(Expressed in U.S. Dollars)
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(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
5th Floor, New York, NY 10036.
The Company is primarily engaged
in acquiring and exploring mineral properties plus the development of mineral resources for mining with the intent of applying
green innovation plus renewable energy and technology to traditional mining methods.
|
(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, 2020 and 2019
(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 $12,858,000 and $11,615,101 for the years ended March
31, 2020 and 2019, respectively, and has incurred cumulative losses since inception of $35,327,528 (2019 - $22,469,528) as at March
31, 2020.
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.
Since December 31, 2019, the outbreak
of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in a widespread health crisis
that has affected economies and financial markets around the world resulting in an economic downturn. This outbreak may also cause
staff shortages, reduced customer demand, increased government regulations or interventions, all of which may negatively impact
the business, financial condition or results of operations of the Company. The duration and impact of the COVID-19 outbreak is
unknown at this time and it is not possible to reliably estimate the length and severity of these developments.
The inputs in the Black-Scholes
option pricing model to value the extension of the share purchase warrants (Note 9).
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(Expressed in
U.S. Dollars)
|
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.
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.
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(Expressed in
U.S. Dollars)
|
3.
|
Significant Accounting Policies (continued)
|
|
(c)
|
Financial Instruments (continued)
|
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.
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:
|
Machinery
|
20% 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, 2020 and 2019
(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, 2020.
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, 2020 and 2019
(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, 2020
|
|
|
|
March 31, 2019
|
|
FVTPL
|
|
|
|
|
|
|
|
|
|
Share
purchase warrants
|
|
3,333,333
|
|
|
$
|
-
|
|
|
$
|
19,046
|
|
|
|
1,000,000
|
|
|
|
-
|
|
|
|
5,970
|
|
|
|
|
|
|
|
-
|
|
|
|
25,016
|
|
Available-for-sale
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares
|
|
3,333,333
|
|
|
|
46,993
|
|
|
|
74,830
|
|
|
|
1,000,000
|
|
|
|
14,098
|
|
|
|
22,449
|
|
|
|
|
|
|
|
61,091
|
|
|
|
97,279
|
|
Total
investment:
|
|
|
|
|
$
|
61,091
|
|
|
$
|
122,295
|
|
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(Expressed in
U.S. Dollars)
|
5.
|
Long Term Investments (continued)
|
On March 28, 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 3,333,333 units at CAD$0.03 per unit for a total
cost of $77,510 (CAD$100,000). 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 $44,331
and $33,179, respectively.
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, 2020, the fair
value of common shares was $61,091 which resulted in an unrealized loss of $36,188 that was recorded in other comprehensive loss
for year ended March 31, 2020. In addition, the fair value of warrants was $Nil, which resulted in a loss of $25,016 that was recorded
in net loss.
As at March 31, 2020 the fair
value of warrants was determined with the Black-Scholes option pricing model using the following assumptions: risk free interest
rate of 0.23%, volatility of 82.6%, annual rate of dividend of 0%, and expected life of 0.04 years.
On March 28, 2020 and April 16,
2020, the 3,333,333 and 1,000,000 share purchase warrants expired respectively.
|
|
Machinery
|
|
|
Total
|
|
Cost
|
|
|
|
|
|
|
Balance at March 31, 2020 & 2019
|
|
$
|
232,620
|
|
|
$
|
232,620
|
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation
|
|
|
|
|
|
|
|
|
Balance at March 31, 2020 & 2019
|
|
$
|
161,060
|
|
|
$
|
161,060
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
As at March 31, 2020 & 2019
|
|
$
|
71,560
|
|
|
$
|
71,560
|
|
|
|
|
|
|
|
|
|
|
Equipment in the amount of $71,560
has not been placed into production and is not currently being depreciated.
|
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.
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(Expressed in
U.S. Dollars)
|
7.
|
Mineral Property Interest (continued)
|
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 license 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 had 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 exploration license, which
was originally granted on August 20, 2013, was extended by the Company until January 30, 2020, pending the results of its application
for a mining license for the property (first submitted December 7, 2018). On February 17, 2020, the Company received notice from
Minister of Mines and geology, Republic of Guinea, revoking the Company’s exploration license for Mansounia Gold Project.
