respect to two of the four Individual Defendants. The Company is currently attempting to obtain written agreements with those two Individual Defendants so that their Cancellable Shares can be cancelled. There is no assurance that the Company will be able to secure such written agreements from those two Individual Defendants.

Critical Accounting Policies

As of January 31, 2021, there were no critical accounting policies. See the footnotes to our unaudited financial statements, included elsewhere in this quarterly report on Form 10-Q, for a complete summary of the significant accounting policies used in the presentation of our financial statements. The summary is presented to assist the reader in understanding the financial statements. The accounting policies used conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Concentrations, Risks, and Uncertainties

The Company did not have a concentration of business with suppliers or customers constituting greater than 10% of the Company’s gross sales during the reporting period.

Recently Issued Accounting Standards

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Results of Operations

The following discussion of the Company’s financial condition and the results of operations should be read in conjunction with the unaudited financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q.

There is no historical financial information about us upon which to base an evaluation of our performance. We had net loss of $846,312 and $134,191 for the three months ended January 31, 2021 and 2020, respectively and $3,443,908 and $376,525 for the nine months ended January 31, 2021 and 2020, respectively.

We did not generate any revenues from our operations for the three months ended January 31, 2021 or 2020 or for the nine months ended January 31, 2021 or 2020. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including the financial risks associated with the limited capital resources currently available to us for the implementation of our business strategies.

During the three months ended January 31, 2021 and 2020, we had operating expenses of $637,144 and $8,364, respectively. The increase in operating expenses is primarily due to an increase in consulting fees of $425,000, an increase in professional fees of $56,007, an increase in investor relations of $40,000, and an increase in research and development expenses of $99,970.

During the nine months ended January 31, 2021 and 2020, we had operating expenses of $2,206,367 and $13,017, respectively. The increase in operating expenses is primarily due to an increase in license fees of $1,245,550, an increase in consulting fees of $425,000, an increase in professional fees of $304,855, an increase in investor relations of $75,000, and an increase in research and development expenses of $124,970.

- 20 -

10-Q	21st “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 21st

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 Three Months Ended January 31, 2021			For the Three Months Ended January 31, 2020
Revenue		—			—
Cost of Revenue		—			—
Net Loss and Comprehensive Loss	$	(846,312	)	$	(134,191	)
Net Loss per Common Share, Basic and Diluted	$	(0.04	)	$	(0.02	)
Weighted Average Number of Common Shares Outstanding, Basic and Diluted		22,959,997			8,303,665


	For the Nine Months Ended January 31, 2021			For the Nine Months Ended January 31, 2020
Revenue		—			—
Cost of Revenue		—			—
Net Loss and Comprehensive Loss	$	(3,443,908	)	$	(376,525	)
Net Loss per Common Share, Basic and Diluted	$	(0.19	)	$	(0.05	)
Weighted Average Number of Common Shares Outstanding, Basic and Diluted		18,052,137			8,303,665

Management’s Plan of Operation

We do not have adequate funds to satisfy our working capital requirements for the next twelve months. Prior to the additional loan made to us in February 2020, discussed below, we had borrowed a total of $1,000,000 from Bellridge to fund our planned plan of operations in digital currency mining. We sold Bellridge our Senior, Secured Convertible Promissory Notes (the “Notes”). Thus far, Bellridge has purchased $1,000,000 in Notes. Pursuant to the terms of our agreements with Bellridge, we were required to file a registration statement with the SEC to register the shares of Common Stock to be issued under those agreements. We filed the registration statement on April 24, 2018 but it has not yet been declared effective. We received the third tranche of $200,000 from Bellridge after the first set of SEC comments. We may not receive the fourth and final tranche of $500,000 unless and until the registration statement is declared effective by the SEC. We cannot estimate when our registration statement will be declared effective by the SEC. Under certain conditions, Bellridge may not have to purchase the fourth Note. These conditions include any acts constituting default under any of the Notes or the agreements entered into at the time of the first purchase of the Note issued on November 27, 2017. Until such time as we receive the final $500,000 of funding from Bellridge, in the interim, we may not be able to completely implement and commence our proposed plan of operations.

