UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
☒
Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For
the quarterly period ended September 30,
2020
☐ Transition
Report pursuant to 13 or 15(d) of the Securities Exchange Act of
1934
For
the transition period _____________to______________
Commission
File Number: 000-53565
BLOX,
INC.
(Exact
name of registrant as specified in its charter)
|
Nevada |
|
20-8530914 |
|
(State
or other jurisdiction of |
|
(I.R.S.
Employer |
|
incorporation
of organization) |
|
Identification
No.) |
|
5th
Floor, 1177 Avenue of Americas, New York |
|
NY
10036 |
|
(Address
of principal executive offices) |
|
(ZIP
Code) |
Registrant’s
telephone number, including area code: (604)
314-9293
|
|
|
|
|
|
(Former
name, former address and former fiscal year, if changed since last
report |
|
Indicate
by check mark whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. ☒
Yes ☐ 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 ☐ No
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and "emerging growth company" in Rule
12b-2 of the Exchange Act. (Check
one):
| Large accelerated filer |
☐ |
Accelerated filer |
☐ |
| Non-accelerated filer |
☐ |
Small reporting company |
☒ |
| |
|
Emerging growth
company |
☐ |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
|
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered
|
| |
|
|
|
|
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
State
the number of shares outstanding of each of the issuer’s classes of
common equity, as of the latest practicable date: 264,541,664
shares of common stock as of November 20, 2020.
Transitional
Small Business Disclosure Format ☐ Yes ☒ No
BLOX,
INC.
Quarterly
Report on Form 10-Q
For
The Quarterly Period Ended
September
30, 2020
INDEX
PART
I
As
used in this quarterly report on Form 10-Q, the terms “we”, “us”
“our”, the “Company” or the “registrant” refer to Blox, Inc., a
Nevada corporation, and its wholly-owned subsidiaries.
Our
financial statements are stated in United States Dollars (US$)
unless otherwise stated and are prepared in accordance with United
States Generally Accepted Accounting Principles.
In
this quarterly report, unless otherwise specified, all references
to “common shares” refer to the common shares in our capital
stock.
Forward-Looking
Statements
This
quarterly report contains “forward-looking statements”. All
statements other than statements of historical fact are
“forward-looking statements” for purposes of federal and state
securities laws, including, but not limited to, any projections of
earnings, revenue or other financial items; any statements of the
plans, strategies and objections of management for future
operations; any statements concerning proposed new services or
developments; any statements regarding future economic conditions
or performance; any statements or belief; and any statements of
assumptions underlying any of the foregoing.
Forward-looking
statements may include the words “may,” “could,” “estimate,”
“intend,” “continue,” “believe,” “expect” or “anticipate” or other
similar words. These forward-looking statements present our
estimates and assumptions only as of the date of this report.
Accordingly, readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the dates on
which they are made. Except as required by applicable law,
including the securities laws of the United States, we do not
intend, and undertake no obligation, to update any forward-looking
statement.
Although
we believe the expectations reflected in any of our forward-looking
statements are reasonable, actual results could differ materially
from those projected or assumed in any of our forward-looking
statements. Our future financial condition and results of
operations, as well as any forward-looking statements, are subject
to change and inherent risks and uncertainties. The factors
impacting these risks and uncertainties include, but are not
limited to:
|
● |
our
current lack of working capital; |
|
● |
our
ability to obtain any necessary financing on acceptable
terms; |
|
● |
timing
and amount of funds needed for capital expenditures; |
|
● |
timely
receipt of regulatory approvals; |
|
● |
our
management team’s ability to implement our business
plan; |
|
● |
effects
of government regulation; |
|
● |
general
economic and financial market conditions; |
|
● |
our
ability to secure exploration permits for our prospective
properties in Ghana; |
|
● |
our
ability to develop our green mining business in Africa;
and |
|
● |
the
fact that our accounting policies and methods are fundamental to
how we report our financial condition and results of operations,
and they may require our management to make estimates about matters
that are inherently uncertain. |
PART I - FINANCIAL
INFORMATION
Item
1. Financial
Statements
The
following unaudited interim consolidated financial statements of
Blox, Inc. are included in this quarterly report on Form
10-Q.
Blox,
Inc.
Condensed
Interim Consolidated Balance Sheets
(Unaudited
– Expressed in U.S. Dollars)
| |
|
As
At |
|
|
As
At |
|
| |
|
September 30,
2020 |
|
|
March
31,
2020 |
|
| |
|
|
|
|
(Audited) |
|
| |
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
|
| Current
Assets |
|
|
|
|
|
|
|
Cash
and cash equivalent |
|
$ |
18,036 |
|
|
$ |
27,551 |
|
| Prepaid
expenses |
|
|
11,167 |
|
|
|
5,167 |
|
| Total
Current Assets |
|
|
29,203 |
|
|
|
32,718 |
|
| |
|
|
|
|
|
|
|
|
| Long
term investments (Note 4) |
|
|
146,192 |
|
|
|
61,091 |
|
| Equipment
(Note 5) |
|
|
71,560 |
|
|
|
71,560 |
|
|
Total Assets
|
|
$ |
246,955 |
|
|
$ |
165,369 |
|
| |
|
|
|
|
|
|
|
|
| LIABILITIES |
|
|
|
|
|
|
|
|
| Current
Liabilities |
|
|
|
|
|
|
|
|
| Accounts
payable and accrued liabilities (Note 12) |
|
$ |
295,771 |
|
|
$ |
294,379 |
|
| Due
to shareholder (Note 9) |
|
|
391,214 |
|
|
|
391,214 |
|
| Loan
payable |
|
|
428 |
|
|
|
- |
|
| Convertible
debenture (Note 10) |
|
|
61,130 |
|
|
|
120,480 |
|
| Loan
interest payable (Note 10) |
|
|
5,129 |
|
|
|
4,706 |
|
| Total
Liabilities |
|
|
753,672 |
|
|
|
810,779 |
|
| |
|
|
|
|
|
|
|
|
| STOCKHOLDERS’
DEFICIENCY |
|
|
|
|
|
|
|
|
|
Common
Stock (Note 7) - 400,000,000 authorized - 264,541,664 issued
(March 31, 2020 – 144,647,664) |
|
|
2,527 |
|
|
|
1,328 |
|
| Additional
Paid-in Capital |
|
|
7,636,122 |
|
|
|
7,382,603 |
|
| Contributed
Surplus |
|
|
27,213,786 |
|
|
|
27,279,356 |
|
| Deficit |
|
|
(35,359,152 |
) |
|
|
(35,308,697 |
) |
| Total
Stockholders’ Deficiency |
|
|
(506,717 |
) |
|
|
(645,410 |
) |
| Total
Liabilities and Stockholders’ Deficiency |
|
$ |
246,955 |
|
|
$ |
165,369 |
|
See
accompanying notes to the condensed interim consolidated financial
statements.