As a result of the revocation of the Company’s exploration license, all rights held by the Company and its partners in the
Mansounia Gold Project have been terminated. The Company has since confirmed that its mining license application cannot proceed
without a valid exploration license, and that it is ineligible to re-apply for an exploration license due to the expiration
of its previous license. At the year ended March 31, 2020, management decide to write off the mineral property interest.
|
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
|
|
Write-off mineral property interest
|
|
|
(931,722
|
)
|
Balance, March 31, 2020
|
|
$
|
Nil
|
|
During the year ended March 31,
2020, the Company spent $52,802 (2019 – $194,117) on the property.
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(Expressed in
U.S. Dollars)
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:
|
|
2020
|
|
|
2019
|
|
Combined statutory rate
|
|
|
21
|
%
|
|
|
21
|
%
|
Expected income tax recovery
|
|
$
|
(2,700,000
|
)
|
|
$
|
(2,439,000
|
)
|
Non-deductible differences and other
|
|
|
2,428,000
|
|
|
|
2,344,000
|
|
Deferred tax assets not recognized
|
|
|
272,000
|
|
|
|
95,000
|
|
Income tax provision
|
|
$
|
-
|
|
|
$
|
-
|
|
The significant components of the Company’s deferred
income tax assets were approximately:
|
|
2020
|
|
|
2019
|
|
Losses available for future periods
|
|
$
|
1,669,000
|
|
|
$
|
1,403,000
|
|
Long-term investments
|
|
|
4,000
|
|
|
|
(2,000
|
)
|
Equipment
|
|
|
(19,000
|
)
|
|
|
(19,000
|
)
|
Tax assets not recognized
|
|
|
(1,654,000
|
)
|
|
|
(1,382,000
|
)
|
Net deferred income tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company has non-capital losses
of approximately $7,471,000 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
|
|
2040
|
|
|
|
-
|
|
|
|
1,144,000
|
|
|
|
72,000
|
|
|
|
|
$
|
1,525,000
|
|
|
$
|
5,809,000
|
|
|
$
|
137,000
|
|
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(Expressed in
U.S. Dollars)
Year ended March 31, 2019
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.
Year ended March 31, 2020
There were no shares issued from
private placement for the year ended March 31, 2020.
|
(b)
|
Convertible debenture shares issuance
|
On August 16, 2019, the Company issued
300,000 commitment shares to two convertible debenture holders. The fair value of the common shares was $60,000 (Note 12).
In March 2020, $22,300 principal of
convertible debenture was converted to 1,475,000 common shares of the Company at price range of $0.03 to $0.17 (Note 12).
Year ended March 31, 2019
On April, 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
options 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 5 years.
On February 27, 2019, the Company
extended the term of 88,000,000 share purchase warrants from February 27, 2019 to February 27, 2020, no other terms were changed.
Year ended March 31, 2020
On August 7, 2019, 50,000 warrants
were exercised for common shares at $0.05 per share.
On August 16, 2019, the Company
issued 1,111,110 warrants to two convertible debenture holders with a fair value of $220,541 (Note 12). On the issuance date of
the warrants, the share price was $0.20. The warrants expire five years from the date of issuance and are exercisable at $0.135
per share. The fair value of these warrants was determined with the Black-Scholes option pricing model using the following assumptions:
risk free interest rate of 1.57%, volatility of 231.6%, annual rate of dividend of 0%, and expected life of 5 years.
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(Expressed in
U.S. Dollars)
|
9.
|
Common Stock (continued)
|
On February 27, 2020, the Company
extended the term of 88,000,000 share purchases warrants from February 27, 2020 to February 27, 2021, no other terms were changed.
