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.
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:
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
December 31,
2020
|
|
|
March
31,
2020
(Audited)
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
13,408
|
|
|
$
|
27,551
|
|
Prepaid
expenses
|
|
|
8,167
|
|
|
|
5,167
|
|
Total
Current Assets
|
|
|
21,575
|
|
|
|
32,718
|
|
|
|
|
|
|
|
|
|
|
Long
term investments (Note 4)
|
|
|
85,085
|
|
|
|
61,091
|
|
Equipment
(Note 5)
|
|
|
71,560
|
|
|
|
71,560
|
|
Total
Assets
|
|
$
|
178,220
|
|
|
$
|
165,369
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities (Note 12)
|
|
$
|
322,917
|
|
|
$
|
294,379
|
|
Due
to shareholder (Note 9)
|
|
|
391,214
|
|
|
|
391,214
|
|
Loan
payable
|
|
|
428
|
|
|
|
-
|
|
Convertible
debentures (Note 10)
|
|
|
84,929
|
|
|
|
120,480
|
|
Loan
interest payable (Note 10)
|
|
|
4,934
|
|
|
|
4,706
|
|
Total
Liabilities
|
|
|
804,422
|
|
|
|
810,779
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
DEFICIENCY
|
|
|
|
|
|
|
|
|
Common
Stock (Note 7) - 400,000,000 authorized with a par value of $0.00001 - 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
|
|
|
27,222,990
|
|
|
|
27,279,356
|
|
Deficit
|
|
|
(35,487,841
|
)
|
|
|
(35,308,697
|
)
|
Total
Stockholders’ Deficiency
|
|
|
(626,202
|
)
|
|
|
(645,410
|
)
|
Total
Liabilities and Stockholders’ Deficiency
|
|
$
|
178,220
|
|
|
$
|
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
|
|
|
Nine Months Ended
|
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting and professional fees (Note 12)
|
|
$
|
23,557
|
|
|
$
|
37,385
|
|
|
$
|
67,381
|
|
|
$
|
114,887
|
|
Exploration (Note 6)
|
|
|
-
|
|
|
|
12,061
|
|
|
|
-
|
|
|
|
47,574
|
|
Foreign exchange
|
|
|
5,173
|
|
|
|
2,936
|
|
|
|
14,391
|
|
|
|
5,677
|
|
Office and administration fees
|
|
|
6,043
|
|
|
|
2,796
|
|
|
|
25,976
|
|
|
|
24,316
|
|
Total Operating Expenses
|
|
|
(34,773
|
)
|
|
|
(55,178
|
)
|
|
|
(107,748
|
)
|
|
|
(192,454
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses (Note 10)
|
|
|
(1,706
|
)
|
|
|
(1,890
|
)
|
|
|
(4,096
|
)
|
|
|
(2,516
|
)
|
Loss on investment in warrants
|
|
|
-
|
|
|
|
(2,156
|
)
|
|
|
-
|
|
|
|
(23,010
|
)
|
Accretion (Note 10)
|
|
|
(15,763
|
)
|
|
|
(27,615
|
)
|
|
|
(34,154
|
)
|
|
|
(44,403
|
)
|
Default penalties (7, 10)
|
|
|
15,340
|
|
|
|
-
|
|
|
|
50,340
|
|
|
|
|
|
Debt issuance cost – cash (Note 10)
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,800
|
)
|
|
|
(10,000
|
)
|
Unrealized gain (loss) on investment in common shares (Note 4)
|
|
|
(61,107
|
)
|
|
|
1,283
|
|
|
|
23,994
|
|
|
|
(30,554
|
)
|
Net Loss and Comprehensive Loss for the Period
|
|
$
|
(128,689
|
)
|
|
$
|
(85,556
|
)
|
|
$
|
(179,144
|
)
|
|
$
|
(302,937
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Per Common Share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Weighted Average Number of Shares Outstanding – Basic and diluted
|
|
|
264,541,664
|
|
|
|
143,172,664
|
|
|
|
245,511,199
|
|
|
|
142,999,573
|
|
See accompanying notes to the condensed interim
consolidated financial statements.
