10-Q 1 f170930bloxform10q.htm QUARTERLY REPORT FOR PERIOD ENDED SEPTEMBER 30, 2017 Blox Form 10-Q



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


FORM 10-Q


x 

Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended

September 30, 2017


o

Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period _____________to______________


Commission File Number: 333-150582

BLOX, INC.

 (Exact name of registrant as specified in its charter)


Nevada

20-8530914

(State or other jurisdiction of

(I.R.S. Employer Identification No.)

incorporation of organization)


Suite 202, 5626 Larch Street, Vancouver, BC  Canada

V6M 4E1

(Address of principal executive offices)

(ZIP Code)


Registrant’s telephone number, including area code:

(604) 696-4236


 

 

 

 

(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

x Yes    o 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).

x Yes    o No


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of ‘‘accelerated filer and large accelerated filer’’ in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer

o

Accelerated filer

o

Non-accelerated filer

o

Small reporting company

x


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


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

oYes   x No


State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 108,611,814 shares of common stock as of November 20, 2017.

 

Transitional Small Business Disclosure Format oYes   x No

 






BLOX, INC.

Quarterly Report on Form 10-Q
For The Quarterly Period Ended
September 30, 2017

INDEX


PART I - FINANCIAL INFORMATION

3

Item 1. Financial Statements

3

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

16

Item 3. Quantitative and Qualitative Disclosures About Market Risk

19

Item 4. Controls and Procedures

19

PART II - OTHER INFORMATION

20

Item 1. Legal Proceedings

20

Item 1A. Risk Factors

20

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

20

Item 3. Defaults Upon Senior Securities

20

Item 4. Submission of Matters to a Vote of Securities Holders

20

Item 5. Other Information

20

Item 6. Exhibits

21

SIGNATURES

22





2





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 complete the required feasibility study for permitting of the Mansounia concession in Guinea;

*

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 financial statements of Blox, Inc. are included in this quarterly report on Form 10-Q.




3



Blox, Inc.

Condensed Interim Consolidated Balance Sheets

(Unaudited - Expressed in U.S. Dollars)


 

 

 

 

 As At

 

As At

 

 

 

 

September 30, 2017

 

March 31, 2017

(audited)

 

 

 

 

 

ASSETS

 

 

 

 

Current Assets

 

 

 

 

 

Cash (Note 7)

$

6,764

$

14,085

 

Prepaid expenses

 

9,167

 

5,549

Total Current Assets

 

15,931

 

19,634

 

 

 

 

 

Equipment (Note 4)

 

71,560

 

74,132

Mineral Property Interest (Note 5)

 

931,722

 

931,722


Total Assets

$

1,019,213

$

1,025,488

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

$

109,594

$

90,595

Long-term Liabilities

 

 

 

 

 

Loans payable (Note 8)

 

-

 

825,120

Total Liabilities

 

109,594

 

915,715

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

Common Stock (Note 6)

– 400,000,000 authorized

– 108,611,814 issued (March 31, 2017 – 108,611,814)

 


967

 


967

Additional Paid-in Capital

 

5,957,211

 

5,957,211

Share subscriptions received

 

1,073,923

 

-

Contributed Surplus

 

3,500,756

 

3,500,756

Accumulated Other Comprehensive Income

 

15,491

 

15,491

Deficit

 

(9,638,729)

 

(9,364,652)

Total Stockholders' Equity

 

909,619

 

109,773

Total Liabilities and Stockholders' Equity

$

1,019,213

$

1,025,488



See accompanying notes to the condensed interim consolidated financial statements.


4




Blox, Inc.

Condensed Interim Consolidated Statements of Comprehensive Loss

(Unaudited - Expressed in U.S. Dollars)



 

 Three Months Ended

Six Months Ended

 

September 30, 2017

September 30, 2016

September 30,  2017

September 30, 2016

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

Consulting and professional fees (Note 10)

$

92,107

$

90,996

$

183,169

$

182,268

Depreciation (Note 4)

 

193

 

275

 

386

 

551

Exploration (Note 5)

 

(15,930)

 

1,486

 

3,654

 

7,511

Foreign exchange

 

34,717

 

(3,183)

 

56,371

 

(4,816)

Office and administration fees (Note 10)

