Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - Blox, Inc.Financial_Report.xls
EX-31.1 - CERTIFICATION - Blox, Inc.exhibit31-1.htm
EX-32.2 - CERTIFICATION - Blox, Inc.exhibit32-2.htm
EX-31.2 - CERTIFICATION - Blox, Inc.exhibit31-2.htm
EX-32.1 - CERTIFICATION - Blox, Inc.exhibit32-1.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 [X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

 [  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 333-150582

BLOX, INC.
(Exact name of registrant as specified in its charter)

Nevada
(State or other jurisdiction of incorporation or organization)
  20-8530914
 (I.R.S. Employer Identification
No.)
     
Suite 600 – 666 Burrard Street, Vancouver, BC
(Address of principal executive offices)
  V6C 3P6
(Zip Code)
     
(604) 688-3899
(Registrant's telephone number, including area code)
   

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  [X]   No  [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  [  ]   No  [X]

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 108,806,014 shares of common stock as of August 19, 2014.



BLOX, INC.

Quarterly Report On Form 10-Q
For The Quarterly Period Ended
June 30, 2014

INDEX

PART I - FINANCIAL INFORMATION. 3
     Item 1. Financial Statements. 3
     Consolidated Statements of Financial Position. 4
     Consolidated Statements of Comprehensive Loss. 5
     Consolidated Statements of Changes in (Deficiency) Equity. 6
     Consolidated Statements of Cash Flows. 7
     Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 16
     Item 3. Quantitative and Qualitative Disclosures About Market Risk. 20
     Item 4. Controls and Procedures. 20
PART II - OTHER INFORMATION. 22
     Item 1. Legal Proceedings. 22
     Item 1A. Risk Factors. 22
     Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 22
     Item 3. Defaults Upon Senior Securities. 22
     Item 4. Submission of Matters to a Vote of Securities Holders. 22
     Item 5. Other Information. 22
     Item 6. Exhibits. 22
     SIGNATURES. 23

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, Blox Energy Inc., Kenderesh Endeavors Corp., Kenderes Biogaz Korlatolt Fele Lossegu Tarsasag (“Kenderes Biogaz”), Quivira Minerals Inc. and Quivira Gold Inc.,  unless otherwise specified.

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;
  • the ability of Kenderes Biogaz to maintain profitable operations, including the provision of a steady and cost effective supply of biomass;
  • the ability to sell electricity to the grid on favorable terms.
  • 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; and

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The following unaudited interim financial statements of Blox, Inc.(sometimes referred to as "we", "us" or "our Company") are included in this quarterly report on Form 10-Q:

3


 

Blox, Inc.
Consolidated Statements of Financial Position
(Unaudited)
(Expressed in U.S. Dollars)

    June 30, 2014     March 31, 2014  
ASSETS            
Current Assets            
      Cash and Cash Equivalents $ 763,111   $ 903,850  
      Accounts receivable   66,835     63,826  
      Prepaid expenses   133,466     235,502  
Total Current Assets   963,412     1,203,178  
             
Prepaid Expenses   94,988     115,423  
Property, Plant and Equipment (Note 4)   675,686     812,060  
Total Assets $ 1,734,086   $ 2,130,661  
             
LIABILITIES            
Current Liabilities            
      Accounts payable (Note 7)   110,349     128,855  
      Royalty payments payable (Note 6)   67,483     66,570  
      Loans payable (Note )   60,290     60,290  
Total Current Liabilities   238,122     255,715  
             
Total Liabilities   238,122     255,715  
             
STOCKHOLDERS' EQUITY            
             
Common Stock (Note 5)   892     892  
Additional Paid-in Capital   5,120,063     5,120,063  
Contributed Surplus   2,299,319     2,299,319  
Accumulated Other Comprehensive Income (Loss)   324,863     339,847  
Deficit   (6,249,173 )   (5,885,175 )
Total Stockholders' Equity   1,495,964     1,874,946  
Total Liabilities and Stockholders' Equity $ 1,734,086   $ 2,130,661  

Subsequent events (Note 5, 10)

These unaudited consolidated interim financial statements are authorized for issue by the Board of Directors on August 19, 2014.

“Robert Abenante”   “Robert Ironside”
Director   Director

See accompanying notes to the consolidated interim financial statements.

