Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
1.
|
Description
of Business
|
Blox,
Inc. (the “Company”) was incorporated on July 21, 2005 under the laws of the state of Nevada. The address of the Company
is #1177 Avenue of Americas 5
th
Floor, New York, NY 10036.
The
Company is primarily engaged in developing mineral exploration projects in Guinea, West Africa.
|
(a)
|
Statement
of Compliance
|
These
financial statements are presented in accordance with generally accepted accounting principles in the United States (“US
GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) and are expressed in U.S.
dollars. The Company’s fiscal year-end is March 31.
|
(b)
|
Basis
of Presentation
|
The
consolidated financial statements of the Company comprise the Company and its subsidiaries, Blox Energy Inc. and Blox Minerals
Guinea. These consolidated financial statements are prepared on the historical cost basis. These consolidated financial statements
have also been prepared using the accrual basis of accounting, except for cash flow information. In the opinion of management,
all adjustments (including normal recurring ones) considered necessary for fair value have been included. All intercompany balances
and transactions have been eliminated upon consolidation.
|
(c)
|
Reporting
and Functional Currencies
|
The
functional currency of an entity is the currency of the primary economic environment in which the entity operates. The functional
currency of the Company is the Canadian dollar (“CAD”). The Company’s reporting currency is the US dollar.
Transactions:
Monetary
assets and liabilities denominated in foreign currencies are translated into functional currencies of the Company and its subsidiaries
using period end foreign currency exchange rates and expenses are translated using the exchange rate approximating those in effect
on the date of the transactions during the reporting periods in which the expenses were transacted. Non-monetary assets and liabilities
are translated at their historical foreign currency exchange rates. Gains and losses resulting from foreign exchange transactions
are included in the determination of net income or loss for the period.
Translations:
Foreign
currency financial statements are translated into the Company’s reporting currency, the US dollar as follows:
|
(i)
|
All
of the assets and liabilities are translated at the rate of exchange in effect on the balance sheet date;
|
|
(ii)
|
Expenses
are translated at the exchange rate approximating those in effect on the date of the transactions; and
|
|
(iii)
|
Exchange
gains and losses arising from translation are included in other comprehensive income.
|
|
(d)
|
Significant
Accounting Judgments and Estimates
|
The
preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the period.
Actual outcomes could differ from these estimates. Revisions to accounting estimates are recognized in the period in which the
estimate is revised and may affect both the period of revision and future periods
Blox,
Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed
in U.S. Dollars)
2.
|
Basis
of Presentation
(continued)
|
|
(d)
|
Significant
Accounting Judgments and Estimates
(continued)
|
In
applying the Company’s accounting policies, management has made certain judgments that may have a significant effect on the consolidated
financial statements. Such judgments include the determination of the functional currencies and use of the going concern assumption.
|
i)
|
Determination
of Functional Currencies
|
In
determining the Company’s functional currency, it periodically reviews its primary and secondary indicators to assess the primary
economic environment in which the entity operates in determining the Company’s functional currencies. The Company analyzes the
currency that mainly influences labor, material and other costs of providing goods or services which is often the currency in
which such costs are denominated and settled. The Company also analyzes secondary indicators such as the currency in which funds
from financing activities such as equity issuances are generated and the funding dependency of the parent company whose predominant
transactional currency is the Canadian dollar. Determining the Company’s predominant economic environment requires significant
judgment.
These
consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize
its assets and discharge its liabilities in the normal course of business. The Company has incurred a net loss of $11,615,101
and $1,489,775 for the years ended March 31, 2019 and 2018, respectively, and has incurred cumulative losses since inception of
$22,469,528 (2018 - $10,854,427) as at March 31, 2019.
These
factors raise substantial doubt about the ability of the Company to continue as a going concern. The continuation of the Company
as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain
necessary debt and/or equity financing to continue operations. These consolidated financial statements do not include any adjustments
to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern. Management of the Company has undertaken steps as part of a plan to sustain
operations for the next fiscal year including plans to raise additional equity financing, control costs and reduce operating losses.