Blox, Inc.
Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)
Nine Months ended December 31, 2020 and 2019
(Expressed in U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Stockholders’
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Contributed
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(114,103
|
)
|
|
|
(114,103
|
)
|
December 31, 2019
|
|
143,172,664
|
|
|
|
1,311
|
|
|
|
7,354,934
|
|
|
|
15,754,920
|
|
|
|
22,745,993
|
|
|
|
364,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 loss 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
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debenture – equity portion (Note 10)
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,204
|
|
|
|
-
|
|
|
|
9,204
|
|
Net loss for the period
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(128,689
|
)
|
|
|
(128,689
|
)
|
December 31, 2020
|
|
264,541,664
|
|
|
$
|
2,527
|
|
|
$
|
7,636,122
|
|
|
$
|
27,222,990
|
|
|
$
|
(35,487,841
|
)
|
|
$
|
(626,202
|
)
|
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)
|
|
Nine Months Ended
|
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
CASH PROVIDED BY (USED IN):
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net loss for the period
|
|
$
|
(179,144
|
)
|
|
$
|
(302,937
|
)
|
Non-cash items:
|
|
|
|
|
|
|
|
|
Loss on investment in warrants
|
|
|
-
|
|
|
|
23,010
|
|
Unrealized (gain) loss on investment in common shares
|
|
|
(23,994
|
)
|
|
|
30,554
|
|
Default penalties
|
|
|
35,000
|
|
|
|
-
|
|
Accretion
|
|
|
34,154
|
|
|
|
44,403
|
|
Interest accrued on convertible debenture
|
|
|
2,101
|
|
|
|
2,515
|
|
Convertible debenture transaction costs
|
|
|
6,800
|
|
|
|
-
|
|
Changes in non-cash working capital:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(3,000
|
)
|
|
|
(6,000
|
)
|
Accounts payable and accrued liabilities
|
|
|
28,700
|
|
|
|
46,550
|
|
Due to shareholder
|
|
|
-
|
|
|
|
60,819
|
|
|
|
|
(99,383
|
)
|
|
|
(101,086
|
)
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from convertible debenture
|
|
|
166,840
|
|
|
|
150,000
|
|
Convertible debenture repayment
|
|
|
(74,800
|
)
|
|
|
-
|
|
Convertible debenture transaction costs
|
|
|
(6,800
|
)
|
|
|
(15,000
|
)
|
Warrants exercised
|
|
|
-
|
|
|
|
2,500
|
|
|
|
|
85,240
|
|
|
|
137,500
|
|
|
|
|
|
|
|
|
|
|
(Decrease) Increase in Cash
|
|
|
(14,143
|
)
|
|
|
36,414
|
|
Cash, Beginning of Period
|
|
|
27,551
|
|
|
|
9,792
|
|
Cash, End of Period
|
|
$
|
13,408
|
|
|
$
|
46,206
|
|
|
|
|
|
|
|
|
|
|
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
Nine Months Ended December 31, 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. 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.
|
(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. These unaudited
interim financial statements are condensed and do not include all disclosures required for annual financial statements. The organization
and business of the Company, accounting policies followed by the Company and other information are contained in the notes to the Company’s
audited consolidated financial statements filed as part of the Company’s March 31, 2020 Annual Report on Form 10-K. This quarterly
report should be read in conjunction with such annual report.
|
(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
Nine Months Ended December 31, 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.
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.