Blox,
Inc.
Condensed
Interim Consolidated Statements of Comprehensive Loss
(Unaudited
- Expressed in U.S. Dollars)
| |
|
Three Months Ended |
|
|
Six Months Ended |
|
| |
|
September 30,
2020 |
|
|
September 30,
2019 |
|
|
September 30,
2020 |
|
|
September 30,
2019 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Consulting and
professional fees (Note 12) |
|
$ |
21,033 |
|
|
$ |
42,997 |
|
|
$ |
43,824 |
|
|
$ |
77,502 |
|
| Default penalties (Note 7) |
|
|
- |
|
|
|
- |
|
|
|
35,000 |
|
|
|
- |
|
| Exploration (Note 6) |
|
|
- |
|
|
|
10,408 |
|
|
|
- |
|
|
|
35,513 |
|
| Foreign exchange |
|
|
4,140 |
|
|
|
964 |
|
|
|
9,218 |
|
|
|
2,741 |
|
| Office and administration fees |
|
|
12,165 |
|
|
|
15,772 |
|
|
|
19,933 |
|
|
|
21,520 |
|
| Travel |
|
|
- |
|
|
|
(263 |
) |
|
|
- |
|
|
|
- |
|
| Total Operating
Expenses |
|
|
(37,338 |
) |
|
|
(69,878 |
) |
|
|
(107,975 |
) |
|
|
(137,276 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expenses (Note 10) |
|
|
(1,507 |
) |
|
|
(626 |
) |
|
|
(2,390 |
) |
|
|
(626 |
) |
| Loss on investment in warrants |
|
|
- |
|
|
|
(65,507 |
) |
|
|
- |
|
|
|
(20,854 |
) |
| Accretion (Note 10) |
|
|
(9,130 |
) |
|
|
(16,788 |
) |
|
|
(18,391 |
) |
|
|
(16,788 |
) |
| Debt issuance cost – cash (Note
10) |
|
|
- |
|
|
|
(10,000 |
) |
|
|
(6,800 |
) |
|
|
(10,000 |
) |
|
Unrealized gain (loss) on investment in common shares (Note 4) |
|
|
34,899 |
|
|
|
(100,113 |
) |
|
|
85,101 |
|
|
|
(31,837 |
) |
|
Net Income (Loss) and Comprehensive Income (Loss) for the
Period |
|
$ |
(13,076 |
) |
|
$ |
(262,912 |
) |
|
$ |
(50,455 |
) |
|
$ |
(217,381 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss)
Per Common Share |
|
$ |
0.00 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
Weighted Average Number of Shares Outstanding – Basic and
diluted |
|
|
264,541,664 |
|
|
|
143,001,468 |
|
|
|
235,943,970 |
|
|
|
142,912,555 |
|
See
accompanying notes to the condensed interim consolidated financial
statements.
Blox,
Inc.
Consolidated
Statements of Changes in Stockholders’ Equity
(Deficiency)
Six
Months ended September 30, 2020 and 2019
(Expressed
in U.S. Dollars)
|
|
|
Common Stock |
|
|
Additional
Paid-in |
|
|
Contributed |
|
|
|
|
|
Total
Stockholders’ Equity |
|
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Surplus |
|
|
Deficit |
|
|
(Deficiency) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| April 1,
2019 |
|
|
142,822,664 |
|
|
$ |
1,309 |
|
|
$ |
7,337,352 |
|
|
$ |
15,658,030 |
|
|
$ |
(22,414,509 |
) |
|
$ |
582,182 |
|
|
Net income for the period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
45,531 |
|
|
|
45,531 |
|
|
June 30, 2019 |
|
|
142,822,664 |
|
|
|
1,309 |
|
|
|
7,337,352 |
|
|
|
15,658,030 |
|
|
|
(22,368,978 |
) |
|
|
627,713 |
|
| Commitment
shares issued |
|
|
300,000 |
|
|
|
1 |
|
|
|
13,838 |
|
|
|
- |
|
|
|
- |
|
|
|
13,839 |
|
|
Warrants exercised |
|
|
50,000 |
|
|
|
1 |
|
|
|
3,744 |
|
|
|
(1,245 |
) |
|
|
- |
|
|
|
2,500 |
|
|
Warrants issued |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
50,867 |
|
|
|
- |
|
|
|
50,867 |
|
|
Convertible debenture - equity portion |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
46,638 |
|
|
|
- |
|
|
|
46,638 |
|
|
Net loss for the period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(262,912 |
) |
|
|
(262,912 |
) |
|
September 30, 2019 |
|
|
143,172,664 |
|
|
$ |
1,311 |
|
|
$ |
7,354,934 |
|
|
$ |
15,754,290 |
|
|
$ |
(22,631,890 |
) |
|
$ |
478,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| April 1,
2020 |
|
|
144,647,664 |
|
|
$ |
1,328 |
|
|
$ |
7,382,603 |
|
|
$ |
27,279,356 |
|
|
$ |
(35,308,697 |
) |
|
$ |
(645,410 |
) |
|
Warrants exercised (Note 7) |
|
|
32,894,589 |
|
|
|
329 |
|
|
|
50,537 |
|
|
|
(50,866 |
) |
|
|
- |
|
|
|
- |
|
|
Convertible debenture – equity portion (Note 10) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
25,000 |
|
|
|
- |
|
|
|
25,000 |
|
|
Convertible debenture -converted to shares (Note 10) |
|
|
66,999,411 |
|
|
|
670 |
|
|
|
168,182 |
|
|
|
(39,704 |
) |
|
|
- |
|
|
|
129,148 |
|
|
Convertible debenture – default penalty shares (Note 7) |
|
|
20,000,000 |
|
|
|
200 |
|
|
|
34,800 |
|
|
|
- |
|
|
|
- |
|
|
|
35,000 |
|
|
Net loss for the period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(37,379 |
) |
|
|
(37,379 |
) |
| June 30,
2020 |
|
|
264,541,664 |
|
|
|
2,527 |
|
|
|
7,636,122 |
|
|
|
27,213,786 |
|
|
|
(35,346,076 |
) |
|
|
(493,641 |
) |
|
Net income for the period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13,076 |
) |
|
|
(13,076 |
) |
|
September 30, 2020 |
|
|
264,541,664 |
|
|
$ |
2,527 |
|
|
$ |
7,636,122 |
|
|
$ |
27,213,786 |
|
|
$ |
(35,359,152 |
) |
|
$ |
(506,717 |
) |
See accompanying
notes to the condensed interim consolidated financial
statements.