3.
|
Significant
Accounting Policies
|
|
(a)
|
Foreign
Currency Accounting
|
|
i)
|
Foreign
Currency Transactions
|
Transactions
in foreign currencies are translated to the respective functional currencies of the Company’s entities at exchange rates at the
dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated
to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies
that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value
was determined. Non-monetary items that are measured in terms of historical costs in a foreign currency are translated using the
exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognized in profit or
loss, except for differences arising on the translation of available-for-sale financial instruments, which are recognized in other
comprehensive income.
Blox,
Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
3.
|
Significant
Accounting Policies
(continued)
|
|
(a)
|
Foreign
Currency Accounting
(continued)
|
The
assets and liabilities of foreign operations are translated to U.S. dollars at exchange rates at the reporting date. The income
and expenses of foreign operations are translated to U.S. dollars at exchange rates at the dates of the transactions. Foreign
currency differences are recognized in other comprehensive income. When a foreign operation is disposed of, the relevant amount
in the accumulated other comprehensive income is transferred to profit or loss as part of the gain or loss on disposal.
Cash
includes cash deposited at banks and highly liquid investments with original maturities of three months or less when purchased.
|
(c)
|
Financial
Instruments
|
Financial
assets
All
financial assets are initially recorded at fair value and classified upon inception into one of the following four categories:
held to maturity, available for sale, loans and receivables or at fair value through profit or loss (“FVTPL”).
Financial
assets classified as FVTPL are measured at fair value with unrealized gains and losses recognized through earnings. The Company’s
cash is classified as FVTPL. Financial assets classified as loans and receivables and held to maturity assets are measured at
amortized cost. Financial assets classified as available for sale are measured at fair value with unrealized gains and losses
recognized in other comprehensive income and loss except for losses in value that are considered other than temporary which are
recognized in earnings.
Transaction
costs associated with FVTPL financial assets are expensed as incurred, while transaction costs associated with all other financial
assets are included in the initial carrying amount of the asset.
A
financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A
financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect
on the estimated future cash flows of that asset.
An
impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows, discounted at the original effective interest rate.
Individually
significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively
in groups that share similar credit risk characteristics.
An
impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized.
For financial assets measured at amortized cost, this reversal is recognized in profit or loss.
Blox,
Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
3.
|
Significant
Accounting Policies
(continued)
|
|
(c)
|
Financial
Instruments
(continued)
|
Financial
liabilities
All
financial liabilities are initially recorded at fair value and classified upon inception as FVTPL or other financial liabilities.
Financial
liabilities classified as other financial liabilities are initially recognized at fair value less directly attributable transaction
costs. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective
interest rate method. The effective interest rate method is a method of calculating the amortized cost of a financial liability
and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated
future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. The Company’s
liabilities are classified as other financial liabilities.
Financial
liabilities classified as FVTPL include financial liabilities held for trading and financial liabilities designated upon initial
recognition as FVTPL. Derivatives, including separated embedded derivatives are also classified as held for trading and recognized
at fair value with changes in fair value recognized in earnings unless they are designated as effective hedging instruments. Fair
value changes on financial liabilities classified as FVTPL are recognized in earnings.
Equipment
is carried at cost less accumulated depreciation and impairment losses, if any. Depreciation is provided at rates and methods
designed to write off cost of the assets over their estimated useful lives as follows:
Office
equipment
|
30%
declining balance
|
Management
reviews the depreciation method, useful lives and residual values annually and accounts for any changes in estimates on a prospective
basis. Where an item of plant and equipment comprises major components with different useful lives, the components are accounted
for as separate items of production facility, and depreciated separately.
|
(e)
|
Impairment
of Non-Financial Assets
|
The
Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s
(“FASB’) Accounting Standards Codification (“ASC”) 360 “Property Plant and Equipment”. ASC
360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the
disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate
that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair
value based on the best information available. Estimated fair value is generally based on either appraised value or measured by
discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows.
Accordingly, actual results could vary significantly from such estimates.
Impairment
tests on intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial
assets are subject to impairment tests whenever events or changes in circumstances indicate their carrying amount may not be recoverable.