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.
|
(i)
|
Determination of Functional Currencies
|
In determining the Company’s functional
currency, it periodically reviews its 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 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 $179,144 for the nine months ended December 31,
2020 and has incurred cumulative losses since inception of $35,487,841 as at December 31, 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.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Nine Months Ended December 31, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
3.
|
Recent Accounting Pronouncements
|
In August 2020, the FASB issued ASU
2020-06, ASC Subtopic 470-20 “Debt—Debt with Conversion and Other Options”. The standard reduced the number of accounting
models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation
models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition
of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued
with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal
years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier
than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently assessing
the impact of the adoption of this standard on its financial statements.
|
|
|
|
Fair Value as at
|
|
|
|
Number
|
|
December 31,
2020
|
|
|
March
31,
2020
|
|
|
|
|
|
|
|
|
|
|
Common shares
|
|
3,333,333
|
|
$
|
65,450
|
|
|
$
|
46,993
|
|
|
|
1,000,000
|
|
|
19,635
|
|
|
|
14,098
|
|
Total investment:
|
|
|
|
$
|
85,085
|
|
|
$
|
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 December 31, 2020, the fair value
of common shares was $85,085 which resulted in an unrealized gain of $23,994 (2019 – unrealized loss of $30,554) that was recorded
in profit and loss for the period ended December 31, 2020. The share purchase warrants of ASI expired unexercised.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Nine Months Ended December 31, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
|
Machinery
|
|
|
Total
|
|
Cost
|
|
|
|
|
|
|
Balance at December 31 & March 31, 2020
|
|
$
|
232,620
|
|
|
$
|
232,620
|
|
Accumulated Depreciation
|
|
|
|
|
|
|
|
|
Balance at December 31 & March 31, 2020
|
|
$
|
161,060
|
|
|
$
|
161,060
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
As at December 31 & 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
Nine Months Ended December 31, 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 Property. As a result of the revocation
of the Company’s exploration license, all rights held by the Company and its partners in the Property 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 & December 31, 2020
|
|
$
|
-
|
|
During the nine months ended December
31, 2020, the Company spent $Nil (2019 – $47,574) on the property.
Year ended March 31, 2020
There were no shares issued from private
placement for the year ended March 31, 2020.
Nine months ended December 31, 2020
There were no shares issued from private
placement for the nine months ended December 31, 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).
Nine Months ended December 31, 2020
From April 1 to June 30, 2020, $127,541
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.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Nine Months Ended December 31, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
7.
|
Common Stock (continued)
|
|
(b)
|
Convertible debenture shares issuance (continued)
|
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.
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 $0.135 per share. The fair
value of these warrants was determined with the Black-Scholes option pricing model using the following assumptions: risk free interest
rate of 1.57%, volatility of 231.6%, annual rate of dividend of 0%, and expected life of 5 years.
On February 27, 2020, the Company extended
the term of 88,000,000 share purchase warrants from February 27, 2020 to February 27, 2021, no other terms were changed.
Nine months ended December 31, 2020
On May 7, 2020, the Company entered
into an Amendment #1 with one convertible debenture holder that the 555,555 warrant shares issued on August 16, 2019 are subject to anti-dilution
protection. The Company agreed that the number of warrant shares should be equal to 10,000,000. On May 13, 2020, the convertible debt
holder exercised 10,000,000 warrants to common shares via cashless exercise.
On May 28 and June 8, 2020, the Company
received an Exercise Notice from another convertible debenture holder that 10,844,805 and 12,049,784 warrant shares were exercised to
common shares via cashless exercise.
The 1,111,110 warrants
were cancelled on June 8, 2020 due to the warrant shares that were issued.
The following table summarizes historical
information about the Company’s warrants:
|
|
Number of
Warrants
|
|
|
Weighted Average
Exercise Price ($)
|
|
|
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, December 31, 2020
|
|
|
117,493,750
|
|
|
|
0.05
|
|
|
|
1.74
|
|
As at December 31, 2020, the following
warrants were outstanding and exercisable:
Number of Warrants
|
|
|
Exercise Price
|
|
|
Expiry Date
|
|
|
|
|
|
|
|
|
87,543,750
|
|
|
$
|
0.05
|
|
|
February 27, 2022
|
|
29,950,000
|
|
|
$
|
0.05
|
|
|
April 24, 2023
|
|
117,493,750
|
|
|
|
|
|
|
|
(Note 14)
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Nine Months Ended December 31, 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.