4


 

Blox, Inc.
Consolidated Statements of Comprehensive Loss
(Expressed in U.S. Dollars)

    Three Months Ended  
      June 30, 2014       June 30, 2013  
Revenue $ -   $ 146,637  
             
Cost of Sales            
Cost of raw materials   66,317     217,747  
Direct labour   6,023     13,601  
Amortization   56,845     60,508  
Other   27,552     54  
    156,737     291,910  
Gross loss   (156,737 )   (145,273 )
             
Operating Expenses            
Consulting and professional fees (Note 6)   176,278     4,982  
Foreign exchange   2,624     -  
Office and administration   28,359     20,564  
Salaries   -     2,075  
Total Operating Expenses   207,261     27,621  
             
Net Loss for the Period   (363,998 )   (172,894 )
Unrealized (loss) gain on translation of foreign operations   (14,984 )   345,583  
Comprehensive (Loss) Income for the Period $ (378,982 ) $ 172,689  
Net Loss Per Common Share $ (0.00 ) $ (0.01 )
Weighted Average Number of Shares Outstanding
      – Basic and diluted
           
    101,572,464     15,892,062  

See accompanying notes to the consolidated interim financial statements.

5


 

Blox, Inc.
Consolidated Statements of Changes in (Deficiency) Equity
(Unaudited)
(Expressed in U.S. Dollars)

                    Accumulated        
            Additional       Other       Total
    Common Stock   Paid-in   Contributed   Comprehensive       Equity
    Shares   Amount   Capital   Surplus   Income (Loss)   Deficit   (Deficiency)
March 31, 2013   15,892,062 $ - $ 743,776 $ - $ (249,012) $ (1,399,511) $ (904,747)
Unrealized gain on translation of foreign operations   -   -   -   -   345,583   -   345,583
Net loss   -   -   -   -   -   (172,894)   (172,894)
June 30, 2013   15,892,062   -   743,776   -   96,571   (1,572,405)   (732,058)
Debt converted for stock   100,310,000       2,129,805       -   -   2,129,805
Reverse acquisition   (43,863,458)   600   1,499,400   1,500,000   -   (3,055,425)   (55,425)
Stock issued for cash   20,000,000   200   499,800   500,000   -   -   1,000,000
Stock issued for services   9,233,860   92   247,282   214,319   -   -   461,693
Stock options issued   -   -   -   85,000   -   -   85,000
Unrealized gain on translation of foreign operations   -   -   -   -   243,276   -   243,276
Net loss   -   -   -   -   -   (1,257,345)   (1,257,345)
March 31, 2014   101,572,464 $ 892 $ 5,120,063 $ 2,299,319 $ 339,847 $ (5,885,175) $ 1,874,946
Unrealized loss on translation of foreign operations   -   -   -   -   (14,984)   -   (14,984)
Net loss   -   -   -   -   -   (363,998)   (363,998)
                             
June 30, 2014   101,572,464 $ 892 $ 5,120,063 $ 2,299,319 $ 324,863 $ (6,249,173) $ 1,495,964

See accompanying notes to the consolidated interim financial statements.

6


 

Blox, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in U.S. Dollars)

    Three Months Ended  
    June 30, 2014     June 30, 2013  
             
OPERATING ACTIVITIES             
Net loss for the period  $ (363,998 ) $ (172,894 )
Non-cash adjustments:             
Amortization    56,845     60,508  
Unrealized foreign exchange on translation of foreign operations    (14,072 )   133,904  
Changes in non-cash working capital:             
     Accounts receivable    (3,009 )   41,112  
     Prepaid expenses    122,471     11,046  
     Accounts payable    (18,505 )   (103,413 )
     Interest payable    -     (4,439 )
    (220,268 )   (34,176 )
             
INVESTING ACTIVITIES             
Disposal of equipment    79,529     -  
    79,529     -  
             
 FINANCING ACTIVITIES            
Proceeds from long-term debt    -     57,622  
    -     57,622  
             
Increase (Decrease) in Cash and Cash Equivalents    (140,739 )   23,445  
             
Cash and Cash Equivalents, Beginning of Period    903,850     22,285  
             
Cash and Cash Equivalents, End of Period  $ 763,111   $ 45,730  

See accompanying notes to the consolidated interim financial statements.