Blox,
Inc.
Condensed
Interim Consolidated Statements of Cash Flows
(Unaudited
– Expressed in U.S. Dollars)
| |
|
Six
Months Ended |
|
| |
|
September 30,
2020 |
|
|
September
30,
2019 |
|
| CASH PROVIDED BY
(USED IN): |
|
|
|
|
|
|
| OPERATING
ACTIVITIES |
|
|
|
|
|
|
| Net loss for the
period |
|
$ |
(50,455 |
) |
|
$ |
(217,381 |
) |
| Non-cash items: |
|
|
|
|
|
|
|
|
| Loss on
investment in warrants |
|
|
- |
|
|
|
20,854 |
|
| Unrealized
(gain) loss on investment in common shares |
|
|
(85,101 |
) |
|
|
31,837 |
|
| Default
penalties |
|
|
35,000 |
|
|
|
- |
|
| Accretion |
|
|
18,391 |
|
|
|
16,788 |
|
| Interest
accrued on convertible debenture |
|
|
2,390 |
|
|
|
626 |
|
| Convertible
debenture transaction costs |
|
|
6,800 |
|
|
|
- |
|
| Changes in non-cash working
capital: |
|
|
|
|
|
|
|
|
| Prepaid
expenses |
|
|
(6,000 |
) |
|
|
(6,000 |
) |
| Accounts
payable and accrued liabilities |
|
|
1,460 |
|
|
|
16,343 |
|
|
Due to shareholder |
|
|
- |
|
|
|
60,593 |
|
| |
|
|
(77,515 |
) |
|
|
(76,340 |
) |
| |
|
|
|
|
|
|
|
|
| FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
| Proceeds from convertible
debenture |
|
|
74,800 |
|
|
|
150,000 |
|
| Convertible debenture transaction
costs |
|
|
(6,800 |
) |
|
|
(15,000 |
) |
| Warrants
exercised |
|
|
- |
|
|
|
2,500 |
|
| |
|
|
68,000 |
|
|
|
137,500 |
|
| |
|
|
|
|
|
|
|
|
| (Decrease) Increase
in Cash |
|
|
(9,515 |
) |
|
|
61,160 |
|
|
Cash, Beginning of Period |
|
|
27,551 |
|
|
|
9,792 |
|
| Cash,
End of Period |
|
$ |
18,036 |
|
|
$ |
70,952 |
|
| |
|
|
|
|
|
|
|
|
| Supplemental
disclosure of cash flow information |
|
|
|
|
|
|
|
|
| Cash paid for interest |
|
$ |
- |
|
|
$ |
- |
|
| Cash paid for taxes |
|
$ |
- |
|
|
$ |
- |
|
| Issuance of
common stock for loan interest payable |
|
$ |
1,607 |
|
|
$ |
- |
|
See
accompanying notes to the condensed interim consolidated financial
statements.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Six Months Ended September 30, 2020 and 2019
(Unaudited – 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 developing mineral exploration
projects in Guinea, West Africa.
|
(a) |
Statement
of Compliance |
These
condensed interim consolidated 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
condensed interim consolidated financial statements of the Company
comprise the Company and its subsidiaries, Blox Energy Inc. and
Blox Minerals Guinea. These condensed interim consolidated
financial statements are prepared on the historical cost basis.
These condensed interim 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 the fair statement of results have been included in these
condensed interim consolidated financial statements. All
intercompany balances and transactions have been eliminated upon
consolidation. The interim results are not necessarily indicative
of results for the full year ending March 31, 2021, or future
operating periods. For further information, see the Company’s
annual consolidated financial statements for the year ended March
31, 2020, including the accounting policies and notes
thereto.
|
(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 parent company is the Canadian dollar (“CAD”) and
the functional currency of the subsidiaries is the US dollar. 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.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Six Months Ended September 30, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
2. |
Basis
of Presentation (continued) |
|
(d) |
Significant
Accounting Judgments and Estimates |
The
preparation of these condensed interim 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.
In
applying the Company’s accounting policies, management has made
certain judgments that may have a significant effect on the
condensed interim consolidated financial statements. Such judgments
include the determination of the functional currencies and use of
the going concern assumption.
Significant
areas requiring the use of management estimates include assumptions
and estimates relating to asset impairment analysis, share-based
payments and warrants, and valuation allowances for deferred income
tax assets.
|
(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
condensed interim consolidated financial statements have been
prepared on a going concern basis, which assumes 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
$50,455 for the six months ended September 30, 2020 and has
incurred cumulative losses since inception of $35,359,152 as at
September 30, 2020.
These
factors raise substantial doubt about the ability of the Company to
continue as 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 condensed interim 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. |
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 condensed interim consolidated 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.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Six Months Ended September 30, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
| |
|
|
|
|
Fair
Value as at |
|
| |
|
|
|
|
September 30, |
|
|
March 31, |
|
|
|
|
Number |
|
|
2020 |
|
|
2020 |
|
| Common shares |
|
|
3,333,333 |
|
|
$ |
112,455 |
|
|
$ |
46,993 |
|
| |
|
|
1,000,000 |
|
|
|
33,737 |
|
|
|
14,098 |
|
| Total
investment: |
|
|
|
|
|
$ |
146,192 |
|
|
$ |
61,091 |
|
On
March 28, 2018, the Company participated in a private placement
offering by its strategic partner, Ashanti Sankofa Inc (TSX.V- ASI)
(“Ashanti” or “ASI”), which shares the same management group and
board of directors as the Company (Note 12). 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 Ashanti. 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
September 30, 2020, the fair value of common shares was $146,192
which resulted in an unrealized gain of $85,101 (2019 – unrealized
loss of $31,837) that was recorded in profit or loss. The share
purchase warrants of ASI expired during the year ended March 31,
2020.