 

11,692

 

10,500

 

22,182

 

22,574

Travel

 

3,818

 

1,897

 

6,129

 

8,300

Total Operating Expenses

 

126,597

 

101,971

 

271,891

 

216,388

 

 

 

 

 

 

 

 

 

Loss from Operations

 

   (126,597)

 

(101,971)

 

(271,891)

 

(216,388)

Loss on disposal of equipment

 

(2,186)

 

-

 

(2,186)

 

-

Net Loss and Comprehensive Loss for the period

$

(128,783)

$

(101,971)

$

(274,077)

(216,388)

Net Loss Per Common Share

$

(0.00)

$

(0.00)

$

(0.00)

$

(0.00)

Weighted Average Number of Shares Outstanding

– Basic and diluted

 

 

 

 

 

 

 

 

108,611,814

 

108,611,814

 

108,611,814

108,611,814





See accompanying notes to the condensed interim consolidated financial statements.




5





Blox, Inc.

Condensed Interim Consolidated Statements of Changes in Stockholders’ Equity

Six months ended September 30, 2017 and 2016

(Expressed in U.S. Dollars)




 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

Shares

 

 

 

Other

 

 

 

Total

 

Common Stock

 

Paid-in

 

Subscriptions

 

Contributed

 

Comprehensive

 

 

 

Stockholders’

 

Shares

 

Amount

 

Capital

 

Received

 

Surplus

 

Income

 

Deficit

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2016

108,611,814

$

967

$

5,957,211

$

-

$

3,500,756

$

15,491

$

(8,925,089)

$

549,336

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

-

 

-

 

-

 

-

 

-

 

-

 

(439,563)

 

(439,563)

March 31, 2017

108,611,814

 

967

 

5,957,211

 

-

 

3,500,756

 

15,491

 

(9,364,652)

 

109,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private placement proceeds

-

 

-

 

-

 

1,073,923

 

-

 

-

 

-

 

1,073,923

Net loss for the period

-

 

-

 

-

 

-

 

-

 

-

 

(274,077)

 

(274,077)

September 30, 2017

108,611,814

$

967

$

5,957,211

$

1,073,923

$

3,500,756

$

15,491

$

(9,638,729)

$

909,619




See accompanying notes to the condensed interim consolidated financial statements.




6




Blox, Inc.

Condensed Interim Consolidated Statements of Cash Flows

(Unaudited - Expressed in U.S. Dollars)



 

 

 

Six Months Ended

 

 

 

September 30, 2017

 

September 30, 2016

CASH PROVIDED BY (USED IN):

 

 

 

OPERATING ACTIVITIES

 

 

 

 

Net loss for the period

$

(274,077)

$

(216,388)

Non-cash items:

 

 

 

 

Depreciation

 

386

 

551

Loss on disposal of equipment

 

2,186

 

-

Changes in non-cash working capital:

 

 

 

 

Prepaid expenses

 

(3,618)

 

(3,833)

Accounts payable and royalty payments payable

 

18,998

 

(14,115)

Cash used in operating activities

 

(256,125)

 

(233,785)

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

Proceeds from private placement advanced

 

248,804

 

-

Proceeds from loans

 

-

 

234,264

Cash provided by financing activities

 

248,804

 

234,264

 

 

 

 

 

(Decrease) Increase in Cash

 

(7,321)

 

479

Cash, Beginning of Period

 

14,085

 

8,944

Cash, End of Period

$

6,764

$

9,423

 

 

 

 

 

NON-CASH FINANCING ACTIVITIES:

 

 

 

 

Loans payable converted into share subscriptions

$

825,120

 

 





See accompanying notes to the condensed interim consolidated financial statements.





7



Blox, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Six Months Ended September 30, 2017 and 2016

(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 Suite 202, 5626 Larch Street, Vancouver, British Columbia, V6M 4E1, Canada. The Company is primarily engaged in developing mineral exploration projects in Africa.


On February 27, 2014, the Company completed a business combination with International Eco Endeavors Corp. (“Eco Endeavors”) which has now been renamed “Blox Energy Inc.” During the year ended March 31, 2015, the Company discontinued operations in Europe and disposed of Blox Energy Inc.’s subsidiary, Kenderesh Endeavors Corp.