7


 

Blox, Inc.
Notes to Consolidated Interim Financial Statements
Three Months Ended June 30, 2014
(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 600 – 666 Burrard Street, Vancouver, British Columbia, V6C 3P6. The Company is primarily engaged in sourcing, developing, and operating renewable energy projects in Europe.

  On February 27, 2014, the Company completed a business combination with International Eco Endeavors Corp. (“Eco Endeavors”) and Ourco Capital Ltd. (“Ourco”), a wholly owned subsidiary of the Company formed for the purpose of this business combination. At amalgamation of Eco Endeavors and Ourco, all of Eco Endeavors common shares outstanding were cancelled, and the holders of Eco Endeavors’ common shares, other than the Company and Ourco, received in exchange for their Eco Endeavors’ common shares cancelled, 60,000,000 units of the Company on a pro-rata basis with a deemed value of $0.05 per unit. Neither the Company nor Ourco received any repayment of capital in respect of any Eco Endeavors’ common shares held by them that were cancelled. All of the common shares of Ourco outstanding immediately prior to the effective time were cancelled and replaced with an equal number of common shares of the amalgamated company (“Amalco”) formed between Eco Endeavors and Ourco, a wholly owned subsidiary of the Company. As consideration for the issuance of the Company’s units, Amalco issued the Company one common share of Amalco for each unit issued. Eco Endeavors sources, develops, and operates renewable energy projects worldwide with a focus on Europe and North America.

  The Company's biogas asset in Hungary is currently undergoing care and maintenance and the Company has elected to cancel its power contract during this idle time. The contract was between MAVIR Zrt. and Kenderes Biogaz Termelo Kft., the Company's subsidiary, for the sale of up to 5,842 megawatt-hours per year from July 2007 to December 2020. The power could be sold at three different rates each day: 37.72 Hungarian Forints per kilowatt-hour (HUF/kWh) at peak hours; 33.76 HUF/kWh at midday hours, and 13.75 HUF/kWh at night hours. The request was submitted on April 26, 2014 and approved on May 23, 2014 for termination on June 1, 2014. There were no penalties for the termination. Once the care and maintenance process has concluded, the Company will utilize the opportunity and seek competitive rates before establishing a new contract.

2. Basis of Presentation

  (a) Statement of Compliance

  These consolidate interim financial statements are presented in accordance with generally accepted accounting principles in the United States ("US GAAP") and the rules and regulations of the Securities and Exchange Commission ("SEC") and are expressed in U.S. dollars. The Company's fiscal year-end is March 31.

  (b) Basis of Presentation

    The consolidated interim financial statements of the Company comprise the Company and its subsidiaries. The accounting policies followed in preparing these consolidated financial statements are the same as those set out in the audited consolidated financial statements of the Company for the year ended March 31, 2014. Certain information and note disclosures normally included for annual consolidated financial statements prepared in accordance with U.S. GAAP have been omitted. These consolidated interim financial statements should be read together with the audited consolidated financial statements of the Company for the year ended March 31, 2014.

  In the opinion of management, all adjustments considered necessary (including reclassifications and normal recurring adjustments) to present fairly the financial position, results of operations and cash flows at June 30, 2014 and for all periods presented, have been included in these financial statements. The interim results are not necessarily indicative of results for the full year ending March 31, 2015, or future operating periods. For further information, see the Company’s annual consolidated financial statements for the year ended March 31, 2014, including the accounting policies and notes thereto.

8


 

Blox, Inc.
Notes to Consolidated Interim Financial Statements
Three Months Ended June 30, 2014
(Unaudited)
(Expressed in U.S. Dollars)

  These consolidated interim 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 $363,998 for the three months ended June 30, 2014, and has incurred cumulative losses since inception of $6,249,173. 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 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.

3. Accounting Standards Issued But Not Yet Adopted

  In January 2014, the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) guidance was issued relating to service concession arrangements. This guidance states that certain service concession arrangements with public-sector grantors are not within the scope of lease accounting. Operating entities entering into these arrangements should not recognize the related infrastructure as its property, plant and equipment and should apply other accounting guidance. The updated guidance becomes effective for the Company beginning January 1, 2015.

  In April 2014, ASC guidance was issued related to discontinued operations which changed the criteria for determining which disposals can be presented as discontinued operations and modified related disclosure requirements. The updated guidance requires an entity to only classify discontinued operations due to a major strategic shift or a major effect on an entity’s operations in the financial statements. The updated guidance will also require additional disclosures relating to discontinued operations. The updated guidance becomes effective for the Company beginning January 1, 2015.