Where the carrying value of an asset exceeds its fair value, the asset is written down accordingly.
Blox,
Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
3.
|
Significant
Accounting Policies
(continued)
|
|
(f)
|
Decommissioning
Liabilities
|
A
legal or constructive obligation to incur restoration, rehabilitation and environmental costs may arise when environmental disturbance
is caused by the operation of an alternative energy plant. Such costs arising from the decommissioning of plant and other site
preparation work, discounted to their net present value, are provided for and capitalized to the carrying amount of the asset,
as soon as the obligation to incur such costs arises. A pre-tax discount rate that reflects the time value of money and the risks
specific to the liability are used to calculate the net present value of the expected future cash flows. These costs are charged
to profit on loss over the economic life of the related asset, through depreciation expense using relevant amortization method.
The related liability is progressively increased each period as the effect of discounting unwinds, creating an expense recognized
in profit or loss. The liability is assessed at each reporting date for changes to the current market-based discount rate, amount
or timing of the underlying cash flows needed to settle the obligation.
The
Company has no material restoration, rehabilitation and environmental costs as the disturbance to date is minimal.
Income
taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities
and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in
the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities
are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability
settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the
period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than
not to be realized.
The
FASB has issued ASC 740 “Income Taxes”. ASC 740 clarifies the accounting for uncertainty in income taxes recognized
in a company’s financial statements. This standard requires a company to determine whether it is more likely than not that
a tax position will be sustained upon examination based on the technical merits of the position. If the more-likely-than-not threshold
is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
As
a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with
recognition and measurement standards established by ASC 740 and concluded that the tax position of the Company has not met the
more-likely-than-not threshold as of March 31, 2019.
The
Company computes loss per share in accordance with ASC 260, “Earnings per Share”, which requires presentation of both
basic and diluted loss per share on the face of the statement of operations. Basic loss per share is computed by dividing net
loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the
period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period using the treasury
stock method and convertible preferred stock using the if-converted method. In computing diluted loss per share, the average stock
price for the period issued in determining the number of shares assumed to be purchased from the exercise of stock options or
warrants. Diluted loss per share excludes all dilutive potential shares if their effect is anti-dilutive.
|
(i)
|
Stock
Based Compensation
|
The
Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses
the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus
on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement
of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of
the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the
grant date must be recognized.
Blox,
Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
3.
|
Significant
Accounting Policies
(continued)
|
|
(i)
|
Stock
Based Compensation
(continued)
|
The
Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, “Equity-Based Payments
to Non-Employees”. Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards
granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is
more reliably measurable. Any stock options or warrants issued to non-employees are recorded in expense and additional paid-in
capital in stockholders’ equity over the applicable service periods using variable accounting through the vesting dates
based on the fair value of the options or warrants at the end of each period.
The
Company issues stock to consultants for various services. The value of the common stock is measured at the earlier of (i) the
date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date
at which the counterparty’s performance is complete. The Company recognized consulting expense and a corresponding increase
to additional paid-in-capital related to stock issued for services.
|
(j)
|
Exploration
and evaluation
|
The
Company is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed
as incurred. Mineral property acquisition costs are initially capitalized when incurred. An impairment loss is recognized when
the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral property. Impairment losses,
if any, are measured as the excess of the carrying amount of the mineral property over its estimated fair value.
4.
|
Recent
Accounting Pronouncements
|
The
Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact
on the financial statements unless otherwise disclosed, and the Company 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.
|
|
|
|
|
Fair Value as at
|
|
|
|
Number
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
FVTPL
|
|
|
|
|
|
|
|
|
|
Share purchase warrants
|
|
3,333,333
|
|
|
$
|
19,046
|
|
|
$
|
48,375
|
|
|
|
1,000,000
|
|
|
|
5,970
|
|
|
|
-
|
|
|
|
|
|
|
|
25,016
|
|
|
|
48,375
|
|
Available-for-sale
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
|
|
3,333,333
|
|
|
|
74,830
|
|
|
|
64,633
|
|
|
|
1,000,000
|
|
|
|
22,449
|
|
|
|
-
|
|
|
|
|
|
|
|
97,279
|
|
|
|
64,633
|
|
Total investment:
|
|
|
|
|
$
|
122,295
|
|
|
$
|
113,008
|
|
Blox,
Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
5.