In February 2020, we entered into a securities purchase agreement with Bellridge, pursuant to which we issued a convertible promissory note in the principal amount of $54,271. The funds were used for operating expenses during the year ended April 30, 2020.

As of January 31, 2021, we had not yet had any revenues from our services in the digital currency mining field.

Liquidity and Capital Resources

As of January 31, 2021, we had not generated any revenues from our business operations. As at January 31, 2021, there were 29,111,660 shares of common stock issued and outstanding. Total cash proceeds received from common share issuance since inception to January 31, 2021 is $190,500.

As of January 31, 2021, and 2010, we had $218 cash on hand. Our cash was not sufficient to meet the obligations associated with being a company that is fully reporting with the SEC. We believe we will require additional financing in the form of share issuance proceeds or advances from our directors.

- 21 -

10-Q	22nd “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 22nd

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 nine months ended January 31, 2021 and 2020, we had operating expenses of $2,206,367 and $13,017, respectively. Historically, we have relied on loans to fund general and administrative operating expenses. As of January 31, 2021, we had a working capital deficiency of $3,475,988.

As of January 31, 2021, the Company had no external sources of liquidity such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.

Our independent auditor has expressed substantial doubt about our ability to continue as a going concern and believes that our ability is dependent on our ability to implement our business plan, raise capital and generate revenues. See Note 2 of our financial statements.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation under a guarantee contract that has any of the characteristics identified in FASB ASC paragraph 460-10-15-4 (Guarantees Topic), as may be modified or supplemented, and that is not excluded from the initial recognition and measurement provisions of FASB ASC paragraphs 460-10-15-7, 460-10-25-1, and 460-10-30-1; (ii) a retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets; (iii) any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, except that it is both indexed to the registrant’s own stock and classified in stockholders’ equity in the registrant’s statement of financial position, and therefore excluded from the scope of FASB ASC Topic 815, Derivatives and Hedging, pursuant to FASB ASC subparagraph 815-10-15-74(a), as may be modified or supplemented; or (iv) any obligation, including a contingent obligation, arising out of a variable interest (as defined in the FASB ASC Master Glossary), as may be modified or supplemented) in an unconsolidated entity that is held by, and material to, the registrant, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with, the registrant.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required for smaller reporting companies.

ITEM 4. 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 January 31, 2021 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.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended January 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

- 22 -

10-Q	23rd “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 23rd

PART II. OTHER INFORMATION.

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Not required for smaller reporting companies.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On November 12, 2020, the third tranche of the September 2020 Note was funded in the aggregate principal amount of $55,000 for an aggregate purchase price of $50,000, net of a $5,000 OID. On November 25, 2020, the fourth tranche of the September 2020 Note was funded in the aggregate principal amount of $65,262 for an aggregate purchase price of $59,329, net of a $5,933 OID. On December 21, 2020, the fifth tranche of the September 2020 Note was funded in the aggregate principal amount of $22,000, net of $2,000 OID. On December 29, 2020, the sixth tranche of the September 2020 Note was funded in the aggregate principal amount of $27,500, net of $2,500 OID.

The interest on the outstanding principal due under the September 2020 Note accrues at a rate of 10% per annum. All principal and accrued interest under the September 2020 Note is due on September 9, 2021 and is convertible into shares of the Company’s Common Stock at a conversion price equal to the lesser of (i) $0.14 and (ii) 70% of the lowest traded market price in the 20 consecutive trading days prior to the conversion date. In the event of a default, the September 2020 Note is convertible into shares of the Company’s common stock at a conversion price equal to 60% of the lowest traded market price in the 20 consecutive trading days prior to the conversion date. The issuance was made pursuant to an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The proceeds for such issuance were used primarily for working capital and general corporate purposes.