  The Company has not assessed the impact, if any, of the standards that become effective January 1, 2015.

9


 

Blox, Inc.
Notes to Consolidated Interim Financial Statements
Three Months Ended June 30, 2014
(Unaudited)
(Expressed in U.S. Dollars)

4. Property, Plant, and Equipment

      Land     Building     Machinery     Total  
                           
  Cost                        
  Balance at March 31, 2014 $ 4,830   $ 507,286   $ 742,916   $ 1,255,032  
  Additions (disposals)   -     -     (281,289 )   (281,289 )
  Balance at June 30, 2014   4,830     507,286     461,627     973,743  
                           
  Accumulated Depreciation                        
  Balance at March 31, 2014   -     271,665     171,307     442,972  
  Depreciation for the period   -     15,548     41,437     56,985  
  Disposals   -           (201,900 )   (201,900 )
  Balance at June 30, 2014   -     287,213     10,844     298,057  
                           
  Carrying amounts                        
  As at June 30, 2014 $ 4,830   $ 220,073   $ 450,783   $ 675,686  
                           
  Carrying amounts                        
  As at March 31, 2014 $ 4,830   $ 235,621   $ 571,609   $ 812,060  

5. Share Capital

  Common Stock issued and fully paid:

      Number of
Common Shares
 
         
  March 31, 2012   13,240,000  
       Issuance of common stock for cash   152,062  
       Issuance of common stock for services   2,500,000  
  March 31, 2013   15,892,062  
       Debt converted for common stock   100,310,000  
       Common stock cancelled on reverse acquisition   (116,202,062 )
       Common stock acquired on reverse acquisition   12,338,604  
       Issuance of common stock on reverse acquisition   60,000,000  
       Issuance of common stock for cash   20,000,000  
       Issuance of common stock for services   9,233,860  
  June 30, 2014 and March 31, 2014   101,572,464  

10


 

Blox, Inc.
Notes to Consolidated Interim Financial Statements
Three Months Ended June 30, 2014
(Unaudited)
(Expressed in U.S. Dollars)

5. Share Capital (Continued)

  On June 19, 2013, the Company entered into an agreement (the “Amalgamation Agreement”), among Ourco Capital Ltd. (“Ourco”), the Company’ wholly-owned subsidiary, International Eco Endeavors Corp., a private British Columbia, Canada corporation (“Eco Endeavors”), and its wholly-owned subsidiaries Kenderesh

  Endeavors Corp. (“Kenderesh”), and Kenderes Biogaz. The Company closed the Amalgamation Agreement and completed the amalgamation of Ourco and Eco Endeavors under the name “Blox Energy Inc,” thereby acquiring all of the issued and outstanding shares of Blox Energy Inc, on February 27, 2014.

  Pursuant to the Amalgamation Agreement, the Company issued 60,000,000 units for a total consideration of $3,000,000 on February 27, 2014, each unit consisting of one common share and one share purchase warrant, each warrant exercisable into an additional common share of the Company at an exercise price of $0.05 per share for a period of five years from the closing date.

  In connection with the closing of the Amalgamation Agreement on February 27, 2014, the Company completed a non-brokered private placement, pursuant to which the Company issued an aggregate of 20,000,000 units at a price of $0.05 per unit for gross proceeds of $1,000,000. Each unit consisted of one common share and one share purchase warrant, each warrant entitling the holder to acquire an additional common share at the exercise price of $0.05 for a period of 5 years from the closing of the financing.

  Pursuant to a consulting agreement dated February 27, 2014 between the Company and Robert Abenante, a director and officer of the Company, Mr. Abenante was issued an additional 9,233,860 common shares of the Company and 8,000,000 share purchase warrants (the “Abenante Stock”) entitling Mr. Abenante to acquire additional common shares at the exercise price of $0.05 for a period of 5 years from February 27, 2014. The entry into the consulting agreement was a condition of closing of the Amalgamation Agreement. The Abenante Stock is subject to an escrow agreement whereby 25% of the Abenante Stock was released on February 27, 2014 (“Start Date”), 25% will be released 6 months from the Start Date, 25% will be released 12 months from the Start Date and 25% will be released 18 months from the Start Date, providing Mr. Abenante remains an officer of the Company failing which the Abenante Stock will be returned to the Company.