|
Long
Term Investments
(continued)
|
On
April 16, 2018, the Company participated in a private placement offering by its strategic partner, Ashanti Sankofa Inc (TSX.V-
ASI), which shares the same management group and board of directors as the Company. The Company purchased 1,000,000 units at CAD$0.03
per unit for a total cost of $23,850 (CAD$30,000). Each unit consists of one common share and one transferable share purchase
warrant with each warrant entitling the holder to acquire one additional common share at a price of CAD$0.05 for a period of 24
months from the closing of the private placement. On the date of issuance, the Company determined the fair value of the common
share and warrants to be $13,420 and $10,430, respectively.
As
at March 31, 2019, the fair value of common shares was $97,279 which resulted in an unrealized gain of $19,225 that was recorded
in other comprehensive income. In addition, the fair value of warrants was $25,016, which resulted in a loss of $33,788 that was
recorded in net income.
As
at March 31, 2019 fair value of the warrants was determined with the Black-Scholes option pricing model using the following assumptions:
risk free interest rate of 1.70%, volatility of 128%, annual rate of dividend of 0%, and expected life of 0.99 – 1.05 years.
|
|
Machinery
|
|
|
Total
|
|
Cost
|
|
|
|
|
|
|
|
|
Balance at March 31, 2019 & 2018
|
|
$
|
232,620
|
|
|
$
|
232,620
|
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation
|
|
|
|
|
|
|
|
|
Balance at March 31, 2019 & 2018
|
|
$
|
161,060
|
|
|
$
|
161,060
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
As at March 31, 2019 & 2018
|
|
$
|
71,560
|
|
|
$
|
71,560
|
|
|
|
|
|
|
|
|
|
|
Equipment
in the amount of $71,560 has not been placed into production and is not currently being depreciated.
Blox,
Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
7.
|
Mineral
Property Interest
|
The
Company entered into a Deed of Assignment and Assumption Agreement dated July 24, 2014 (the “Assumption Agreement”)
among Joseph Boampong Memorial Institute Ltd. (“JBMIL”) and Equus Mining Ltd. (“EML”), Burey Gold Guinee sarl
(“BGGs”) and Burey Gold Limited (“BGL”) and, collectively with EML and BGGs, (the “Vendors”), pursuant
to which the Company has agreed to assume JBMIL’s right to acquire a 78% beneficial interest in the Mansounia Concession (the
“Property”) from the Vendors. The Company exercised that right and acquired a 78% beneficial interest in the Property.
The
Property lies in the southwest margin of the Siguiri Basin, in the Kouroussa Prefecture, Kankan Region, in Guinea, West Africa
and covers a surface area of 145 square kilometres. The Property is located approximately 80 kilometres west, by road, from the
country’s third largest city, Kankan.
An
exploration permit for the Property was granted by the Ministère des Mines et de la Géologie on August 20, 2013.
As part of its due diligence, the Company obtained a legal opinion which confirmed that the license was in good standing at the
time of acquisition. It is the Company’s intention to obtain an exploitation permit to allow the Company the right to mine and
dispose of minerals for 15 years, with a possible 5-year extension. The Company has commenced work on the feasibility study and
environmental impact assessment required for obtaining this permit.
In
consideration for the acquisition of the interest in the Property, the Company paid $100,000 to BGL and $40,000 to EML and issued
BGL and EML an aggregate of 6,514,350 shares of common stock of the Company (the “First Tranche Shares”), at a deemed
price of $0.1765 per share, for an aggregate deemed value of $1,150,000. The First Tranche Shares were issued to BGL and EML in
the proportions of 71.43% and 28.57%, respectively. For accounting purposes, the Company recorded the cash payment of $140,000,
and $10,000 for an independent valuation of the Property. Additionally, $781,722 was capitalized to mineral property interests,
being the fair value of the first tranche of shares. The fair value of the first tranche shares was based on the closing price
of the Company’s shares on the OTCQB on July 24, 2014.
