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Dynamite Blockchain Corp. Interim / Quarterly Report 2025
47277_rns_2024-12-31_3234627e-f67e-4c82-ae28-9a1449e968df.pdf
Interim / Quarterly Report
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Dynamite Blockchain Corp.
DYNAMITE BLOCKCHAIN CORP.
(formerly Cryptoblox Technologies Inc.)
Condensed Consolidated Interim Financial Statements
For the three and nine months ended October 31, 2024 and 2023
(Expressed in Canadian dollars)
(Unaudited)
3
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.
The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company's management. The Company's independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of the condensed consolidated interim financial statements.
DYNAMITE BLOCKCHAIN CORP.
(formerly Cryptoblox Technologies Inc.)
Condensed Consolidated Interim Statements of Financial Position
(Expressed in Canadian dollars)
| October 31, 2024 $ | January 31, 2024 $ | |
|---|---|---|
| Assets | ||
| Current assets | ||
| Cash | 12,584 | 3,276 |
| Loan receivable (Note 2) | 281,216 | 263,200 |
| GST/ HST receivable | 398,389 | 413,381 |
| Deposits and prepaid expenses | 2,050,000 | 2,050,000 |
| Investment in securities (Note 3) | 1,725,484 | 1,725,484 |
| Total current assets | 4,467,673 | 4,455,341 |
| Non-current assets | ||
| Equipment (Note 6) | 332,500 | 332,500 |
| Intangible Asset - License (Note 7) | 616,667 | 766,667 |
| Intangible Asset - Intellectual property (Note 8) | 1,607,322 | 1,607,322 |
| Total non-current assets | 2,556,489 | 2,706,489 |
| Total assets | 7,024,162 | 7,161,830 |
| Liabilities and shareholders’ equity | ||
| Current liabilities | ||
| Accounts payable and accrued liabilities | 1,250,518 | 1,200,933 |
| Liability on purchase contracts (Note 8) | 1,607,322 | 1,607,322 |
| Obligation to issue shares (Note 8) | 1,216,921 | 1,216,921 |
| Due to related parties (Note 5) | 47,063 | 75,000 |
| Income tax payable | 4,332 | 4,332 |
| Loan payable (Note 9) | 263,000 | 40,000 |
| Total liabilities | 4,389,156 | 4,144,508 |
| Shareholders’ equity | ||
| Share capital (Note 10) | 50,868,490 | 50,670,490 |
| Equity reserves | 726,481 | 666,902 |
| Accumulated other comprehensive loss | (4,864) | (4,216) |
| Deficit | (48,955,101) | (48,315,854) |
| Total shareholders’ equity | 2,635,006 | 3,017,322 |
| Total liabilities and shareholders’ equity | 7,024,162 | 7,161,830 |
Nature of operations and going concern (Note 1)
Subsequent events (Note 16)
Approved and authorized for issuance by the Board of Directors on December 30, 2024:
/s/ "Victor Hui-Fai Ho"
/s/ "Akshay Sood"
Victor Ho, Audit Committee Chair
Akshay Sood, CEO
DYNAMITE BLOCKCHAIN CORP.
(formerly Cryptoblox Technologies Inc.)