In
January 2016, the Financial Accounting Standards Board (FASB)
issued Accounting Standards Update (ASU) 2016-01, “Financial
Instruments – Overall: Recognition and Measurement of Financial
Assets and Financial Liabilities.” ASU 2016-01 requires equity
investments (except those accounted for under the equity method of
accounting, or those that result in consolidation of the investee)
to be measured at fair value with changes in fair value recognized
in net income, requires public business entities to use the exit
price notion when measuring the fair value of financial instruments
for disclosure purposes, requires separate presentation of
financial assets and financial liabilities by measurement category
and form of financial asset, and eliminates the requirement for
public business entities to disclose the method(s) and significant
assumptions used to estimate the fair value that is required to be
disclosed for financial instruments measured at amortized cost.
These changes became effective for the fiscal year beginning April
1, 2018. The most significant change for the Company, once ASU
2016-01 was adopted, was the accounting treatment for long term
investments that were classified as available-for-sale. The
accounting treatment used for the Consolidated Financial Statements
through fiscal 2018 was that the long term investments, classified
as available-for-sale, were carried at fair value, with net
unrealized holding gains and losses being excluded from earnings
and reported as a separate component of Stockholders’ Deficiency
until realized and the change in net unrealized holding gains and
losses being reflected as comprehensive income (loss). Under ASU
2016-01, effective April 1, 2018, these long term investments
continue to be measured at fair value, however, the changes in net
unrealized holding gains and losses are now recognized through net
income.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Six Months Ended September 30, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
| |
|
Machinery |
|
|
Total |
|
| Cost |
|
|
|
|
|
|
| Balance at September 30
& March 31, 2020 |
|
$ |
232,620 |
|
|
$ |
232,620 |
|
| Accumulated
Depreciation |
|
|
|
|
|
|
|
|
| Balance at
September 30 & March 31, 2020 |
|
$ |
161,060 |
|
|
$ |
161,060 |
|
| Carrying
amounts |
|
|
|
|
|
|
|
|
| As at
September 30 & March 31, 2020 |
|
$ |
71,560 |
|
|
$ |
71,560 |
|
Machinery
in the amount of $71,560 has not been placed into production and is
not currently being depreciated.
|
6. |
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 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.
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 required for obtaining this
permit.
In
consideration for the acquisition of the interest in the Property,
the Company paid in cash $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.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Six Months Ended September 30, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
6. |
Mineral
Property Interest (continued) |
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
the 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 March 31, 2020,
management decided 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 |
|
|
Write-off mineral property interest |
|
|
(931,722 |
) |
| Balance,
March 31 & September 30, 2020 |
|
$ |
- |
|
During
the six months ended September 30, 2020, the Company spent $Nil
(2019 – $35,513) on the property.
Year
ended March 31, 2020
There
were no shares issued from private placement for the year ended
March 31, 2020.
Six
months ended September 30, 2020
There
were no shares issued from private placement for the six months
ended September 30, 2020.
|
(b) |
Convertible
debenture shares issuance |
Year
ended March 31, 2020
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 10).
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 10).
Six
Months ended September 30, 2020
From
April 1 to June 30, 2020, $127,273 principal of convertible
debenture was converted to 66,999,411 common shares of the Company
at a price range of $0.01 to $0.02 (Note 10).
On
May 28, 2020, the Company received a notice from one convertible
debenture holder that $17,500 of default penalty will be converted
into 10,000,000 shares. On June 1, 2020, the 10,000,000 common
shares were issued to settle the default penalty of $17,500. The
penalty incurred is due to the loss of Mansounia
property.
On
June 8, 2020, the Company received a notice from one convertible
debenture holder that $17,500 of default penalty will be converted
into 10,000,000 shares. On June 8, 2020, the 10,000,000 common
shares were issued to settle the default penalty of
$17,500.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Six Months Ended September 30, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
7. |
Common
Stock (continued) |
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
10). 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 $0.135 per share. The fair value of these
warrants was determined with the Black-Scholes option pricing model
using the following assumptions: risk free interest rate of 1.57%,
volatility of 231.6%, annual rate of dividend of 0%, and expected
life of 5 years.
On
February 27, 2020, the Company extended the term of 88,000,000
share purchase warrants from February 27, 2020 to February 27,
2021, no other terms were changed.
Six
months ended September 30, 2020
On
May 7, 2020, the Company entered into an Amendment #1 with one
convertible debenture holder that the 555,555 warrant shares issued
on August 16, 2019 are subject to anti-dilution protection. The
Company agreed that the number of warrant shares should be equal to
10,000,000. On May 13, 2020, the convertible debt holder exercised
10,000,000 warrants to common shares via cashless
exercise.
On
May 28 and June 8, 2020, the Company received an Exercise Notice
from another convertible debenture holder that 10,844,805 and
12,049,784 warrant shares were exercised to common shares via
cashless exercise.
The
1,111,110 warrants were cancelled on June 8, 2020 due to the
warrant shares that were issued.
The
following table summarizes historical information about the
Company’s warrants:
| |
|
Number
of
Warrants
|
|
|
Weighted Average Exercise Price ($) |
|
|
Weighted Average Life Remaining (Years) |
|
| |
|
|
|
|
|
|
|
|
|
| Balance, March 31, 2020 |
|
|
118,604,860 |
|
|
|
0.05 |
|
|
|
1.41 |
|
| Warrants issued |
|
|
32,894,589 |
|
|
|
0.001 |
|
|
|
- |
|
| Warrants exercised |
|
|
(32,894,589 |
) |
|
|
0.001 |
|
|
|
- |
|
| Warrants
cancelled |
|
|
(1,111,110 |
) |
|
|
|
|
|
|
|
|
| Balance,
September 30, 2020 |
|
|
117,493,750 |
|
|
|
0.05 |
|
|
|
0.96 |
|
As at
September 30, 2020, the following warrants were outstanding and
exercisable:
|
Number
of Warrants
|
|
|
Exercise Price |
|
|
Expiry Date |
| |
|
|
|
|
|
|
| |
87,543,750 |
|
|
$ |
0.05 |
|
|
February 27, 2021 |
|
|
29,950,000 |
|
|
$ |
0.05 |
|
|
April 24,
2023 |
|
|
117,493,750 |
|
|
|
|
|
|
|
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Six Months Ended September 30, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
7. |
Common
Stock (continued) |
Year
ended March 31, 2020
650,000
options expired on August 7, 2019.