Within
14 days of commercial gold production being publicly declared from ore mined from the Property, the Company will issue BGL and
EML a second tranche of shares of common stock of the Company (the “Second Tranche Shares”). The number of Second Tranche
Shares to be issued shall be calculated by dividing $1,150,000 by the volume weighted average share price of the Company’s common
stock over a 20-day period preceding the issuance date. The Second Tranche Shares shall be issued to BGL and EML in the proportions
of 71.43% and 28.57%, respectively.
The
mining exploration permit for the Company expired on April 30, 2019. The Company submitted an application to Ministère
des Mines for mining permit on December 7, 2018.
|
|
Mansounia Property, West Africa
|
|
Acquisition of mineral property interest
|
|
|
|
|
|
|
|
|
|
Cash payment
|
|
$
|
150,000
|
|
Issuance of 6,514,350 common shares
|
|
|
781,722
|
|
|
|
|
|
|
Balance, March 31, 2019 and 2018
|
|
$
|
931,722
|
|
During
the year ended March 31, 2019, the Company spent $194,117 (2018 – $196,567) on the property.
Blox,
Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
7.
|
Mineral
Property Interest
(continued)
|
A
summary of exploration and evaluation expenditures included in comprehensive loss are as follows:
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
Exploration Cost
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
Assays
|
|
|
7,501
|
|
|
|
-
|
|
Feasibility
|
|
|
5,450
|
|
|
|
6,720
|
|
General and admin costs
|
|
|
7,816
|
|
|
|
23,384
|
|
Geologist consulting fees
|
|
|
110,034
|
|
|
|
24,278
|
|
Licenses and permits
|
|
|
34,568
|
|
|
|
142,185
|
|
Travel
|
|
|
28,748
|
|
|
|
-
|
|
Total cost during the year
|
|
|
194,117
|
|
|
|
196,567
|
|
The Company is subject to income
taxes on its unconsolidated financial statements in Canada and the United States. The consolidated provision for income taxes varies
from the amount that would be computed by applying the combined statutory income tax rates to net loss before taxes were approximately
as follows:
|
|
2019
|
|
|
2018
|
|
Combined statutory rate
|
|
|
21
|
%
|
|
|
21
|
%
|
Expected income tax recovery
|
|
$
|
(2,439,000
|
)
|
|
$
|
(313,000
|
)
|
Non-deductible differences and other
|
|
|
2,344,000
|
|
|
|
507,000
|
|
Deferred tax assets not recognized
|
|
|
95,000
|
|
|
|
(194,000
|
)
|
Income tax provision
|
|
$
|
-
|
|
|
$
|
-
|
|
The significant components of the Company’s deferred
income tax assets were approximately:
|
|
2019
|
|
|
2018
|
|
Losses available for future periods
|
|
$
|
1,403,000
|
|
|
$
|
1,310,000
|
|
Long-term investments
|
|
|
(2,000
|
)
|
|
|
(4,000
|
)
|
Equipment
|
|
|
(19,000
|
)
|
|
|
(19,000
|
)
|
Tax assets not recognized
|
|
|
(1,382,000
|
)
|
|
|
(1,287,000
|
)
|
Net deferred income tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
|
8.