On November 25, 2020, the Company entered into a subscription agreement (“Subscription Agreement”) for a private placement (“Private Placement”) of its Common Stock, with an accredited investor (“Investor”), pursuant to which Subscription Agreement the Company agreed to issue and sell 1,000,000 restricted shares of Common Stock at a price of $0.10 per share (“Purchase Price”) for total gross proceeds of $100,000. The closing of the Private Placement occurred concurrently with the execution of the Subscription Agreement by the parties and the receipt of the Company of $100,000 in funds from the Investor. The Company issued the 1,000,000 shares of Common Stock to the Investor on January 25, 2021.

Pursuant to the Subscription Agreement, the issuance of the Common Stock is exempt from the registration requirements of the Securities Act, pursuant to Regulation D promulgated thereunder and such Common Stock will therefore be restricted. The Investor gave representations that he is purchasing the Common Stock without a present view toward a distribution of the Common Stock and that he is an “accredited investor” (as defined under Rule 501 of Regulation D). The proceeds for such issuance were used primarily for working capital and general corporate purposes.

On January 5, 2021, the Company and Hodson Ltd. entered into a Business Development and Advisory Agreement. In consideration for the services provided, the Company agreed to issue 5,000,000 shares of Common Stock in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, with a fair value of $425,000 based on the quoted market price on January 5, 2021.

On June 29, 2020, the Company became obligated to issue 249,109,944 restricted shares of Common Stock to Black Cactus Holdings LLC as consideration for the licenses provided under the License Agreement and in satisfaction if its payment obligations under the License Agreement in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. In connection therewith, on January 18, 2021, the Company issued 744,975 restricted shares of Common Stock to Black Cactus Holdings LLC, which should have been issued to Black Cactus Holdings LLC but for the Company not having enough authorized and unissued shares of common stock to issue all of such shares. For a detailed discussion regarding this transaction, please refer to the Company Overview section in Part I of Item 2 of this quarterly report.

On July 9, 2018, the Company entered into a Settlement and General Release Agreement pursuant to which the Company would issue an employee 300,000 shares of common stock in exchange for release from the Employment Agreement. See Note 11(a) of our financial statements. On January 26, 2021, the Company issued the 300,000 shares of Common Stock in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act in exchange for release from the Employment Agreement. The fair value of the shares of $420,000 was expensed in July 2018.

- 23 -

10-Q	24th “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 24th

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company continues to be in default under several convertible notes to Bellridge Capital L.P. as follows:

On November 27, 2018, the Company defaulted on a convertible note, resulting in the note becoming immediately due and payable. Upon default, the interest rate increased to 29% per annum and the Company incurs a late fee at an interest rate equal to 18% per annum on any overdue and unpaid interest under the convertible note. Additionally, the total amount owed on the convertible note upon default is equal to 130% of the outstanding principal and accrued and unpaid interest. During the year ended April 30, 2019, the Company recorded a 30% default penalty of $191,297 as a result of default, which included $25,694 of interest accrued up to the point of default. The default penalty increased the carrying value of the loan principal to $717,613. During the nine months ended January 31, 2021, the Company issued 2,052,498 shares of common stock upon the conversion of $150,904 of the Note, comprising of $107,769 principal amount and $43,135 interest. As at January 31, 2021, the carrying value of the principal amount was $609,844, and the Company has recorded accrued interest of $481,036.

On December 20, 2018, the Company defaulted on a convertible note, resulting in the note becoming immediately due and payable. Upon default, the interest rate increased to 29% per annum and the Company incurs a late fee at an interest rate equal to 18% per annum on any overdue and unpaid interest under the convertible note. Additionally, the total amount owed on the convertible note upon default is equal to 130% of the outstanding principal and accrued and unpaid interest. During the year ended April 30, 2019, the Company recorded a 30% default penalty of $109,341 as a result of default, which included $11,234 of interest accrued up to the point of default. The default penalty increased the carrying value of the loan principal to $425,131. During the nine months ended January 31, 2021, the Company recorded accretion of discount of $Nil (2019 - $Nil). As at January 31, 2021, the carrying value of the principal amount was $425,131, and the Company has recorded accrued interest of $321,756.