2.

Basis of Presentation


(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. 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 the fair statement of results have been included in these 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, 2018, or future operating periods. For further information, see the Company’s annual consolidated financial statements for the year ended March 31, 2017, 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 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;





8



Blox, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Six Months Ended September 30, 2017 and 2016

(Unaudited – Expressed in U.S. Dollars)



2.

Basis of Presentation (Continued)


(c)

Reporting and Functional Currencies (Continued)


(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.


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.


(ii)

Going Concern


These condensed interim 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 $274,077 for the six months ended September 30, 2017, and has incurred cumulative losses since inception of $9,638,729 as at September 30, 2017.


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, controlling costs and reducing operating losses. Waratah Investments Limited, the Company’s controlling shareholder continued to finance the required working capital through a private placement (Note 6(a)).




9



Blox, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Six Months Ended September 30, 2017 and 2016

(Unaudited – Expressed in U.S. Dollars)



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 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.


4.

Equipment


 

 

 

Office Equipment

 

Machinery

 

Total

Cost

 

 

 

 

 

 

 

Balance at March 31, 2017

 

$

8,760

$

232,620

$

241,380

Additions (disposals)

 

 

(8,760)

 

-

 

(8,760)

Balance at September 30, 2017

 

$

-

$

232,620

$

232,620

 

 

 


 


 


Accumulated Depreciation

 

 


 


 


Balance at March 31, 2017

 

$

6,188

$

161,060

$

167,248

Depreciation for the period

 

 

386

 

-

 

386

Disposal for the period

 

 

(6,574)

 

-

 

(6,574)

Balance at September 30, 2017

 

$

-

$

161,060

$

161,060

 

 

 


 


 


Carrying amounts

 

 


 


 


As at September 30, 2017

 

$

-

$

71,560

$

71,560

 

 

 


 


 


Carrying amounts

 

 


 


 


As at March 31, 2017

 

$

2,572

$

71,560

$

74,132


Equipment in the amount of $71,560 has not been placed into production and is not currently being depreciated.


5.

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 has acquired a 78% beneficial interest in the Property.


An exploration permit for the Property was granted by the Ministère des Mines et de la Géologie on August 20, 2013. As part of its due diligence, the Company obtained a legal opinion which confirmed that the license was in good standing at the time of acquisition. It is the Company's intention to obtain an exploitation permit to allow the Company the right to mine and dispose of minerals for 15 years, with a possible 5-year extension. The Company has commenced work on the feasibility study and environmental impact assessment required for obtaining this permit.




10



Blox, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Six Months Ended September 30, 2017 and 2016

(Unaudited – Expressed in U.S. Dollars)



5.

Mineral Property Interest (continued)


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.


The mining exploration license for the Company has been extended for an additional three months to January 24, 2018, in order to allow the Company sufficient time to finalize the Feasibility Study and Application for an Exploitation License.   During the six months ended September 30, 2017, the Company spent $3,654 (September 30, 2016 – $7,511) on the property.


 

Mansounia Property,

West Africa

Acquisition of mineral property interest

 

 

 

 

   Cash payment

$

150,000

   Issuance of 6,514,350 common shares  

781,722

   

 

Balance, as at September 30 and March 31, 2017

$

931,722


6.

Common Stock


(a)

Private placement


On September 29, 2017, the Company entered into an agreement with Waratah Capital Ltd. (“Waratah”) 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 the required private placement of $1,000,000 to $1,500,000 required to consummate the Company’s acquisition of Quivira Gold Ltd.  As a condition of entering into the agreement with Waratah, Waratah agreed to provide the remaining balance of funds required to close the private placement, and/or arrange for third parties to participate in the private placement on or before December 31, 2017, or such other date as may be agreed to among the parties (Note 8).


The Private Placement will consist of a minimum of 20,000,000 units and up to a maximum of 30,000,000 units at a deemed price of $0.05 per share, with each unit consisting 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.




11



Blox, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Six Months Ended September 30, 2017 and 2016

(Unaudited – Expressed in U.S. Dollars)



6.

Common Stock (continued)


(b)

Share Purchase Warrants


The Company had 88,000,000 outstanding warrants as at September 30, 2017 and March 31, 2017 exercisable at $0.05 per share until February 27, 2019 (1.4 years).