|
Income Taxes
(continued)
|
The Company has non-capital losses
of approximately $6,255,000 which may be carried forward and applied against taxable income in future years and expire as follows:
|
|
Canada
|
|
|
United States
|
|
|
Guinea
|
|
|
|
|
|
|
|
|
|
|
|
2027
|
|
$
|
-
|
|
|
$
|
1,000
|
|
|
$
|
-
|
|
2028
|
|
|
-
|
|
|
|
16,000
|
|
|
|
-
|
|
2029
|
|
|
-
|
|
|
|
35,000
|
|
|
|
-
|
|
2030
|
|
|
-
|
|
|
|
30,000
|
|
|
|
-
|
|
2031
|
|
|
-
|
|
|
|
78,000
|
|
|
|
-
|
|
2032
|
|
|
237,000
|
|
|
|
24,000
|
|
|
|
-
|
|
2033
|
|
|
813,000
|
|
|
|
53,000
|
|
|
|
-
|
|
2034
|
|
|
462,000
|
|
|
|
511,000
|
|
|
|
-
|
|
2035
|
|
|
11,000
|
|
|
|
1,688,000
|
|
|
|
-
|
|
2036
|
|
|
-
|
|
|
|
312,000
|
|
|
|
-
|
|
2037
|
|
|
-
|
|
|
|
907,000
|
|
|
|
-
|
|
2038
|
|
|
2,000
|
|
|
|
621,000
|
|
|
|
-
|
|
2039
|
|
|
-
|
|
|
|
389,000
|
|
|
|
65,000
|
|
|
|
$
|
1,525,000
|
|
|
$
|
4,665,000
|
|
|
$
|
65,000
|
|
On September 29, 2017, the Company
entered into an agreement with Waratah Capital Ltd. (“Waratah”), a controlling shareholder, whereby Waratah and the
Company agreed that in order to allow the Company to finalize its acquisition of Quivira Gold Ltd. pursuant to the Share Purchase
Agreement dated June 22, 2013 among the Company, Quivira Gold Ltd. and Waratah (the “Quivira Agreement”), the Bridge
Loan Agreement dated as of April 17, 2015, and amended on April 28, 2016 and November 1, 2016 between the Company and Waratah would
be cancelled and the Company will utilize the loan proceeds advanced to close a private placement of $1,500,000 required to consummate
the Company’s acquisition of Quivira Gold Ltd.
On April 24, 2018, the Company
closed the private placement as part of the Quivira acquisition and issued 30,000,000 units at a price of $0.05 per unit for gross
proceeds of $1,500,000. Each unit consists of one common share and one transferable share purchase warrant exercisable at a price
of $0.05 per share for a term of five years.
On April 24, 2018, the Company
issued 30,000,000 share purchase warrants as part of the $1,500,000 private placement. The warrants expire five years from the
date of issuance and are exercisable at $0.05 per share. The fair value of these warrants was determined with the Black-Scholes
option pricing model using the following assumptions: risk free interest rate of 2.73%, volatility of 204.3%, annual rate of dividend
of 0%, and expected life of 5 years.
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
|
9.
|
Common Stock
(continued)
|
On February 27, 2019, the Company
extended the term of 88 million share purchases warrants from February 27, 2019 to February 27, 2020, no other terms were changed.
As a result of the extension of the expiration date of the warrants, the Company recorded an $11,136,000 non-cash charge to shareholder
expense and a corresponding increase to contributed surplus. The exercise price of the share purchase warrants is $0.05. On February
28, 2019, 456,250 warrants were exercised to common shares for gross proceeds of $22,813. The fair value of the modified warrants
was determined using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 1.81%, volatility
of 109%, annual rate of dividends of 0%, and expected life of 1 year.
The following table summarizes
historical information about the Company’s warrants:
|
|
Number of
Warrants
|
|
|
Weighted Average Exercise Price ($)
|
|
|
Weighted Average Life Remaining (Years)
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2018 and 2017
|
|
|
88,000,000
|
|
|
|
0.05
|
|
|
|
0.90
|
|
Issued
|
|
|
30,000,000
|
|
|
|
0.05
|
|
|
|
4.10
|
|
Exercised
|
|
|
(456,250
|
)
|
|
|
0.05
|
|
|
|
0.90
|
|
Balance, March 31, 2019
|
|
|
117,543,750
|
|
|
|
0.05
|
|
|
|
1.72
|
|
As at March 31, 2019, the following
warrants were outstanding and exercisable:
Number of Warrants
|
|
|
Exercise Price
|
|
|
Expiry Date
|
|
|
|
|
|
|
|
|
87,543,750
|
|
|
$
|
0.05
|
|
|
February 27, 2020
|
|
30,000,000
|
|
|
$
|
0.05
|
|
|
April 24, 2023
|
|
117,543,750
|
|
|
|
|
|
|
|
On June 26, 2018, 4,000,000 stock
options were exercised via cashless exercise at a price of $0.01 per share, resulting in issuance of 3,754,600 common shares. The
cash component, equivalent to $40,000, is calculated as 245,400 shares at $0.163, the closing market price of the Company on the
date of issuance.