Six
months ended September 30, 2020
1,500,000
options were cancelled on May 27, 2020 due to the optionee no
longer being an officer of the Company. There were no stock options
granted for the six months ended September 30, 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, 2020 |
|
|
1,500,000 |
|
|
|
0.27 |
|
|
|
2.90 |
|
| Cancelled |
|
|
(1,500,000 |
) |
|
|
0.27 |
|
|
|
|
|
| Balance,
September 30, 2020 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
At
September 30, 2020, there were no stock options
outstanding.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Six Months Ended September 30, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
8. |
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 and 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
to 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
September 30,
2020 |
|
| Cash and cash
equivalent |
|
$ |
18,036 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
18,036 |
|
| Long-term investment –
Shares |
|
|
146,192 |
|
|
|
- |
|
|
|
- |
|
|
|
146,192 |
|
| Total |
|
$ |
164,228 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
164,228 |
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total
March 31,
2020 |
|
| Cash and cash
equivalent |
|
$ |
27,551 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
27,551 |
|
| Long-term investment –
Shares |
|
|
61,091 |
|
|
|
- |
|
|
|
- |
|
|
|
61,091 |
|
| Total |
|
$ |
88,642 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
88,642 |
|
The following table sets forth the Company’s financial liabilities
measured at fair value by level within the fair value
hierarchy:
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total
September 30,
2020 |
|
|
Accounts payable |
|
$ |
295,771 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
295,771 |
|
| Due to
shareholder |
|
$ |
391,214 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
391,214 |
|
| Loan
payable |
|
$ |
428 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
428 |
|
| Convertible
debt |
|
$ |
61,130 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
61,130 |
|
| Total |
|
$ |
748,543 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
748,543 |
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total
March 31,
2020 |
|
| Accounts payable |
|
$ |
294,379 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
294,379 |
|
Due to
shareholder
|
|
$ |
391,214 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
391,214 |
|
Loan
payable
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Convertible
debt |
|
$ |
120,480 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
120,480 |
|
| Total |
|
$ |
806,073 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
806,073 |
|
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Six Months Ended September 30, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
During the period ended September 30, 2020, the Company received
advances from Waratah Capital Ltd. (“Waratah”), a controlling
shareholder of the Company, in the amount of $Nil (year ended March
31, 2020 - $61,868). As at September 30, 2020, the Company was
indebted to Waratah for $391,214 (March 31, 2020 - $391,214). The
advances from shareholder are unsecured, non-interest bearing and
have no fixed repayment terms.
|
10. |
Convertible Debenture |
Year ended March 31, 2020
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 7 (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 |
|
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Six Months Ended September 30, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
10. |
Convertible Debenture
(continued) |
For the year ended March 31, 2020, $22,300 of debt principal was
converted to 1,475,000 common shares of the Company at price range
of $0.03 to $0.17 (Note 7 (b)).
Six months ended September 30, 2020
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 (Note 14(c)).
For the period ended September 30, 2020, $127,541 debt principal
was converted to 66,999,411 common shares of the Company at price
range of $0.01 to $0.02 (Note 7 (b)). Accretion for the note was
calculated as $18,391 (2019 - $16,788) and interest expense of
$2,390 (2019 - $626) was recorded. As of September 30, 2020,
$149,572 debt principal were converted to commons shares.
| |
|
September 30,
2020 |
|
|
March
31,
2020 |
|
| Convertible debenture –
beginning of the period |
|
$ |
120,480 |
|
|
$ |
- |
|
| Debt proceeds received |
|
|
74,800 |
|
|
|
23,656 |
|
| Debt converted to common shares |
|
|
(127,541 |
) |
|
|
(20,753 |
) |
| Equity portion of convertible
debenture |
|
|
(25,000 |
) |
|
|
- |
|
| Finance cost -
accretion |
|
|
18,391 |
|
|
|
117,577 |
|
| Carrying value
– end of the period |
|
$ |
61,130 |
|
|
$ |
120,480 |
|
The total principal value of the convertible debenture as at
September 30, 2020 is $74,800 (March 31, 2020 - $150,000) As at
September 30, 2020 $5,129 (March 31, 2020 - $4,706) of interest is
accrued in relation to the convertible debenture.
On June 22, 2013, the Company entered into a share purchase
agreement with Waratah Capital Ltd. (“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 Condensed Interim Consolidated Financial Statements
Six Months Ended September 30, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
12. |
Related Party
Transactions |
The Company’s related parties include its 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 six months ended September 30, 2020 and 2019:
| |
|
Six Months Ended
September 30, |
|
| |
|
2020 |
|
|
2019 |
|
| Compensation – CEO |
|
$ |
25,740 |
|
|
$ |
27,000 |
|
| Compensation
– Former Officer |
|
|
- |
|
|
|
14,841 |
|
| |
|
$ |
25,740 |
|
|
$ |
41,841 |
|
As at September 30, 2020, the Company was indebted to its related
parties for the amounts as below:
| |
|
September 30,
2020 |
|
|
March 31,
2020 |
|
| |
|
|
|
|
|
|
| Accounts payable and
accrued liabilities |
|
$ |
141,117 |
|
|
$ |
122,651 |
|
| Due to shareholder (Note 9) |
|
|
391,214 |
|
|
|
391,214 |
|
| Investment
in related party (Note 4) |
|
|
146,192 |
|
|
|
61,091 |
|
These amounts owing are unsecured, non-interest bearing and have no
fixed repayment terms.