Nine months ended December 31, 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 nine months ended
December 31, 2020.
The following table summarizes historical
information about the Company’s incentive stock options:
|
|
Number of
options
|
|
|
Weighted Average Exercise Price ($)
|
|
|
Weighted Average Life Remaining (Years)
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020
|
|
|
1,500,000
|
|
|
|
0.27
|
|
|
|
2.90
|
|
Cancelled
|
|
|
(1,500,000
|
)
|
|
|
0.27
|
|
|
|
|
|
Balance, December 31, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
At December 31, 2020, there were no
stock options outstanding.
|
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.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Nine Months Ended December 31, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
8.
|
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
December 31,
2020
|
|
Cash and cash equivalents
|
|
$
|
13,408
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
13,408
|
|
Long-term investment – Shares
|
|
|
85,085
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85,085
|
|
Total
|
|
$
|
98,493
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
98,493
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
March 31, 2020
|
|
Cash and cash equivalents
|
|
$
|
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
December 31,
2020
|
|
Accounts payable
|
|
$
|
322,917
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
322,917
|
|
Due to shareholder
|
|
|
391,214
|
|
|
|
-
|
|
|
|
-
|
|
|
|
391,214
|
|
Loan payable
|
|
|
428
|
|
|
|
-
|
|
|
|
-
|
|
|
|
428
|
|
Convertible debt
|
|
|
84,929
|
|
|
|
-
|
|
|
|
-
|
|
|
|
84,929
|
|
Loan interest
|
|
|
4,934
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,934
|
|
Total
|
|
$
|
804,422
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
804,422
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
March 31, 2020
|
|
Accounts payable
|
|
$
|
294,379
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
294,379
|
|
Due to shareholder
|
|
|
391,214
|
|
|
|
-
|
|
|
|
-
|
|
|
|
391,214
|
|
Convertible debt
|
|
|
120,480
|
|
|
|
-
|
|
|
|
-
|
|
|
|
120,480
|
|
Total
|
|
$
|
806,073
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
806,073
|
|
During the period ended December 31,
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 December 31, 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.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Nine Months Ended December 31, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
10.
|
Convertible
Debentures
|
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
|
|
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)).
Nine
months ended December 31, 2020
|
a)
|
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 prices to Common Stock
of the Company after 180 days and prior to June 8, 2021 (Note 14(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.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Nine Months Ended December 31, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
10.
|
Convertible
Debenture (continued)
|
|
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, mature on October 9, 2021. The note will be convertible before and after maturity
into common shares of the Company at a rate that is a 25% discount to the lowest trading price of the Common shares during the 20-day
period ending on the last complete trading day prior to the conversion date.
|
For the period ended December 31, 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 $34,154 (2019 - $72,950) and interest expense of $4,163 (2019 - $2,516) was recorded. As of December 31,
2020, $149,572 debt principal were converted to commons shares.
As at December 31, 2020, the total
principal value of the convertible debenture is $92,040 (March 31, 2020 - $150,000), and $4,934 (March 31, 2020 - $4,706) of interest
is accrued and payable in relation to the convertible debenture.
|
|
December 31,
2020
|
|
|
March 31,
2020
|
|
Balance – beginning of the period
|
|
$
|
120,480
|
|
|
$
|
-
|
|
Debt proceeds received
|
|
|
166,840
|
|
|
|
150,000
|
|
Debt repayment
|
|
|
(74,800
|
)
|
|
|
-
|
|
Debt converted to common shares
|
|
|
(127,541
|
)
|
|
|
(20,753
|
)
|
Equity portion of convertible debenture
|
|
|
(34,204
|
)
|
|
|
(46,638
|
)
|
Finance cost - accretion
|
|
|
34,154
|
|
|
|
37,871
|
|
Balance – end of the period
|
|
$
|
84,929
|
|
|
$
|
120,480
|
|
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.
|
12.
|
Related Party Transactions
|
The Company’s related parties
include its key management personnel, controlling shareholders, directors, and strategic partner. Transactions with related parties for
goods and services are based on the exchange amount as agreed to by the related parties.