(c)

Stock Options


The Company did not grant any stock options during the six months ended September 30, 2017 and 2016.


The following table summarizes historical information about the Company’s incentive stock options:


 

Number of Options

Weighted Average Exercise Price

Balance, September 30, 2017 and March 31, 2017

4,650,000

$0.03


At September 30, 2017, the following stock options were outstanding and exercisable:


Exercise Price

Expiry Date

Options Outstanding

Weighted Average Remaining Life in Years

Options Exercisable

$0.01

21-Jul-20

4,000,000

2.8

4,000,000

$0.15

07-Aug-19

650,000

1.9

650,000

 

 

4,650,000

2.7

4,650,000


7.

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 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.




12



Blox, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Six Months Ended September 30, 2017 and 2016

(Unaudited – Expressed in U.S. Dollars)



7.

Fair Value of Financial Instruments (continued)


The following table sets forth the Company’s financial assets measured at fair value by level within the fair value hierarchy:


 

Level 1

Level 2

Level 3

Total September 30, 2017

Cash

$    6,764

$       -

$      -

$     6,764


 

Level 1

Level 2

Level 3

Total March 31, 2017

Cash

$    14,085

$       -

$     -

$     14,085


8.

Loans Payable


The Company entered into a bridge loan agreement with Waratah Capital Ltd. (“Waratah”) dated as of April 17, 2015, which agreement was amended on April 28, 2016 and again on November 1, 2016 (the “Loan Agreement”), whereby Waratah agreed to provide a bridge loan to the Company in order to fund its obligations and for general working capital purposes for a total of Cdn$1,500,000 (the “Loan Proceeds”) on the terms and conditions set out in the loan Agreement.


On September 29, 2017, the Company entered into an agreement with Waratah Capital Ltd. (“Waratah”) 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 Loan Agreement would be cancelled and the Company will utilize the loan proceeds advanced to close the required private placement of $1,000,000 to $1,500,000 required to consummate the Company’s acquisition of Quivira Gold Ltd.  As a condition of entering into the agreement with Waratah, Waratah agreed to provide the remaining balance of funds required to close the private placement, and/or arrange for third parties to participate in the private placement on or before December 31, 2017, or such other date as may be agreed to among the parties (Note 6(a)).


As at September 30, 2017, the proceeds of loan payable were reclassified to share capital subscription and the balance of the loan payable was $Nil (March 31, 2017 - $825,120/Cdn$1,083,020).


9.

Commitment


On June 22, 2013, the Company entered into a share purchase agreement with Waratah Investments Limited (“Waratah Investments”) where the Company shall purchase all of Waratah Investments’s right, title, and interest in the Quivira Gold Ltd. (“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.  The agreement provides that closing is subject to completion of a private placement financing of up to US$1,500,000, consisting of units priced at $0.05 per unit, with each unit comprising a share in the common stock of the Company and a share purchase warrant, exercisable at $0.05 for five years.  As of the issuance date of these financial statements, the due diligence and financing has not yet been completed.




13



Blox, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Six Months Ended September 30, 2017 and 2016

(Unaudited – Expressed in U.S. Dollars)



10.

Related Party Transactions


The Company’s related parties include its controlling shareholder, directors, and key management personnel. 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 three and six months ended September 30, 2017 and 2016:


 

            Three Months Ended

             Six Months Ended

September 30,

2017

September 30, 2016

September 30,

2017

September 30,

2016

 







Compensation – Directors

$

59,795

$

57,720

$

116,993

$

104,803

Compensation – Officers


14,730

 

16,794

 

31,058

 

31,345


During the six months ended September 30, 2017, $4,349 (September 30, 2016 - $4,369) was paid for bookkeeping services to a company owned by an officer of the Company.


As at September 30, 2017, the Company was indebted to its related parties for the amounts as below:


 

   September 30, 2017


March 31, 2017

 





Accounts payable and accrued liabilities

$

58,113

$

46,467

Loans payable (Note 8)


-

 

825,120


As at September 30, 2017, $58,113 (March 31, 2017 - $46,467) remains unpaid to directors and officers for the consulting, professional fees, and other expenses. These amounts owing are unsecured, non-interest bearing and have no fixed repayment terms.  