On September 26, 2018, 1,500,000
stock options were cancelled due to the optionee who ceased to be an officer of the Company.
On February 15, 2018, the Company
granted 3,000,000 stock options to two officers. These stock options have an exercise price of $0.27 and expire on February 15,
2023 vesting on the date of grant. The weighted average fair value of stock options was determined with the Black-Scholes option
pricing model using the following assumptions: risk free interest rate of 2.65%, volatility of 199%, annual rate of dividend of
0% and expected life of options of 5 years.
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
|
9.
|
Common Stock
(continued)
|
|
(c)
|
Stock Options
(continued)
|
The following table summarizes
historical information about the Company’s incentive stock options:
|
|
Number of
options
|
|
|
Weighted Average Exercise Price ($)
|
|
|
Weighted Average Life Remaining (Years)
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2017
|
|
|
4,650,000
|
|
|
|
0.03
|
|
|
|
1,17
|
|
Granted
|
|
|
3,000,000
|
|
|
|
0.27
|
|
|
|
3.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2018
|
|
|
7,650,000
|
|
|
|
0.12
|
|
|
|
2.80
|
|
Cancelled
|
|
|
(1,500,000
|
)
|
|
|
0.27
|
|
|
|
3.90
|
|
Exercised
|
|
|
(4,000,000
|
)
|
|
|
0.01
|
|
|
|
1.30
|
|
Balance, March 31, 2019
|
|
|
2,150,000
|
|
|
|
0.23
|
|
|
|
2.80
|
|
At March 31, 2019, the following
stock options were outstanding and exercisable:
Exercise Price
|
|
|
Expiry Date
|
|
Options Outstanding
|
|
|
Weighted Average Remaining Life in Years
|
|
Options Exercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.15
|
|
|
07-Aug-19
|
|
|
650,000
|
|
|
0.4
|
|
|
650,000
|
|
$
|
0.27
|
|
|
15-Feb-23
|
|
|
1,500,000
|
|
|
3.9
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
2,150,000
|
|
|
2.8
|
|
|
2,150,000
|
|
|
10.
|
Fair Value of Financial Instruments
|
The following provides an analysis
of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on
the degree to which fair value is observable:
Level 1 – fair value measurements
are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – fair value measurements
are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 – fair value measurements
are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market
data (unobservable inputs).
Level 2 and 3 financial instruments
are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require
significant management judgment for estimation. Valuations based on unobservable inputs are highly subjective and require significant
judgments. Changes in such judgments could have a material impact on fair value estimates. In addition, since estimates are as
of a specific point in time, they are susceptible to material near-term changes. Changes in economic conditions may also dramatically
affect the estimated fair values.
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
|
10.
|
Fair Value of Financial Instruments
(continued)
|
The following table sets forth
the Company’s financial assets measured at fair value by level within the fair value hierarchy:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
March 31,
2019
|
|
Cash
|
|
$
|
9,792
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
9,792
|
|
Long-term investment – Shares
|
|
|
97,279
|
|
|
|
-
|
|
|
|
-
|
|
|
|
97,279
|
|
Long-term investment – Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
25,016
|
|
|
|
25,016
|
|
Total
|
|
$
|
107,071
|
|
|
$
|
-
|
|
|
$
|
25,016
|
|
|
$
|
132,087
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
March 31,
2018
|
|
Cash
|
|
$
|
28,481
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
28,481
|
|
Long-term investment – Shares
|
|
|
64,633
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,633
|
|
Long-term investment – Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
48,375
|
|
|
|
48,375
|
|
Total
|
|
$
|
93,114
|
|
|
$
|
-
|
|
|
$
|
48,375
|
|
|
$
|
141,489
|
|
During the years ended March 31,
2019, the Company received advances from Waratah Capital Ltd. (“Waratah”), a controlling shareholder of the Company,
in the amount of $273,145. As at March 31, 2019, the Company was indebted to Waratah for $329,346 (2018 - $56,200). The advances
from shareholder are unsecured, non-interest bearing and have no fixed repayment terms.