Condensed Consolidated Interim Statements of Loss and Other Comprehensive Loss
(Expressed in Canadian dollars)
| Three months ended October 31, 2024 $ | Three months ended October 31, 2023 $ | Nine months ended October 31, 2024 $ | Nine months ended October 31, 2023 $ | |
|---|---|---|---|---|
| Revenue | $ - | $ - | $ - | $ - |
| Expenses | ||||
| Amortization (Note 7) | 50,000 | 64,187 | 150,000 | 127,250 |
| Consulting fees | 12,088 | 30,000 | 74,768 | 90,000 |
| Foreign exchange loss (gain) | 624 | 4,048 | 3,027 | 3,039 |
| Interest expense (Note 9) | 17,123 | 1,414 | 32,659 | 4,242 |
| Management fees (Note 5) | 30,000 | 45,000 | 90,000 | 45,000 |
| Office and general | 3,482 | 4,244 | 46,678 | 33,385 |
| Professional fees | 29,882 | 45,244 | 137,634 | 95,392 |
| Share-based compensation (Note 5,12) | 28,539 | - | 122,829 | 100,000 |
| Total expenses | 171,738 | 194,137 | 657,595 | 498,308 |
| Loss before other income | (171,738) | (194,137) | (657,595) | (498,308) |
| Other income | - | 6,050 | - | 17,951 |
| Interest income (Note 2) | 6,049 | 18,384 | ||
| Investment gain (loss) (Note 4) | - | - | - | (4,838) |
| Net loss for the period | (165,689) | (188,087) | (639,247) | (485,195) |
| Other comprehensive loss | (133) | (867) | (648) | (651) |
| Net loss and comprehensive loss for the period | $ (165,822) | $ (188,954) | $ (639,895) | $ (485,846) |
| Basic and diluted loss per share | $ (0.00) | $ (0.00) | $ (0.01) | $ (0.01) |
| Weighted average number of shares outstanding | 110,259,318 | 53,857,693 | 109,611,494 | 56,147,666 |
(The accompanying notes are an integral part of these Condensed Consolidated Interim financial statements)
DYNAMITE BLOCKCHAIN CORP.
(formerly Cryptoblox Technologies Inc.)
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity (Deficit)
(Expressed in Canadian dollars)
| Share capital | Equity reserve $ | Accumulated other comprehensive loss $ | Deficit $ | Total shareholders' equity (deficit) $ | ||
|---|---|---|---|---|---|---|
| Number of shares | Amount $ | |||||
| Balance, January 31, 2023 | 53,863,144 | 47,796,278, | 584,842 | (4,157) | (46,102,089) | 2,274,874 |
| Shares issued for Red Water Acquisition | 11,828,280 | 1,774,212 | - | - | - | 1,774,212 |
| Shares issued for directors' fees | 714,286 | 100,000 | - | - | - | 100,000 |
| Net loss for the period | - | - | - | (651) | (485,195) | (485,846) |
| Balance, October 31, 2023 | 66,405,510 | 49,670,490 | 584,842 | (4,808) | (46,587,284) | 3,663,240 |
| Balance, January 31, 2024 | 109,205,509 | 50,670,490 | 666,902 | (4,216) | (48,315,854) | 3,017,322 |
| Share issued for options exercise | 1,150,000 | 138,000 | (63,250) | - | - | 74,750 |
| Shares issued for debt settlement | 109,091 | 60,000 | - | - | - | 60,000 |
| Stock options expense | - | - | 122,829 | - | - | 122,829 |
| Net loss for the period | - | - | - | (648) | (639,247) | (639,895) |
| Balance, October 31, 2024 | 110,464,600 | 50,868,490 | 726,481 | (4,864) | (48,955,101) | 2,635,006 |
(The accompanying notes are an integral part of these consolidated financial statements)
DYNAMITE BLOCKCHAIN CORP.
(formerly Cryptoblox Technologies Inc.)