14



Blox, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Six Months Ended September 30, 2017 and 2016

(Unaudited – Expressed in U.S. Dollars)



11.

Geographical Area Information


 

 

Canada

 

 

Africa

 

Total

 

 

 

 

 

 

 

 

September 30, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

$

15,931

 

$

-

$

15,931

Equipment

 

-

 

 

71,560

 

71,560

Mineral property interest

 

-

 

 

931,722

 

931,722

Total assets

$

15,931

 

$

1,003,282

$

1,019,213

 

 

 

 

 

 

 

 

Total liabilities

$

109,594

 

$

-

$

109,594

 

 

 

 

 

 

 

 

March 31, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

$

19,634

 

$

-

$

19,634

Equipment

 

2,572

 

 

71,560

 

74,132

Mineral property interest

 

-

 

 

931,722

 

931,722

Total assets

$

22,206

 

$

1,003,282

$

1,025,488

 

 

 

 

 

 

 

 

Total liabilities

$

915,715

 

$

-

$

915,715


 



15





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 August 6, 2014, we announced that we entered into a Deed of Assignment and Assumption Agreement dated July 24, 2014 (the "Assumption Agreement") with 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 we agreed to assume JBMIL's right to acquire a 78% beneficial interest in the Mansounia Concession (the "Mansounia Property") from the Vendors, which right was exercised.


The Mansounia 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 Mansounia Property is located approximately 80 kilometres west, by road, from the country's third largest city, Kankan.


An exploration permit for the Mansounia Property was granted by the Ministère des Mines et de la Géologie on August 20, 2013. On October 25, 2016, an exploration permit extension was granted for a period of 12-months.  The purpose of the extension was to provide time to complete the required feasibility study and environmental impact assessment that will be submitted to Ministre des Mines et de la Géologie and the La Ministre de l’Environnement, des Eaux et Forêts. Work has commenced on the feasibility study and a consultant has been engaged to commence the environmental impact assessment.  It is our intention to obtain an exploitation permit, which would give us the exclusive right to mine and dispose of minerals for 15 years, with a possible five-year extension.  In February 2017, our directors and management teams from Vancouver and Guinea met in Accra, Ghana, to further the process of advancing a project viability study for the Mansounia Property.  The environmental impact assessment of the concession is in progress.  Once completed, the results of these two studies will be presented to the Guinea Ministry of Mines and Geology and the Environmental Protection Agency in Guinea, with a view to advancing towards an exploitation license.   


In consideration for the acquisition of the interest in the Mansounia Property, we paid approximately $100,000 to BGL and $40,000 to EML and on July 31, 2014, issued BGL and EML an aggregate of 6,514,350 shares of common stock of our 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, we recorded the cash payment of $150,000 plus $781,722 as the fair value of the First Tranche Shares in mineral interest. The fair value of the First Tranche Shares was based on the closing price of our shares on the OTCQB on July 24, 2014.


Within 14 days of commercial gold production being publicly declared from ore mined from the Mansounia Property, we will issue BGL and EML a second tranche of shares of our common stock (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 our 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 field program scheduled last year for the Mansounia Property has now been completed with results pending.  Crews were on the ground at Mansounia undertaking geological traverses and collecting soil and rock grab samples.  Those samples have now been sent to the laboratory for analysis.  No results were available as at the date of this Form 10-Q Quarterly Report.




16





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 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 is subject to the completion of a private placement financing of up to $1,500,000, consisting of units priced at $0.05 per unit, with each unit to be comprised of one common share and one share purchase warrant, exercisable at $0.05 for five years.  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.


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 $274,077 for the six months ended September 30, 2017, and have incurred cumulative losses since inception of $9,638,729.  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


Six Months Ended September 30, 2017 and 2016


The following summary of our results of operations should be read in conjunction with our unaudited consolidated interim financial statements for the six months ended September 30, 2017 and 2016, which are included herein.