The following table
summarizes historical information about the Company’s warrants:
|
|
Number of
Warrants
|
|
|
Weighted Average Exercise Price ($)
|
|
|
Weighted Average Life Remaining (Years)
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2018
|
|
|
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
|
|
|
|
0.90
|
|
Warrants issued
|
|
|
1,111,110
|
|
|
|
0.135
|
|
|
|
4.40
|
|
Warrants exercised
|
|
|
(50,000
|
)
|
|
|
0.05
|
|
|
|
|
|
Balance, March 31, 2020
|
|
|
118,604,860
|
|
|
|
0.05
|
|
|
|
1.49
|
|
As at March 31, 2020, the following
warrants were outstanding and exercisable:
Number of Warrants
|
|
|
Exercise Price
|
|
Expiry Date
|
|
|
|
|
|
|
|
87,543,750
|
|
|
$
|
0.05
|
|
February 27, 2020
|
|
29,950,000
|
|
|
$
|
0.05
|
|
April 24, 2023
|
|
1,111,110
|
|
|
$
|
0.135
|
|
August 16, 2024
|
|
118,604,860
|
|
|
|
|
|
|
Year ended March 31, 2019
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 $0.27 and expire on February 15,
2023 vesting on the date of grant. The weighted average fair value of stock options was determined with the Black-Scholes option
pricing model using the following assumptions: risk free interest rate of 2.65%, volatility of 199%, annual rate of dividend of
0% and expected life of options of 5 years.
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(Expressed in
U.S. Dollars)
|
9.
|
Common Stock (continued)
|
|
(d)
|
Stock Options (continued)
|
Year ended March 31, 2020
650,000 options expired on August
7, 2019. There were no stock options granted for the year ended March 31, 2020.
The following table summarizes
historical information about the Company’s incentive stock options:
|
|
Number of
options
|
|
|
Weighted Average Exercise Price ($)
|
|
|
Weighted Average Life Remaining (Years)
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 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
|
|
Expired
|
|
|
(650,000
|
)
|
|
|
0.15
|
|
|
|
|
|
Balance, March 31, 2020
|
|
|
1,500,000
|
|
|
|
0.27
|
|
|
|
2.90
|
|
At March 31, 2020, the following
stock options were outstanding and exercisable:
Exercise Price
|
|
Expiry Date
|
|
Options Outstanding
|
|
|
Weighted Average
Remaining
Life in Years
|
|
|
Options Exercisable
|
|
$
|
0.27
|
|
15-Feb-23
|
|
|
1,500,000
|
|
|
|
2.9
|
|
|
|
1,500,000
|
|
|
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.
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,
2020
|
|
Cash
|
|
$
|
27,551
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
27,551
|
|
Long-term investment – Shares
|
|
|
61,091
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,091
|
|
Total
|
|
$
|
88,642
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
88,642
|
|
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(Expressed in
U.S. Dollars)
|
10.
|
Fair Value of Financial Instruments (continued)
|
|
|
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
|
|
During the year ended March 31,
2020, the Company received advances from Waratah Capital Ltd. (“Waratah”), a controlling shareholder of the Company,
in the amount of $61,868. As at March 31, 2020, the Company was indebted to Waratah for $391,214 (2019 - $329,346). The advances
from shareholder are unsecured, non-interest bearing and have no fixed repayment terms.
|
12.
|
Convertible Debenture
|
On August 16, 2019, the Company
entered into security purchase agreements with two private investors, issuing two convertible promissory notes in an aggregate
principal amount of $150,000, with a $15,000 original issue discount and $10,000 in legal fees, paid in cash to the investors and
the legal counsel. Each note accrues interest at an annual rate of 5% and is to be repaid nine months after the dates of actual
funding received. The investors have rights to convert a portion, or all, of the principal amount plus interest of each note at
a lowest conversion price of i) $0.09 (fixed conversion price); or ii) 50% multiplied by the lowest closing bid price of the Common
Stock during the 25 consecutive trading day period immediately preceding the date of the respective conversion (alternative conversion
price) into common shares of the Company after 180 days and prior to May 16, 2020.
In addition, the Company issued
300,000 commitment shares to the two investors with a fair value of $60,000 and 1,111,110 warrants with a fair value of $220,541.
The two warrant holders are entitled to purchase up to 1,111,110 common shares of the Company at an exercise price of $0.135 with
a 5-year expiry date (Note 9 (b) & (c)).
Based on a discount factor of
66%, the debt portion of the promissory note was valued at $102,567 and the conversion feature portion of the notes was valued
at $202,208. The conversion feature was valued using the Black Scholes model with the following assumptions: risk free interest
rate of 1.61%, volatility of 100.01%, dividend rate of 0% and expected life of 9 months.