Condensed Consolidated Interim Statements of Cash Flows
(Expressed in Canadian dollars) (CAD)
| Nine months ended October 31, 2024 $ | Nine months ended October 31, 2023 $ | |
|---|---|---|
| Operating activities | ||
| Net loss from continuing operations | (656,247) | (485,195) |
| Items not involving cash: | ||
| Amortization (Note 7) | 150,000 | 114,187 |
| Share-based compensation (Note 5, 12) | 122,829 | - |
| Interest income (Note 2) | (18,016) | (17,950) |
| Non-cash Interest expense (Note 9) | - | 4,240 |
| Gain (loss) in investment in associate | - | 4,838 |
| Changes in non-cash working capital items: | ||
| Accounts payable and accrued liabilities | 79,585 | 229,872 |
| Shares issued for directors’ fees (Note 11) | - | 100,000 |
| Accounts receivable | - | 50,889 |
| Due to related parties | 2,063 | - |
| Deposits and prepaid expenses | - | - |
| GST/HST receivable | 14,992 | (18,492) |
| Net cash used in operating activities | (287,794) | (17,611) |
| Financing activities | ||
| Loan Payable (Note 9) | 223,000 | - |
| Proceeds from issuance of exercise options | 74,750 | - |
| Net cash provided by financing activities | 297,750 | - |
| Effect of foreign currency translation | (648) | (651) |
| Increase (decrease) in cash | 9,308 | (18,262) |
| Cash, beginning | 3,276 | 21,683 |
| Cash, ending | 12,584 | 3,421 |
| Non-Cash investing and financing activities | ||
| Share issued for account payable settlement | 60,000 | - |
| Fair Value of shares issued for Redwater (Note 8) | - | (1,774,212) |
(The accompanying notes are an integral part of these consolidated financial statements
8
CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
1. Nature of Operations and Going Concern
Dynamite Blockchain Corp. (formerly CryptoBlox Technologies Inc.) (the "Company") was incorporated under the laws of British Columbia on January 16, 2015. The name of the Company changed to Dynamite Blockchain Corp. on November 26, 2024. The Company's shares are listed on the Canadian Securities Exchange (the "Exchange") under the symbol "KAS" (formerly BLOX). The Company's registered records office is 6th floor – 905 West Pender Street, Vancouver, BC V6C 1L6.
Dynamite Blockchain Corp. is a blockchain technology and infrastructure company focused on building three (3) divisions: Mining, Products and Services, which collectively comprise its Blockchain Ecosystem Strategy.
On November 1, 2023, the Company completed a 10:1 consolidation of its total issued and outstanding shares. No fractional shares were issued. All fractional shares that resulted from the consolidation were rounded up or down to the nearest whole number. All share figures and references have been retroactively adjusted to reflect the share consolidation.
These condensed consolidated interim financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. The Company does not have sufficient cash to sustain operations for the next twelve months without additional financing. The continued operations of the Company are dependent on its ability to generate future cash flows, raise additional cash through debt or equity, or liquidate its assets. Management is of the opinion that sufficient working capital will be obtained from external financing to meet the Company's liabilities and commitments as they become due; however, they may not be at terms that are favorable to the Company. These factors indicate the existence of a material uncertainty that may cast significant doubt upon the Company's ability to continue as a going concern. These condensed consolidated interim financial statements do not reflect any adjustments that may be necessary if the Company is unable to continue as a going concern.
Basis of Presentation and Compliance:
a) Statement of Compliance and Principles of Consolidation
These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and interpretations of the IFRS Interpretations Committee as issued by the International Accounting Standards Board ("IASB") on a going concern basis.
These Interim condensed consolidated interim financial statements include the accounts of the Company and its wholly owned subsidiaries, 1Linx Ltd., CryptoPlug Technologies Inc. ("CryptoPlug"), Optimal CP Inc. ("Optimal") and Red Water Acquisition Corp. ("Redwater"). All intercompany transactions and balances have been eliminated on consolidation. On October 29, 2021, the Company entered into a share exchange agreement to acquire CryptoPlug as its wholly owned subsidiary to perform activities related to developing a blockchain based, crypto-compatible application for smartphones. On December 8, 2021, the Company closed a share exchange agreement to acquire Optimal, a company focused on the development and management of crypto mining facilities. On June 29, 2023, the Company acquired 100% of the issued and outstanding shares of Red Water.
IONiX Pro Battery Technologies Inc ("IONiX") was removed from the consolidation in October 2021 after the Company's ownership in IONiX dropped below 50%. On January 2, 2024, the company sold its ownership in IONiX Pro Battery Technologies Inc. ("IONiX"). The Company records IONiX in accordance with the equity method under IFRS.
The Company recognized a gain from the dissolution of GRT Technologies Inc. (GRT) of $1,179,357 in the statement of loss and comprehensive loss for the year ended January 31, 2023. GRT was dissolved as there was no business activity for the past several years.