  The fair value of the common shares included in the Abenante Stock of $0.05 per common share was based on the price of the non-brokered private placement on February 27, 2014. The fair value of the warrants of $0.05 included in the Abenante Stock was based on the Black-Scholes option pricing model using input assumptions of a risk free interest rate of 1.49%, volatility of 149%, expected dividend yield of zero and expected life of 5 years. The fair value of the current year Abenante Stock is expensed in the statement of operations over the escrow period on a straight-line basis with $115,425 expensed during the year ended March 31, 2014. The remaining Abenante stock has yet to be released. The remainder includes current prepaid expenses of $128,812 (2013 - $nil) and long term prepaid expenses of $94,988 (2013 - $nil).

11


 

Blox, Inc.
Notes to Consolidated Interim Financial Statements
Three Months Ended June 30, 2014
(Unaudited)
(Expressed in U.S. Dollars)

5. Share Capital (Continued)

  Warrants

  The Company’s outstanding warrants as at June 30, 2014 and March 31, 2014 are as follows:

    Number of Warrants Weighted Average Exercise Price Expiry
Date
Remaining Life (Years)
           
  March 31, 2013        
           
  Issued on reverse acquisition 60,000,000 $0.05 February 27, 2019 4.7
  Issued for cash 20,000,000 $0.05 February 27, 2019 4.7
  Issued for services 8,000,000 $0.05 February 27, 2019 4.7
           
  June 30, 2014 and March 31, 2014 88,000,000      

  Stock Options

  On the closing of the Amalgamation Agreement on February 27, 2014, the Company granted 1,700,000 stock options to directors and employees. Each stock option is exercisable at a price of $0.01 per share until expiry on the date that is 5 years from

  February 27, 2014. All stock options vested on February 27, 2014, but are subject to an escrow agreement whereby common stock issued on the exercise of the stock options will be held in escrow to be released as to 25% on February 27, 2014 (“Release Date”), 25% 6 months from the Release Date, 25% 12 months from the Release Date and 25% 18 months from the release Date, providing the stock option holder remains with the Company failing which the escrowed common shares will be returned to the Company.

  Each stock option has a fair value of $0.05, which was based on the Black-Scholes option pricing model using input assumptions of a risk free interest rate of 1.49%, volatility of 149%, expected dividend yield of zero and expected life of 5 years. The fair value of the stock options is expensed in the statement of operations over the escrow period on a graded basis with $85,000 expensed during the year ended March 31, 2014. As of June 30, 2014, none of the stock options were exercised.

    Number of Stock Options Weighted Average Exercise Price Expiry Date Remaining Life (Years)
           
  March 31, 2013                   -      
           
  Issued 1,700,000 $0.01 February 27, 2019 4.7
           
  June 30, 2014 and March 31, 2014 1,700,000      

12


 

Blox, Inc.
Notes to Consolidated Interim Financial Statements
Three Months Ended June 30, 2014
(Unaudited)
(Expressed in U.S. Dollars)

5. Share Capital (Continued)

  Subsequent to June 30, 2014, 125,000 stock options were exercised and 375,000 stock options were forfeited.

  On August 7, 2014, the Company granted 4,500,000 stock options to directors and consultants. These stock options have an exercise price $0.15 and expire on August 7, 2019 with 25% vesting on the date of grant and 25% vesting every six months after the date of grant.

  On August 9, 2014, the exercise price of 1,000,000 stock options previously granted to two directors was amended to $0.05 from $0.01.

6. Related Parties and Loans Payable

  The Company undertakes transactions with related parties that are generally on the same terms as those accorded to unrelated third parties. In addition to the shares for services transactions disclosed in the share capital note, the Company completed transactions with Emerald Power Consulting Inc. (“Emerald”), which has a common director and officer with the Company. During the three months ended June 30, 2014, the Company paid consulting and office and administrative expense to Emerald amounting to $31,500 (2013 - $nil) and $11,628 (2013- $19,204), respectively. As at June 30, 2014, $nil (2013-$nil) was payable to Emerald.

  At June 30, 2014 and 2013, the Company was indebted to arm’s length parties in the amount of $60,290. The loans payable are unsecured, non-interest bearing and have no fixed repayment terms.