The net proceeds received by the
Company were allocated to the convertible debt and associated financial instruments based on their relative fair values as below:
|
|
Proceeds Allocation
|
|
Debt
|
|
$
|
23,656
|
|
Conversion feature
|
|
|
46,638
|
|
Warrants
|
|
|
50,867
|
|
Shares
|
|
|
13,839
|
|
Total proceeds
|
|
$
|
135,000
|
|
In March 2020, $22,300 principal
of convertible debenture were converted to 1,475,000 common shares of the Company at price range of $0.03 to $0.17 (Note 9 (b)).
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(Expressed in
U.S. Dollars)
|
12.
|
Convertible Debenture (continued)
|
For the year ended March 31,
2020, accretion for the notes was calculated as $117,577 (2019 - $Nil) and interest expense of $4,706 was recorded. As at March
31, 2020, the carrying value of the convertible notes is as below:
|
|
March 31, 2020
|
|
Convertible debenture – beginning of the year
|
|
$
|
-
|
|
Debt proceeds received
|
|
|
23,656
|
|
Debt converted to common shares
|
|
|
(20,753
|
)
|
Finance cost - accretion
|
|
|
117,577
|
|
Carrying value – end of the year
|
|
$
|
120,480
|
|
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.
|
14.
|
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, 2020 and 2019:
|
|
Year Ended March 31, 2020
|
|
|
Year Ended March 31, 2019
|
|
Compensation – Director
|
|
$
|
54,000
|
|
|
$
|
29,735
|
|
Compensation – Former directors
|
|
|
-
|
|
|
|
58,079
|
|
Compensation – Former Officer
|
|
|
26,841
|
|
|
|
28,812
|
|
Compensation – Former officer
|
|
|
-
|
|
|
|
12,262
|
|
During the year ended March 31,
2020, $Nil (2019 - $2,179) was paid for bookkeeping services to a company owned by a former officer of the Company. The Company
also recognized $9,060,196 (2019 - $8,749,076) in shareholder expenses related to the modification of warrants held by a controlling
shareholder.
Blox, Inc.
Notes to Consolidated
Financial Statements
Years ended
March 31, 2020 and 2019
(Expressed in
U.S. Dollars)
|
14.
|
Related Party Transactions (continued)
|
As at March 31, 2020, the Company
was indebted to its related parties for the amounts as below:
|
|
March 31, 2020
|
|
|
March 31, 2019
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
122,651
|
|
|
$
|
93,104
|
|
Due to shareholder (Note 11)
|
|
|
391,214
|
|
|
|
329,346
|
|
These amounts owing are unsecured,
non-interest bearing and have no fixed repayment terms.
|
15.
|
Geographical Area Information
|
|
|
Canada
|
|
|
Africa
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
30,575
|
|
|
$
|
2,143
|
|
|
$
|
32,718
|
|
Long term investments
|
|
|
61,091
|
|
|
|
-
|
|
|
|
61,091
|
|
Equipment
|
|
|
-
|
|
|
|
71,560
|
|
|
|
71,560
|
|
Total assets
|
|
$
|
91,666
|
|
|
$
|
73,703
|
|
|
$
|
165,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
718,234
|
|
|
$
|
92,545
|
|
|
$
|
810,779
|
|
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
|
|
From April 1 to June 29, 2020,
all the outstanding principal of the convertible debenture were converted to common shares of the Company, resulting in issuance
of 89,319,216 common shares.
On May 27, 2020, 1,500,000 options
were cancelled due to the optionee no longer being an officer of the Company.
On June 8, 2020, the Company entered
into security purchase agreements with a private investor, issuing one convertible promissory note in an aggregate principal amount
of $74,800, with a $6,800 original issue discount, $500 in due diligence fees and $2,500 in legal fees, paid in cash to the investors
and the legal counsel. Each note accrues interest at an annual rate of 8% and is to be repaid on June 8, 2021. The investors have
rights to convert a portion, or all, of the principal amount plus interest at variable conversion price to Common Stock of the
Company after 180 days and prior to June 8, 2021.