9
CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
These condensed consolidated interim financial statements were approved by the Board of Directors of the Company on December 30, 2024.
b) Basis of Presentation and Functional Currency
The condensed consolidated interim financial statements have been prepared on a historical cost basis and are presented in Canadian dollars. The functional currency of the Company, CryptoPlug, Optimal CP Inc., and Red Water Acquisition Corp. is the Canadian dollar. The functional currency of 1Linx Ltd. is the United States dollar and the currency translation adjustment is recognized through other comprehensive income.
c) Use of Estimates, Assumptions and Judgements
The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires the Company's management to make estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.
Significant areas requiring the use of estimates include the useful life and amortization of equipment and intangible assets, measurement of share-based payments, and deferred income tax asset valuation allowances, impairment considerations for investments.
The preparation of condensed consolidated interim financial statements in accordance with IFRS requires the Company to make judgments, apart from those involving estimates and business acquisitions, in applying accounting policies. Judgments made by management in the application of IFRS that have a significant effect on the financial statements include the factors supporting the capitalization and recoverability of property and equipment and intangible assets, and inputs into the calculation of the fair value of notes payable and share-based payments.
d) Recent Accounting Pronouncements
The accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company's condensed consolidated interim financial statements.
e) Material Accounting Policy
The material accounting policies applied to these condensed consolidated interim financial statements are the same as those applied to the Company's audited consolidated financial statements for the year ended January 31, 2024.
- Loan Receivable
On April 13, 2022, the Company issued a $200,000 unsecured promissory note receivable bearing interest at 12% per annum and a maturity date of December 31, 2022. The Company granted the borrower an extension and the borrower has agreed to pay a penalty of $20,000 with accrued interest up to the date the amount is paid in full. The Company recognized interest income of $18,016 for the nine months ended October 31, 2024 (October 31, 2023 - $17,951).
10
CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
3. Investment in Securities
a) Investment in Modern Battery Solutions Inc.:
On January 2, 2024, the Company sold its investment in IONiX Pro Battery Technologies Inc. and settled on outstanding debts for an investment in Modern Battery Solutions Inc. (Modern) of 571,161 common shares at $3.00 per share for a total value of $1,725,483. Modern Battery Solutions Inc. is a privately held company. As at October 31, 2024, the company has an investment of $1,725,483 (January 31, 2024 - $1,725,483).
b) Investment in Voltaire Services Corp:
| October 31, 2024 and 2023 | ||
|---|---|---|
| Cost $ | Fair Value $ | |
| Available-for-sale securities: | ||
| Voltaire Services Corp. - 1,000 common shares | 1 | 1 |
4. Investment in Associate
| October 31, 2024 $ | January 31 2024 $ | |
|---|---|---|
| IONiX Pro Battery Technologies Inc. | - | - |
On January 2, 2024, the Company sold its remaining 25% interest in IONiX Pro Battery Technologies Inc. (IONiX) to the Modern Battery Solutions Inc. (Modern) and assigned a debt outstanding for a total consideration of $1,725,483 for 571,161 common shares at a fair value of $3.00 per share. The Company's assigned $1,225,482 of debt owing from IONiX to Modern in exchange for 571,161 common shares of Modern.
On January 2, 2024, the carrying value of the investment in IONiX was $4,838 and the carrying value of the outstanding receivable from IONiX was $339,642. The Company recognized a gain on sale of investment of 1,450,333 the year ended January 31, 2024.
5. Related Party Transactions
The Company has identified the directors and senior officers as key management personnel.
As at October 31, 2024, the Company owed a balance of $47,063 to the CEO (January 31, 2024 - $75,000). During the nine months ended October 31, 2024, the Company expensed $90,000 in management fees for the CEO (October 31, 2024 – $45,000). On March 11, 2024, the company issued 54,545 shares at the value per share of $0.55 for total consideration for $30,000 for CEO debt conversion.
On October 30, 2024, the Company issued 2,000,000 restricted share units ("RSUs") with market price of $0.175 per unit to CEO of the Company that vest as follows: (i) 25% to vest four (4) months from issuance; (ii) 25% to vest eight (8) months from issuance; (iii) 25% to vest twelve (12) months from issuance; and (iv) 25% to vest sixteen (16) months from issuance. During the three months ended October 31, 2024, the Company incurred an expense of $1,502.