Expenses


The expenses were as follows:


 

Three Months Ended

Six Month Ended

 

September 30,
2017

September 30,
2016

September 30,
2017

September 30,
2016

Administration and office

11,692

10,500

22,182

22,574

Consulting and professional fees

92,107

90,996

183,169

182,268

Depreciation

193

275

386

551

Exploration

(15,930)

1,486

3,654

7,511



17








Foreign exchange

34,717

(3,183)

56,371

(4,816)

Loss on disposal of equipment

2,186

-

2,186

-

Travel

3,818

1,897

6,129

8,300

 

 

 

 

 

Net Loss

$      128,783

$      101,971

$  274,077

$  216,388


We incurred a net loss of $128,783 and $274,077 ($0.00 per share) for the three and six month ended September 30, 2017, compared to $101,971 and $216,388 ($0.00 loss per share), in the same periods in 2016. During the three and six months ended September 30, 2017, we incurred foreign exchange loss of $34,717 and $56,371, respectively, which resulted in the increased operating expenses during fiscal 2017 compared to fiscal 2016


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, 2017

March 31, 2017

Current Assets

$         15,931

$       19,634

Current Liabilities

109,594

90,595

Working Capital Deficit

$   (93,663)

$     (70,961)


Current Assets


The nominal decrease in current assets as of September 30, 2017 compared to March 31, 2017 was primarily due to a decrease in cash from $14,085 to $6,764.  


Current Liabilities  


Current liabilities as at September 30, 2017 increased by $18,999 since March 31, 2017, primarily due to additional expenses being incurred during the current quarter.


Cash Flow


Our cash flow was as follows:


 

Six months Ended September 30

 

2017
$

2016
$

Net cash used in operating activities

(256,125)

(233,785)

Net cash used in investing activities

-

-

Net cash provided by financing activities

248,804

234,264

(Decrease) increase in cash and cash equivalents

(7,321)

479


Operating activities


The increase in net cash used in operating activities for the six months ended September 30, 2017, compared to the same period in 2016 was primarily as a result of increased accounts payable and royalty payments.




18





Investing activities


There is no cash used in investing activities for the six months ended September 30, 2017 or September 30, 2016.  


Financing activities


The increased net cash provided by financing activities for the six months ended September 30, 2016, compared to the same period in 2015 was mainly attributable to the proceeds advanced by a shareholder for subscriptions received.  


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, 2017.


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 $250,000 to $500,000 and we currently have approximately $920 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.




19





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


On September 7, 2017, we filed a Notice of Claim in the Supreme Court of British Columbia against our former President and CEO, Robert Abenante and his wholly-owned company Emerald Power Consulting Inc.  Mr. Abenante was a director, President and CEO of our company from February 27, 2014 until he resigned on May 1, 2015.  Among other things, the claims against Mr. Abenante include failure to perform his duties to the level of competence and skill expected, failing to act in our company’s best interests, failing to develop and further our business and failure to devote sufficient time to perform his duties, acting in a manner of self-interest and devoting significant time towards other personal interests to the exclusion and prejudice of our company, as well as failing to maintain property financial and corporate records and failing to assist with accessing electronic records after his resignation.  As a result of Mr. Abenante’s failures, we have suffered a loss of cash, revenue and business opportunities.  We are seeking damages, including the return of 11,402,496 shares of our company and 10,168,636 share purchase warrants and termination of the right to receive 10% of the total shares issued on the close of acquisition of Quivira Gold Ltd., which were acquired by Mr. Abenante as part of his employment agreement with our company.


Management is not aware of any threatened litigation, claims or assessments.


Item 1A.

Risk Factors


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


We did not issue any securities during the quarter ended September 30, 2017.


Item 3.

Defaults Upon Senior Securities


None.


Item 4.

Mine Safety Disclosure


Not applicable.


Item 5.

Other Information


None




20





Item 6. Exhibits


Number

Exhibit Description

31.1

Certification of the Chief Executive Officer pursuant to Rule 13a-14 Or 15d-14 of the Securities Exchange Act Of 1934,as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14 Or 15d-14 of the Securities Exchange Act Of 1934,as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C.  Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C.  Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 **

Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.

 

101.INS

XBRL Instance Document

 

101.SCH

XBRL Taxonomy Extension Schema Document

 

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

 

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document


** 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.



21





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/ Trevor Pickett

Name:

Trevor Pickett

Title:

Interim Chief Executive Officer

 

 

Date:

November 20, 2017




22