7. Royalty Payments

  The Company was required to make royalty payments of 3% of revenues to its previously long-term holder. Additionally, the Company is required to make royalty payments of 10% of earnings before interest, taxes, depreciation and amortization to an arms-length corporation in exchange for financial and advisory services. These royalties are calculated on a quarterly basis. For the three months ended June 30, 2014 and 2013, there was no royalty expense included in consulting and professional fees. As of June 30, 2014, $67,483 is owed to the above noted parties (March 31, 2014 - $66,570).

8. Commitments

  (a) On June 22, 2013, the Company entered into a share purchase agreement with Waratah Investments Limited (“Waratah”) where the Company shall purchase all of Waratah’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 Agreements provide that closing is subject to completion of a private placement financing of up to $1,500,000, consisting of units priced at $0.05 per unit, with each unit comprises 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.

  (b) On November 1, 2013, the Company entered into an agreement to lease office premises for $3,188 per month until October 31, 2015.

13


 

Blox, Inc.
Notes to Consolidated Interim Financial Statements
Three Months Ended June 30, 2014
(Unaudited)
(Expressed in U.S. Dollars)

9. Geographical Area Information

      Canada     Hungary     Total  
  June 30, 2014:                  
  Prepaid expenses $ 94,988     -   $ 94,988  
  Property, plant and equipment   -     675,686     675,686  
  Total assets $ 912,890   $ 821,196   $ 1,734,086  
                     
  Total liabilities $ 181,146     56,976   $ 238,122  
                     
  March 31, 2014:                  
  Prepaid expenses $ 115,423     -   $ 115,423  
  Property, plant and equipment   -     812,060     812,060  
  Total assets $ 1,233,630   $ 897,031   $ 2,130,661  
                     
  Long-term debt $ -     -   $ -  
  Total liabilities $ 192,581     63,134   $ 255,715  
                     
      Three Months Ended        
      June 30, 2014     June 30, 2013        
  Net Loss - Canada $ 207,263   $ 27,654        
  Net Loss - Hungary   156,735     145,240        
  Net loss for the Period $ 363,998   $ 172,894        

  All of the Company’s sales are in Hungary and the Company derives 99% of its sales from MAVIR Zrt.

10. Subsequent Event

  On August 6, 2014, the Company announced that it 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 the Company has agreed to assume JBMIL's right to acquire a 78% beneficial interest in the Mansounia Concession (the "Property") from the Vendors. The Company also announced that it has exercised that right and has acquired a 78% beneficial interest in the Property.

  The Property lies in the southwest margin of the Siguiri Basin, in the Kouroussa Prefecture, Kankan Region, in Guinea, West Africa and covers a surface area of 145 square kilometres. The Property is located approximately 80 kilometres west, by road, from the country's third largest city, Kankan.

14


 

Blox, Inc.
Notes to Consolidated Interim Financial Statements
Three Months Ended June 30, 2014
(Unaudited)
(Expressed in U.S. Dollars)

10. Subsequent Event (Continued)

  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, Blox obtained a legal opinion which confirmed that the license remains in good standing. It is the Company's intention to obtain an exploitation permit, which would give the Company the exclusive right to mine and dispose of minerals for 15 years, with a possible 5 year extension. The Company has already 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 $107,142.86 to BGL and $42,857.14 to EML and on July 31, 2014, 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. 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.

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. Following incorporation, we were engaged in the exploration of early-stage mineral properties. However, we were not successful in developing our mineral property interests and thus began to investigate other business opportunities in order to maximize shareholder value. As a result, we entered into the Amalgamation Agreement with Eco Endeavors, which closed on February 27, 2014.

Following the closing of the Amalgamation Agreement, we commenced focusing on the business currently carried on by Amalco, which operates as a renewable energy company that indirectly owns an operating biogas plant in Hungary. It is also engaged in the development of renewable energy projects and intends to expand into the provision of renewable energy services.  Amalco currently owns and operates a 1.14 MW biogas plant located just outside of Budapest, Hungary. The plant serves as a pilot project to demonstrate the potential for similar use of renewable energy in a variety of regions and climates.