11
CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
On January 24, 2024, the Company granted stock options to the officers and directors of the company at an exercise price of $0.065 for a term of five years. The options vest over a schedule of three years starting with 25% immediately and 12.5% after each six months, totally 100% vesting in three years. The fair value of the stock options calculated using the Black-Scholes model was $0.055 per stock option.
a) The CEO and director received 2,500,000 stock options. During the nine months ended October 31, 2024, the Company expensed $53,906 through the statement of loss and comprehensive loss for vesting stock options.
b) The CFO received 250,000 stock options. During the nine months ended October 31, 2024, the Company expensed $5,391 through the statement of loss and comprehensive loss for vesting stock options.
c) The directors received 100,000 stock options each for a total of 200,000 stock options. During the nine months ended October 31, 2024, the Company expensed $4,312 through the statement of loss and comprehensive loss for vesting stock options.
On June 16, 2023, Bryson Goodwin resigned as Chief Executive Officer and director of the Company. The Company appointed Taryn Stemp as its Interim Chief Executive Officer. On June 16, 2023, the Company appointed Akshay Sood to its board of directors. On August 4, 2023, the Company appointed Akshay Sood as its CEO. On August 25, 2023, Taryn Stemp resigned as director. On August 25, 2023, the Company appointed Rahim Teja to its board of directors.
On June 9, 2023, the Company incurred $100,000 director and officer fees by way of a common share issuance of 7,142,856 common shares. The shares were priced at $0.014 per share based on a 20-day volume weighted average price, resulting in a total transaction value of $100,000 (2023 - $nil).
As at October 31, 2024, the directors of the Company were Akshay Sood, Rahim Teja, and Victor Hiu-Fai Ho.
6. Equipment
The Company acquired 133 ASIC Miners through the acquisition of Red Water (Note 8). The ASIC Miners are not in use in the period ended October 31, 2024 and year ended January 31, 2024, and therefore have not been amortized.
| Cost | Amount ($) |
|---|---|
| Acquired on June 29, 2023 (Note 8) | 332,500 |
| Balance at January 31, 2024 | 332,500 |
| Amortization | |
| Additions | - |
| Balance at January 31 and October 31, 2024 | - |
| Net Book Value | |
| Balance at January 31 and October 31, 2024 | 332,500 |
7. Intangible Asset- Technology License
a) Crypto Green Tech Inc. Patent License
On November 17, 2023, the Company has entered into a 4-year patent license agreement with Crypto Green Tech Inc., ("Crypto Green") an Ontario Corporation, whereby the Company has acquired a four-year royalty-free, assignable, worldwide license to develop and distribute products based on Crypto Green's crypto mining hybrid solar and wind tree with water reservoir system. Crypto Green holds the rights to a patent application submitted with the International Bureau of WIPO respecting the Renewable Energy Powered Crypto Mining Technology. In consideration for
12
CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
the license agreement, the Company has issued 40,000,000 common shares in capital of the Company to Crypto Green's shareholders. A finder's fee of 2,800,000 common shares was issued to the party that introduced Crypto Green to the Company. The fair value of the consideration was $0.25 per common share for a total of $1,070,000, $1,000,000 for the Patent license and 70,000 for the share issuance cost. The Crypto Green Patent license was fairly valued at $800,000 on the date of purchase and recognized a $200,000 impairment on intangible during the year ended January 31, 2024. The Crypto Green License is amortized over 4 years.
| $ | |
|---|---|
| Cost: | |
| Balance, January 31, 2023 | - |
| Addition on November 17, 2023 | 1,000,000 |
| Impairment | (200,000) |
| Balance, January 31, 2024 / October 31, 2024 | 800,000 |
| Accumulated Amortization: | - |
| Balance, January 31, 2023 | - |
| Additions | 33,333 |
| Balance, January 31, 2024 | 33,333 |
| Additions | 150,000 |
| Balance, October 31, 2024 | 183,333 |
| Net Book Value: | |
| Balance, January 31, 2024 | 766,667 |
| Balance, October 31, 2024 | 616,667 |
b) Battery Management Systems Technology License
On August 31, 2020, the Company signed a definitive agreement with IBS - Intelligent Battery Services Ltd. and Jiangsu RichPower New Energy Co. Ltd. to acquire the exclusive North and South American rights, as well as the European and African rights to a broad set of applied technologies and solutions for battery management systems, energy storage technology applications and battery safety applications (BMS Technology). The BMS Technology license was amortized over a 10-year period.