|
13. |
Geographical Area Information |
| |
|
Canada |
|
|
Africa |
|
|
Total |
|
| |
|
|
|
|
|
|
|
|
|
| September 30, 2020: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Current
assets |
|
$ |
26,841 |
|
|
$ |
2,362 |
|
|
$ |
29,203 |
|
| Long term
investments |
|
|
162,435 |
|
|
|
- |
|
|
|
162,435 |
|
| Equipment |
|
|
- |
|
|
|
71,560 |
|
|
|
71,560 |
|
| Total
assets |
|
$ |
189,276 |
|
|
$ |
73,922 |
|
|
$ |
263,198 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total
liabilities |
|
$ |
654,875 |
|
|
$ |
98,797 |
|
|
$ |
753,672 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| 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 |
|
$ |
718,237 |
|
|
$ |
92,545 |
|
|
$ |
810,779 |
|
|
(a) |
On October 8, 2020, the Company’s
common shares was removed from OTCQB and demoted to the OTC Pink
reporting tier due to OTCQB bid price deficiency. |
|
(b) |
On October 8, 2020, the Company
received $92,040 in cash from a significant shareholder by issuing
a one-year convertible promissory note with interest at 8% per
annum. |
|
(c) |
On October 9, 2020, the Company
terminated the convertible promissory issued on June 8, 2020 by
paying the convertible promissory holder an aggregate amount of
$92,042, including principal amount of $74,800, accrued interest
$1,902 and prepayment penalty of $15,340. |
|
Item 2. |
Management’s Discussion and
Analysis of Financial Condition and Results of Operations |
The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in
this quarterly report. The following discussion contains
forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those
discussed in the forward-looking statements. Factors that could
cause or contribute to such differences include those discussed
below and elsewhere in this quarterly report on Form 10-Q.
Overview
We were incorporated in the State of Nevada on July 21, 2005, under
the name “Nava Resources, Inc.” for the purpose of conducting
mineral exploration activities. We were authorized to issue
400,000,000 shares of common stock, having a par value of $0.001
per share. On January 4, 2007, we obtained written consent from our
shareholders to amend our Articles of Incorporation to change the
par value of our common stock from $0.001 to $0.00001 per share,
which change was effected on February 28, 2007. Effective July 30,
2013, we changed our name from “Nava Resources, Inc.” to “Blox,
Inc.”.
On July 9, 2020, the Company received notice from OTC Markets Group
that the closing bid price of our common shares has closed below
$0.01 for more than 30 consecutive calendar days and no longer
meets the Standards for Continued Eligibility for the OTCQB
quotation tier as per the OTCQB Standards Section 2.3(2), which
states that the Company must “maintain proprietary priced
quotations published by a Market Maker in OTC Link with a minimum
closing bid price of $0.01 per share on at least one of the prior
thirty consecutive calendar days.”
As per Section 4.1 of the OTCQB Standards, the company will be
granted a cure period of 90 calendar days during which the minimum
closing bid price for the Company’s common stock must be $0.01 or
greater for ten consecutive trading days in order to continue
trading on the OTCQB marketplace. If the requirement is not met by
October 7, 2020, the Company will be removed from the OTCQB
marketplace and demoted to the OTC Pink reporting tier. In
addition, if the Company’s closing bid price falls below $0.001 at
any time for five consecutive trading days, the Company will be
immediately removed from the OTCQB and demoted to the OTC Pink
reporting tier. On October 8, 2020, the Company’s common shares
started trading at OTC Pink sheet.
Recent Developments
Recently Discontinued Projects
Mansounia Property, Guinea, West Africa
Our former Mansounia exploration permit was acquired in 2013 and
was secured based on our technical and financial capabilities to
obtain a mining permit. The 2013 exploration permit was near
expiration when acquired and was subsequently renewed for the
maximum of four times permitted by the Guinea Mining Code. In
December 2019, the Company submitted its final mining permit
proposal to the Ministry of Mines. The ministry requested, in its
discretion, that we provide evidence of funding to account for 15%
of the capital required for project financing. The Company was
unable to secure the required financing during prior to expiration
of the final permit extension, and the permit was withdrawn by
decree from the Ministry of Mines. Although it is our understanding
the Ministry of Mines exercises considerable discretion regarding
the extension and revocation of permits and the grant of mining
licenses, the decree to revoke our exploration permit suggests that
our application is no longer under consideration. With respect to
the fate of the project, we anticipate that we will attempt to
renegotiate a position for the Mansounia project once Guinea
reopens its border to international travel (the country has been
inaccessible due to COVID-19).
Current Business:
Pramkese, Osenase and Asamankese, Ghana, West
Africa
On June 22, 2013, we entered into a share purchase agreement with
Waratah Investments Limited (“Waratah”) whereby we 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, we
agreed to 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, owns and
operates gold and diamond mining properties in Ghana.
The closing of the agreement was subject to the completion of a
private placement financing of up to US$1,500,000, which private
placement was completed in April 2018. We issued 30,000,000 units
(the “Units”) at a price of US$0.05 per unit for aggregate gross
proceeds of US$1,500,000. US$1,100,000 of the proceeds were
advanced as non-interest bearing loans since 2014 and were utilized
to cover general and administrative expenses, as well as to carry
out exploration work on our mineral properties. The remaining
balance of US$400,000 was received by April 2018. Each Unit
consists of one common share and one share purchase warrant
entitling the holder thereof to purchase one additional common
share at a price of $0.05 per share for a term of five years from
the date of issuance.
Closing the Agreement is also conditional upon receiving legal
opinions of Ghana counsel confirming various matters relating to
the laws of Ghana, including corporate and title opinions; the
Company receiving legal opinions of Australian counsel confirming
various matters relating to the laws of Australia, including
corporate and title opinions; completion of certain ongoing
transactions by Quivira relating to the transfer of title to
certain assets and to an assignment of debt; and preparation of
U.S. GAAP consolidated financial statements for Quivira.
Our directors conducted their first visit to Ghana in August 2015,
when they visited the Birim Region where the three Ghanaian
concessions are located. The objective was to carry out a
geological reconnaissance over the areas to identify potentially
favourable lithologies. The directors inspected the existing
field programs in Ghana and oversaw the planning and implementation
of programs for the near future. Field work on the three
concessions has since ceased and associated exploration permits
have expired. Neither the Company nor Quivira holds any right title
or claim to the concessions, but the Company endeavors to renew
permits subject to securing sufficient financing. There is no
guarantee that sufficient financing will be raise in a timely
manner, if at all.