The Company's biogas plant in Hungary is currently undergoing care and maintenance and the Company has elected to cancel its power contract during this idle time. The contract was between MAVIR Zrt. and Kenderes Biogaz Termelo Kft., the Company's subsidiary, for the sale of up to 5,842 megawatt-hours per year from July 2007 to December 2020. The power could be sold at three different rates each day: 37.72 Hungarian Forints per kilowatt-hour (HUF/kWh) at peak hours; 33.76 HUF/kWh at midday hours, and 13.75 HUF/kWh at night hours. The request was submitted on April 26, 2014 and approved on May 23, 2014 for termination on June 1, 2014. There were no penalties for the termination. Once the care and maintenance process has concluded, the Company will utilize the opportunity and seek competitive rates before establishing a new contract.

On August 6, 2014, the Company announced that it 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 the Company has agreed to assume JBMIL's right to acquire a 78% beneficial interest in the Mansounia Concession (the "Property") from the Vendors. The Company also announced that it has exercised that right and has acquired a 78% beneficial interest in the Property.

The Property lies in the southwest margin of the Siguiri Basin, in the Kouroussa Prefecture, Kankan Region, in Guinea, West Africa and covers a surface area of 145 square kilometres. The Property is located approximately 80 kilometres west, by road, from the country's third largest city, Kankan.

An exploration permit for the Property was granted by the Ministère des Mines et de la Géologie on August 20, 2013. As part of its due diligence, Blox obtained a legal opinion which confirmed that the license remains in good standing. It is the Company's intention to obtain an exploitation permit, which would give the Company the exclusive right to mine and dispose of minerals for 15 years, with a possible 5 year extension. The Company has already 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 $107,142.86 to BGL and $42,857.14 to EML and on July 31, 2014, issued BGL and EML an aggregate of 6,514,350 shares of common stock 

16


 

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. 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.

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. The Company has incurred a net loss of $363,998 for the three months ended June 30, 2014, and has incurred cumulative losses since inception of $6,249,173. 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 annual report and eventually secure other sources of financing and attain profitable operations.

Results of Operations

Quarters Ended June 30, 2014 and 2013

The following summary of our results of operations should be read in conjunction with our audited consolidated interim financial statements for the three months ended June 30, 2014 and 2013 which are included herein:

   
Quarter Ended

June 30, 2014
    Quarter Ended
June 30, 2013
 
Revenue, net of royalties $ -   $ 146,637  
Cost of goods sold   156,737     291,910  
Gross loss   156,737     145,273   
Net Loss (after operating expenses and other
  expenses)
$ 363,998   $ 172,894  

17


 

Revenue and Cost of Goods Sold

The Company's biogas plant in Hungary is currently undergoing care and maintenance and the Company has elected to cancel its power contract during this idle time. As a result, there were no revenues for the 2014 quarter compared to net revenues of $146,637 for the comparative 2013 quarter. Cost of goods decreased from $291,910 in the 2013 quarter to $156,737 in the 2014 quarter.  Our cost of goods sold decreased during the 2014 quarter primarily due to the idling of the plant in Hungary resulting in lower raw materials and labor costs. 

Expenses

Our operating expenses for the quarters ended June 30, 2014 and June 30, 2013 were as follows:

    June 30, 2014     June 30, 2013  
Operating Expenses            
Consulting and professional fees   176,278     4,982  
Foreign exchange   2,624     -  
Office and administration   28,359     20,564  
Salaries   -     2,075  
Total Operating Expenses   207,261     27,621  

Total operating expenses increased from $27,621 during the 2013 quarter to $207,261 during 2014 quarter. The increase is primarily due to higher and additional consulting fees paid for the management of the corporate office. The consulting fee includes amortization of prepaid consulting services that arose when the Company’s stock was issued as compensation for consulting services. Office and administration expense increased during the 2014 quarter compared to the 2013 quarter due primarily to increase travel costs.  Management anticipates operating expenses will materially increase in future periods as our company expands our business operations and incurs increased professional fees 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

      At June 30, 2014     At March 31, 2014  
  Current assets $ 963,412   $ 1,203,178  
  Current liabilities   238,122     255,715  
  Working capital $ 725,290   $ 947,463  

Current Assets

The decrease in current assets as of June 30, 2014 as compared to March 31, 2014 was primarily due to the decrease in cash to $763,111 from $903,850, as a result of the reduction of revenues to $nil and increase in expenses for the 2014 quarter.

18


 

Current Liabilities 

Current liabilities as at June 30, 2014 decreased by $17,593 primarily due to decreases in operations in Hungary.