On June 22, 2013, the Company
entered into a share purchase agreement with Waratah Investments Limited (“Waratah”) where the Company agreed to purchase
all of Waratah’s right, title, and interest in the Quivira Gold (“Quivira”) shares, of which Waratah holds 100%
of the outstanding shares. As consideration for the Quivira shares, the Company will issue to Waratah 60,000,000 shares of common
stock and 60,000,000 warrants. Each warrant entitles the holder to purchase one additional common share at $0.05 for a period of
five years from the closing date. Quivira, a subsidiary of Waratah Investments, owns and operates gold and diamond mining properties
in Ghana.
The closing of the agreement is
subject to the completion of due diligence and the completion of a private placement for $1,500,000. The private placement closed
during the year ended March 31, 2019. As of the issuance date of these financial statements, the due diligence has not yet been
completed.
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2019 and 2018
(Expressed in
U.S. Dollars)
|
13.
|
Related Party Transactions
|
The Company’s related parties
include its subsidiaries, and key management personnel, controlling shareholders, and strategic partner. Transactions with related
parties for goods and services are based on the exchange amount as agreed to by the related parties.
The Company incurred the following
expenses with related parties during the years ended March 31, 2019 and 2018:
|
|
Year Ended
March 31,
2019
|
|
|
Year Ended
March 31,
2018
|
|
Compensation – Director
|
|
$
|
29,735
|
|
|
$
|
114,887
|
|
Compensation – Former directors
|
|
|
58,079
|
|
|
|
71,877
|
|
Compensation – Officer
|
|
|
28,812
|
|
|
|
61,921
|
|
Compensation – Former officer
|
|
|
12,262
|
|
|
|
-
|
|
Stock based compensation – Officers
|
|
|
-
|
|
|
|
878,944
|
|
During the year ended March 31,
2019, $2,179 (2018 - $8,834) was paid for bookkeeping services to a company owned by a former officer of the Company. The Company
also recognized $8,749,076 (2018 - $Nil) in shareholder expenses related to the modification of warrants held by a controlling
shareholder.
As at March 31, 2019, the Company
was indebted to its related parties for the amounts as below:
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
93,104
|
|
|
$
|
57,014
|
|
Due to shareholder (Note 11)
|
|
|
329,346
|
|
|
|
56,200
|
|
These amounts owing are unsecured,
non-interest bearing and have no fixed repayment terms.
|
14.
|
Geographical Area Information
|
|
|
Canada
|
|
|
Africa
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
13,367
|
|
|
$
|
1,592
|
|
|
$
|
14,959
|
|
Long term investments
|
|
|
122,295
|
|
|
|
-
|
|
|
|
122,295
|
|
Equipment
|
|
|
-
|
|
|
|
71,560
|
|
|
|
71,560
|
|
Mineral property interest
|
|
|
-
|
|
|
|
931,722
|
|
|
|
931,722
|
|
Total assets
|
|
$
|
135,662
|
|
|
$
|
1,004,874
|
|
|
$
|
1,140,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
509,401
|
|
|
$
|
48,953
|
|
|
$
|
558,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
32,648
|
|
|
$
|
-
|
|
|
$
|
32,648
|
|
Long term investments
|
|
|
113,008
|
|
|
|
-
|
|
|
|
113,008
|
|
Equipment
|
|
|
-
|
|
|
|
71,560
|
|
|
|
71,560
|
|
Mineral property interest
|
|
|
-
|
|
|
|
931,722
|
|
|
|
931,722
|
|
Total assets
|
|
$
|
145,656
|
|
|
$
|
1,003,282
|
|
|
$
|
1,148,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
160,177
|
|
|
$
|
-
|
|
|
$
|
160,177
|
|