We intend to renew permits for three concessions in Ghana for their
gold and diamond potential, and to explore the market for other
viable assets. All three licences have expired and require an
estimated $100,000 to renew. We are currently in discussions with
with prospective equity investors to finance the renewal costs,
however no agreement has been secured. Nevertheless, in order to
secure necessary financing, we will be required to increase our
authorized capital. The Asamankese, Osenase and Pramkese
concessions are located near Asamankese, Akim Oda and Kade towns
respectively. The concession is dominated by broad pene plain,
dotted with moderate to high hills and remnant of rain forest. The
area is hilly and rugged, running from 180m to 300m in elevation.
Around the licences is the Atewa range about 1050m above sea level.
There are little published records of extensive widely scattered
gold mineralization old pits, shafts and adits, as well as
artisanal gold workings in the concessions. In the mid-sixties, the
Geological Survey Department of Ghana undertook reconnaissance
mapping and soil geochemical survey in the area during which traces
of gold were recorded in panned concentrates of geochemical
samples.
Osenase is in the Birim Central Municipal District. The nearest
town to the project area is the District Capital Akim Oda. This
project has seen limited amount of gold exploration. The concession
was previously held by Cornucopia Resources in the 1990s and was
engaged in potential for a diamond resource. Paramount Mining
Corporation held the concession for almost 6 years with limited
amount of work. The limited work done was focused on diamondiferous
hard rock potential at Atiankama Nkwanta. The presence of diamonds
in what appears to be an in-situ unit exposed by the Francis Pits
at Atiakama Nkwanta provides an opportunity to explain the source
of some of the diamonds in the region. S Two oriented grids were
sampled in 2007 but were never analysed for gold. The samples have
been stored at the Manso camp to be analysed later. No subsequent
work has been carried out to establish gold or diamond potential,
and there is no guarantee that ore is present in economically
significant quantity.
Asamankese is a 150Km2 Prospecting License (PL) in the West Akim
District. The nearest town to the project area is the District
Capital Asamankese. Asamankese was originally part of Osenase under
a reconnaissance licence. In 2006, about 4 soil-oriented grids on
800m x 50m was established and sampled. The samples were stored at
the Manso camp to be analysed later. The samples are still in
storage at the Manso camp. A total of 436 samples representing two
of the gridlines L1600N and L2400N at 800m apart were later on
analysed for gold. The samples were sent to SGS Tarkwa for 2kg BLEG
analysis. Results received were not encouraging for gold, with only
one modest spike of 170 ppb Au, associated with alluvials. A
limited stream sediment program began in November 2008 but could
not be completed due to financial constraints. About 108 stream
sediment samples were collected and panned for visible gold out of
a total 183 planned. No laboratory analysis was carried out. About
80 sample points are still yet to be sampled.
Pramkese is a 66 square kilometres Prospecting License (PL) in the
Kwaebibirim District located in the Birim Diamond Field. The
nearest town to the project area is the District Capital Kade.
Limited reconnaissance work was carried out in 2009 and the licence
was converted to a Prospecting Licence. The exercise concentrated
on the south of the town of Pramkese. Ten (10) alluvial pits were
dug and sampled. The samples collected were panned and hand jigged
for gold and diamond respectively. In the early 90’s, a fair amount
of work was done on the concession for both alluvial gold and
diamond by Basogard. Basogard defined some alluvial gold and
diamond resources which were never investigated.
The company is now in discussions with various potential partners
to explore and define the potential of these concessions, however
no definitive agreements have been reached. There is no
guarantee that any agreements will be reached or that permits will
be secured.
Going Concern
Our financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to
a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. We
have not yet established an ongoing source of revenues sufficient
to cover our operating costs and to allow us to continue as a going
concern. We have incurred a net loss of $50,455 for the six months
ended September 30, 2020, and have incurred cumulative losses since
inception of $35,359,152. These factors raise substantial doubt
about the ability of the Company to continue as going concern. Our
ability to continue as a going concern is dependent on our ability
to continue obtaining adequate capital to fund operating losses
until we become profitable. If we are unable to obtain adequate
capital, we could be forced to significantly curtail or cease
operations.
We will need to raise additional funds to finance continuing
operations. However, there are no assurances that we will be
successful in raising additional funds. Without sufficient
additional financing, it would be unlikely for us to continue as a
going concern. Our ability to continue as a going concern is
dependent upon our ability to successfully accomplish the plans
described in this quarterly report and eventually secure other
sources of financing and attain profitable operations.
Results of Operations
Three Months Ended September 30, 2020 and 2019
The net loss and comprehensive loss for the three months ended
September 30, 2020 was $13,076 as compared to the net loss and
comprehensive loss for three months ended September 30, 2019 of
$262,912. Operating expenses for the 2nd quarter totaled
$37,338 compared to $69,878, in 2019 a decrease of $32,540. Some of
the more items contributing to the net loss and comprehensive loss
for the 2nd quarter of 2020 and 2019 were as
follows:
|
● |
Exploration expenses of $Nil (2019 - $10,408).
The Company currently will not involve the exploration activities
due to the loss of Mansounia exploration license. |
|
● |
Consulting and professional fees of $21,033 (2019
- $42,997). The decrease is result of cutting back the management
fees in the current quarter. |
|
● |
Loss on the investment in warrants of $Nil (2019
- $65,507). The fair value of warrants of ASI is $Nil in the
current quarter due to the warrants expired. |
|
● |
Accretion of $9,130 (2019 - $16,788). The
decrease in accretion is due to only one convertible note is still
outstanding in the current quarter when compared to two convertible
notes in 2019. |
|
● |
Unrealized gain on the investment in common
shares of $34,899 (2019 - $100,113 unrealized loss). The unrealized
gain is due to holding the investment in Ashanti Sankofa Inc’s
(TSX.V-ASI)’ common shares. The market value of ASI’s common shares
increased for the current quarter. |
Six Months Ended September 30, 2020 and 2019
The net loss and comprehensive loss for the six months ended
September 30, 2020 was $50,455 as compared to the net loss for the
six months ended September 30, 2019 of $217,381. Operating expenses
for two quarters totaled $107,975 compared to $137,276 in 2019 a
decrease of $29,301. Some of the more items contributing to the net
loss and comprehensive loss for two quarters of 2020 and 2019 were
as follows:
|
● |
Exploration expenses of $Nil (2019 - $35,513).