On December 20, 2018, the Company defaulted on another convertible note, resulting in the note becoming immediately due and payable. Upon default, the interest rate increased to 29% per annum and the Company incurs a late fee at an interest rate equal to 18% per annum on any overdue and unpaid interest under the convertible note. Additionally, the total amount owed on the convertible note upon default is equal to 130% of the outstanding principal and accrued and unpaid interest. During the year ended April 30, 2019, the Company recorded a 30% default penalty of $70,836 as a result of default, which included $5,906 of interest accrued up to the point of default. The default penalty increased the carrying value of the loan principal to $281,363. As at January 31, 2021, the carrying value of the principal amount was $281,363, and the Company has recorded accrued interest of $212,944.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

The information regarding the September 2020 Note as set forth in Part I, Item 2 and Part II, Item 1 of this quarterly report is incorporated by reference into this Item 5.

ITEM 6. EXHIBITS



Exhibit		Description

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
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation
101.DEF*		XBRL Taxonomy Extension Definition
101.LAB*		XBRL Taxonomy Extension Labels
101.PRE*		XBRL Taxonomy Extension Presentation

__________

* Filed herewith.

- 24 -

10-Q	Last “Page” of 25	TOC	1st	Previous	Next	↓Bottom	Just 25th

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	BLGI, INC.

Date: March 22, 2021	By: /s/ *Lawrence P. Cummins*
	Lawrence P. Cummins
	Chief Executive Officer (Principal Executive Officer)


Date: March 22, 2021	By: /s/ *Jeremy Towning*
	Jeremy Towning
	Chief Financial Officer (Principal Financial Officer)

- 25 -

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

	4/5/23	17
	3/29/23	17
	5/27/22	17
	9/9/21	13	23
	7/9/21	19
	4/30/21	4
Filed on:	3/22/21	1	25
	2/20/21	13
For Period end:	1/31/21	1	24	NT 10-Q
	1/26/21	17	23
	1/25/21	17	23
	1/18/21	16	23
	1/5/21	16	23
	12/29/20	15	23
	12/21/20	14	23	10-Q
	11/25/20	14	23	8-K
	11/12/20	14	23
	10/31/20	6		10-Q, 10-Q/A, NT 10-Q
	10/16/20	17	18	8-K
	10/15/20	8	17	8-K
	10/14/20	20
	10/8/20	18
	9/21/20	20
	9/18/20	14
	9/17/20	13
	9/9/20	13	20
	8/24/20	16
	8/14/20	17
	8/4/20	16
	7/31/20	6		10-K, 10-Q, 10-Q/A
	7/21/20	15	19
	6/29/20	16	23	10-Q, 3, 8-K
	4/30/20	2	21	10-K, 10-K/A, DEF 14C, NT 10-K, PRE 14C
	2/20/20	13
	1/31/20	2	22	10-Q, 10-Q/A
	11/15/19	15	19
	10/31/19	6		10-Q, 10-Q/A
	9/13/19	19		3
	8/24/19	15	18
	7/31/19	6	19	10-Q, 10-Q/A
	6/1/19	12
	4/30/19	6	24	10-K, 10-K/A
	2/20/19	15
	2/13/19	11
	12/20/18	12	24
	11/27/18	11	24
	7/15/18	11
	7/9/18	15	23
	6/1/18	12
	4/30/18	11		10-K, 10-K/A, 8-K, NT 10-K
	4/24/18	21		S-1
	4/13/18	12
	4/5/18	12
	4/2/18	12		10-Q/A
	2/14/18	11	15
	12/4/17	8		8-K
	11/27/17	11	21	8-K
	11/13/17	16	18
	6/18/17	15	19	8-K
	4/30/17	11		10-K, NT 10-K
	7/15/16	11
	5/6/16	19
	4/8/13	8	18
	1/31/10	21
				List all Filings

Number of
warrants

Weighted average
exercise price
$

Balance, April 30, 2020

Balance, January 31, 2021