Blox, Inc.
Notes to Condensed Interim Consolidated Financial Statements
Nine Months Ended December 31, 2020 and 2019
(Unaudited – Expressed in U.S. Dollars)
|
12.
|
Related Party Transactions (continued)
|
The Company incurred the following
expenses with related parties during the nine months ended December 31, 2020 and 2019:
|
|
Nine Months Ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Compensation – CEO (included within consulting and professional fees)
|
|
$
|
39,513
|
|
|
$
|
40,500
|
|
Compensation – Former Officer (included within consulting and professional fees)
|
|
|
-
|
|
|
|
21,591
|
|
|
|
$
|
39,513
|
|
|
$
|
62,091
|
|
As at December 31, 2020, the Company
was indebted to its related parties for the amounts as below:
|
|
December 31,
2020
|
|
|
March 31,
2020
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
158,292
|
|
|
$
|
122,651
|
|
Due to shareholder (Note 9 & 10)
|
|
|
391,214
|
|
|
|
391,214
|
|
Convertible debenture (Note 10)
|
|
|
84,929
|
|
|
|
-
|
|
These amounts owing are unsecured,
non-interest bearing and have no fixed repayment terms.
|
13.
|
Geographical Area Information
|
|
|
Canada
|
|
|
Africa
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
19,213
|
|
|
$
|
2,362
|
|
|
$
|
21,575
|
|
Long term investments
|
|
|
85,085
|
|
|
|
-
|
|
|
|
85,085
|
|
Equipment
|
|
|
-
|
|
|
|
71,560
|
|
|
|
71,560
|
|
Total assets
|
|
$
|
104,298
|
|
|
$
|
73,922
|
|
|
$
|
178,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
705,625
|
|
|
$
|
98,797
|
|
|
$
|
804,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
30,575
|
|
|
$
|
2,143
|
|
|
$
|
32,718
|
|
Long term investments
|
|
|
61,091
|
|
|
|
-
|
|
|
|
61,091
|
|
Equipment
|
|
|
-
|
|
|
|
71,560
|
|
|
|
71,560
|
|
Total assets
|
|
$
|
91,666
|
|
|
$
|
73,703
|
|
|
$
|
165,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
718,234
|
|
|
$
|
92,545
|
|
|
$
|
810,779
|
|
On February 23, 2021, the Company extended the
expiry term of 87,543,750 outstanding warrants from February 27, 2021 to February 27, 2022. The exercise price of the warrants remains
at $0.05.
On February 23, 2021, the Company was able to
fund its investment in Ashanti Sankofa Inc. through a loan advanced by Waratah in the amount of CAD$50,000. The Company acquired 2,500,000
units of ASI. Each unit consists of one common share of ASI at a price of $0.02 and one share purchase warrant exercisable at $0.05 for
additional common shares for a term of 2 years.
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
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 property, 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 $179,144 for the nine months
ended December 31, 2020 and have incurred cumulative losses since inception of $35,487,841. 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 December 31, 2020 and
2019
The net loss and comprehensive loss for the three
months ended December 31, 2020 was $128,689 as compared to the net loss and comprehensive loss for three months ended December 31, 2019
of $85,556. Operating expenses for the 3rd quarter totaled $50,113 compared to $55,178, in 2019 a decrease of $5,065. Some
of the more significant items contributing to the net loss and comprehensive loss for the 3rd quarter of 2020 and 2019 were
as follows:
|
|
●
|
Exploration expenses of $Nil (2019
- $12,061). The Company currently is not involved in exploration activities due to the loss of Mansounia exploration license.
|
|
|
●
|
Consulting and professional fees
of $23,557 (2019 - $37,385). The decrease is result of cutting back the management fees in the current quarter.
|
|
|
●
|
Loss on the investment in warrants
of $Nil (2019 - $2,156). The fair value of warrants of ASI is $Nil in the current quarter as the warrants expired.
|
|
|
●
|
Accretion of $15,763 (2019 - $27,615).