The Company currently will not involve the exploration activities
due to the loss of Mansounia exploration license. |
|
● |
Consulting and professional fees of $43,824 (2019
- $77,502). The decrease is result of cutting back the management
fees in the current quarter. |
|
● |
Loss on the investment in warrants of $Nil (2019
- $20,854). The fair value of warrants of ASI is Nil in the current
quarter due to the warrants expired. |
|
● |
Accretion of $18,391 (2019 - $16,788). The
accretion of the convertible debenture was recognized in both 2020
and 2019. |
|
● |
Default penalties of $35,000 (2019 - $Nil). The
Default penalties, a non-cash expense incurred is due to the loss
of Mansounia property. |
|
● |
Unrealized gain on the investment in common
shares of $85,101 (2019 - $31,837 unrealized loss). The unrealized
gain is due to holding the investment in Ashanti Sankofa Inc’s
(TSX.V-ASI)’ common shares. The market value of ASI’s common shares
decreased for the current quarter. |
Management anticipates operating expenses will materially increase
in future periods as we focus on green mineral development and
incur increased costs as a result of being a public company with a
class of securities registered under the Securities Exchange Act of
1934.
Liquidity and Capital Resources
Working Capital
|
Continuing Operations |
|
September 30,
2020 |
|
|
March 31,
2020 |
|
| Current Assets |
|
$ |
29,203 |
|
|
$ |
32,718 |
|
| Current
Liabilities |
|
|
753,672 |
|
|
|
810,779 |
|
| Working
Capital Deficit |
|
$ |
(724,469 |
) |
|
$ |
(778,061 |
) |
Current Assets
The nominal decrease in current assets as of September 30, 2020
compared to March 31, 2020 was primarily due to a decrease in cash
from $27,551 to $18,036.
Current Liabilities
Current liabilities as at September 30, 2020 decreased by $57,107
since March 31, 2020, primarily due to the conversion of
convertible debentures into common shares during the current
quarters.
Cash Flow
Our cash flow was as follows:
| |
|
Six Months Ended
September 30 |
|
| |
|
2020
$ |
|
|
2019
$ |
|
| Net cash used in operating
activities |
|
|
(77,515 |
) |
|
|
(76,340 |
) |
| Net cash used in investing
activities |
|
|
- |
|
|
|
- |
|
| Net cash
provided by financing activities |
|
|
68,000 |
|
|
|
137,500 |
|
| Decrease
(increase) in cash and cash equivalents |
|
|
(9,515 |
) |
|
|
61,160 |
|
Operating activities
The increase in net cash used in operating activities for the six
months ended September 30, 2020, compared to the same period in
2019 was primarily as a result of increased operating activities in
the current quarter.
Investing activities
For the six months ended September 30, 2019 and 2020, there were no
investing activities incurred.
Financing activities
There were convertible promissory notes issued in the six months
ended September 30, 2020 and September 30, 2019.
Critical Accounting Policies
There have been no significant changes to the critical accounting
policies as described in our Annual Form 10-K for the year ended
March 31, 2020.
Cash Requirements
Our current cash position is not sufficient to meet our present and
near-term cash needs. We will require additional cash
resources, including the sale of equity or debt securities, to meet
our planned capital expenditures and working capital
requirements. For the next 12 months we estimate that our
capital needs will be $500,000 to $750,000 and we currently have
approximately $18,000 in cash. We will seek to sell additional
equity or debt securities or obtain additional credit facilities.
The sale of additional equity securities will result in dilution to
our stockholders. The incurrence of indebtedness will result in
increased debt service obligations and could require us to agree to
operating and financial covenants that could restrict our
operations or modify our plans to grow the business. Financing may
not be available in amounts or on terms acceptable to us, if at
all. Any failure by us to raise additional funds on terms favorable
to us, or at all, will limit our ability to expand our business
operations and could harm our overall business prospects.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or
capital resources that is material to our stockholders.
Contractual Obligations
Not applicable.
|
Item 3. |
Quantitative and Qualitative Disclosures About Market
Risk |
We are a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and are not required to provide the information
required under this item.
|
Item 4. |
Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934
(the “Exchange Act”), that are designed to ensure that
information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission rules
and forms, and that such information is accumulated and
communicated to our management, including our Principal Executive
Officer and Principal Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure. We conducted an
evaluation under the supervision and with the participation of our
Principal Executive Officer and Principal Financial Officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this
report pursuant to Rule 13a-15 of the Exchange Act. Based on this
Evaluation, our Principal Executive Officer and Principal Financial
Officer concluded that our Disclosure Controls were effective as of
the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls that occurred during
the quarter covered by this report that have materially affected,
or are reasonably likely to materially affect our internal
controls.
PART II - OTHER
INFORMATION
|
Item 1. |
Legal Proceedings |
We are not a party to any pending legal proceeding. Management is
not aware of any threatened litigation, claims or assessments.
We are a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and are not required to provide the information
required under this item.
|
Item 2. |
Unregistered Sales of Equity Securities and Use of
Proceeds |
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.
The above securities were issued to non-US persons (as that term is
defined in Regulation S of the Securities Act of 1933), in offshore
transactions relying on Regulation S of the Securities Act of 1933,
as amended.
|
Item 3. |
Defaults Upon Senior Securities |
None.
|
Item 4. |
Mine Safety Disclosure |
Not applicable.
|
Item 5. |
Other Information |
On June 30, 2020, Ronald Renee was appointed as the Interim Chief
Financial Officer the Company.
Item 6. Exhibits
|
** |
XBRL (Extensible
Business Reporting Language) information is furnished and not filed
or a part of a registration statement or prospectus for purposes of
Sections 11 or 12 of the Securities Act of 1933, as
amended, is deemed not filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, and otherwise
is not subject to liability under these sections. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BLOX INC.
| By: |
/s/
Ronald Renee |
|
| Name: |
Ronald
Renee |
|
| Title: |
Chief
Executive Officer |
|
| |
|
|
| Date: |
November
20, 2020 |
|
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