Cash Flow

Our cash flow for the quarter ended June 30, 2014 and 2013 was as follows:

Cash Flows

    Quarter     Quarter  
    Ended     Ended  
    June 30,     June 30,  
    2014     2013  
Net Cash used in operating activities $ (220,268 ) $ (34,176 )
Net Cash provided in investing activities   79,529     -  
Net Cash provided by financing activities   -     57,622  
Net increase (decrease) in cash and cash equivalents $ (140,739 ) $ 23,445  

Operating activities

The increase in net cash used in operating activities for the 2014 quarter compared to the 2013 quarter was primarily as a result of the reduction of revenues to $nil and increase in expenses for the 2014 quarter due to the idling of the plant in Hungary.

Investing activities

The higher amount of cash provided in investing activities in the 2014 quarter compared to the 2013 quarter was primarily due to the disposal of equipment in the Hungary operations.

Financing activities

Net cash provided by financing activities for the 2013 quarter was from proceeds received from long-term debt.

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, 2014.

19


 

Cash Requirements

We believe that the Company’s current cash position will meet our present and near-term cash needs.  Although as the Company continues to search for both mining and renewable opportunities, 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 $763,000 in cash. We expect to incur significant capital expenditures once we close our anticipated gold acquisition of Quivira in Ghana.  If our own financial resources and then current cash-flows from operations are insufficient to satisfy our capital requirements, we may 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

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

Item 4. Controls and Procedures

Our management, including our principal executive officer and our principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934).

As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934 (the “Exchange Act”), our principal executive officer and principal financial officer evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q. Based upon that evaluation, our chief executive officer, who is our principal executive officer and our principal financial officer, concluded that, as at June 30, 2014, our disclosure controls and procedures were not effective (1) to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. The conclusion reached by our chief executive officer was a result of the material weaknesses described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.  We have identified the following material weaknesses:

  (i) inadequate segregation of duties and effective risk assessment;

20


 
  (ii) significant management changes including the change of our Chief Financial Officer and Corporate Secretary; and

  (iii) inadequate security and restricted access to computer systems, including insufficient disaster recovery plans.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.  Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

Remediation of Material Weaknesses

We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies. We intend to consider the results of our remediation efforts and related testing as part of our year-end 2015 assessment of the effectiveness of our internal control over financial reporting.

Due to our size and nature, segregation of all conflicting duties has not always been possible and may not be economically feasible. However, we are in the process of implementing processes and procedures intended to mitigate any material weaknesses identified

Subject to receipt of additional financing, we intend to undertake the below remediation measures to address the material weaknesses described in this Form 10-Q. Such remediation activities include the following:

  (i) we intend to increase the security and restricted access to computer systems, including a sufficient disaster recovery plan; and

  (ii) we intend to update the documentation of our internal control processes, including formal risk assessment of our financial reporting processes.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, our management, with the participation of our principal executive officer and principal financial officer has conducted an assessment, including testing, using the criteria in Internal Control — Integrated Framework (1992), issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Based on our evaluation under the framework in COSO, our management concluded that our internal controls over financial reporting were ineffective as of June 30, 2014 due to the above-noted material weaknesses.  The weaknesses and their related risks are not uncommon in a company of our size because of the limitations in the size and number of staff. We believe we have taken initial steps to mitigate these risks by consulting outside advisors where necessary.

21


 

Our management believes that because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

PART II - OTHER INFORMATION 

Item 1. Legal Proceedings

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.  The Company’s property is not the subject of any pending legal proceedings.   

Item 1A. Risk Factors

Smaller reporting companies are not required to provide the information required by this Item 1A.

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

Unregistered Sales of Equity Securities

None 

Purchases of equity securities by the issuer and affiliated purchasers

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

 Item 6. Exhibits

Exhibit 31 - Certification of Principal Executive and Financial Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934 as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32 – Certification of Principal Executive and Financial Officer Pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

** 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.

22


 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BLOX INC.

By: /s/ Robert Abenante                              
Robert J. Abenante
President, Chief Executive Officer and Director
(Principal Executive Officer)

Date: August 19, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ Robert Abenante                              
Robert J. Abenante
President, Chief Executive Officer and Director
(Principal Executive Officer)

Date: August 19, 2014

By: /s/ Rick Low                               
Rick Low
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

Date: August 19, 2014

23