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 loss on the investment
in common shares of $61,107 (2019 - $1,283 unrealized gain). The unrealized gain is due to holding the investment in Ashanti Sankofa
Inc’s common shares. The market value of ASI’s common shares decreased for the current quarter.
|
|
|
●
|
Default penalties of $15,340 (2019
- $Nil). The Default penalties are related to two convertible debentures.
|
Nine Months Ended December 31, 2020 and
2019
The net loss and comprehensive loss for the nine
months ended December 31, 2020 was $179,144 as compared to the net loss for the nine months ended December 31, 2019 of $302,937. Operating
expenses for three quarters totaled $158,088 compared to $192,454 in 2019 a decrease of $34,366. Some of the more significant items contributing
to the net loss and comprehensive loss for three quarters of 2020 and 2019 were as follows:
|
|
●
|
Exploration expenses of $Nil (2019
- $47,574). The Company currently will not involve the exploration activities due to the loss of Mansounia exploration license.
|
|
|
●
|
Consulting and professional fees
of $67,381 (2019 - $114,887). The decrease is result of cutting back the management fees in the current fiscal year.
|
|
|
●
|
Loss on the investment in warrants
of $Nil (2019 - $23,010). The fair value of warrants of ASI is $Nil in the current quarter as the warrants expired.
|
|
|
●
|
Accretion of $34,154 (2019 - $44,403).
The accretion of the convertible debenture was recognized in both 2020 and 2019.
|
|
|
●
|
Default penalties of $50,340 (2019
- $Nil). The Default penalties are related to two convertible debentures.
|
|
|
●
|
Unrealized gain on the investment
in common shares of $23,994 (2019 - $30,554 unrealized loss). The unrealized gain is due to holding the investment in Ashanti Sankofa
Inc’s common shares. The market value of ASI’s common shares increased for the current fiscal year.
|
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
|
|
December 31,
2020
|
|
|
March 31,
2020
|
|
Current Assets
|
|
$
|
21,575
|
|
|
$
|
32,718
|
|
Current Liabilities
|
|
|
804,422
|
|
|
|
810,779
|
|
Working Capital Deficit
|
|
$
|
(782,847
|
)
|
|
$
|
(778,061
|
)
|
Current Assets
The nominal decrease in current assets as of December
31, 2020 compared to March 31, 2020 was primarily due to a decrease in cash from $27,551 to $13,408.
Current Liabilities
Current liabilities as at December 31, 2020 decreased
by $6,357 since March 31, 2020, primarily due to the conversion of convertible debentures into common shares during the current fiscal
year.
Cash Flow
Our cash flow was as follows:
|
|
Nine Months Ended
December 31
|
|
|
|
2020
$
|
|
|
2019
$
|
|
Net cash used in operating activities
|
|
|
(99,383
|
)
|
|
|
(101,086
|
)
|
Net cash used in investing activities
|
|
|
—
|
|
|
|
—
|
|
Net cash provided by financing activities
|
|
|
85,240
|
|
|
|
137,500
|
|
Decrease (increase) in cash and cash equivalents
|
|
|
(14,143
|
)
|
|
|
36,414
|
|
Operating activities
The increase in net cash used in operating activities
for the nine months ended December 31, 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 nine months ended December 31, 2019 and
2020, there were no investing activities incurred.
Financing activities
There were two convertible promissory notes issued
in the nine months ended December 31, 2020 and December 31, 2019, of which one convertible note was repaid in the 3rd quarter.
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 $780,000 and we currently have approximately $13,000 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.