As at October 31, 2024 the BMS Technology intangible asset's net book value is $Nil (January 31, 2024: $Nil). As at October 31, 2024, the outstanding amount on the BMS license fee is $Nil (January 31, 2024 $Nil) payable in common shares. The nine months ended October 31, 2024 had an amortization expense of $Nil (October 31, 2023: $75,000). During the year ended January 31, 2024, the Company took an impairment loss of $760,278 on the intangible asset.
- Intangible Assets – Intellectual Property
a) Red Water Acquisition Corp.
On June 16, 2023, the Company entered into a Share Purchase Agreement (the "Agreement") with Red Water Acquisition Corp ("Red Water") to acquire 100% of the issued and outstanding shares of Red Water. The acquisition is determined to be a business combination. In exchange for 100% of the total issued and outstanding shares of Red Water, the Company will issue 22,000,000 common shares of the Company (the "Consideration Shares") at a deemed price of $0.50 per Consideration Share to the shareholders of Red Water for a deemed transaction value of $11,000,000. The Consideration Shares issued in tranches with 11,828,080 Consideration Shares being delivered to the shareholders on Red Water upon closing of the Acquisition on June
13
CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
29, 2023, and the remaining 10,171,920 Consideration Shares to be delivered upon the completion of certain milestones being met by Red Water pursuant to the terms of the agreement.
The fair value of the consideration for the first tranche of 11,828,080 common shares is $1,774,212 at $0.15 per common share. The fair value of the outstanding consideration second and third tranche of 10,171,920 common shares is $.12 per common share for a value of $1,216,921.
The purchase price allocation is as follows:
| Amount ($) | Amount ($) | |
|---|---|---|
| Purchase Consideration | ||
| Shares issued (11,828,080 shares at $0.15 per Share) | 1,774,212 | |
| Outstanding share (10,171,920 shares at $0.12 per share, discounted at 4.9% over 3 months) | 1,216,921 | |
| Total Purchase Consideration | 2,991,133 | |
| Net identifiable assets | ||
| Accounts Receivable and other assets | 2,401 | |
| Equipment – 133 ASIC Miners | 332,500 | |
| Purchase Contracts | 1,607,322 | |
| Accounts Payable and Accrued Liabilities | (4,615) | |
| Liability on rights to purchase contracts | (1,607,322) | |
| Total net identifiable assets | 330,286 | |
| Goodwill | 2,660,847 | |
| Total Net Assets | 2,991,133 |
During the year ended January 31, 2024, the company took a goodwill impairment of $2,660,847 as the transaction was not closed by the outside date per the share purchase agreement.
On June 28, 2024, the company entered into an amendment to the share purchase agreement extending the share purchase agreement to September 30, 2024. The Company continues to work with the original vendors of Redwater to find a path forward.
b) Optimal CP Inc.
On November 22, 2021, the Company entered into a share exchange agreement to acquire Optimal CP Inc. ("Optimal"), a company focused on the development and management of crypto mining facilities. As compensation for the acquisition, the Company agreed to issue 5,500,000 common shares at a price of $2.50 per common share, to the shareholders of Optimal, for a deemed transaction value of $13,750,000. On December 8, 2021, the Company closed the acquisition of Optimal CP Inc., by issuing 5,500,000 common shares at a price of $2.50 per common share to the shareholders of Optimal CP Inc., for a deemed transaction value of $13,750,000. There are 3,000,000 of 5,500,000 common shares issued held in an escrow account until the milestones specified in the agreement are met. As at October 31, 2024, the 3,000,000 shares remain held in escrow. The acquisition of Optimal does not constitute a business combination as the Company does not meet the definition of a business under IFRS 3 – Business Combination. As a result, the transaction has been measured at the fair value of equity consideration issued to acquire this Company.
- Loan Payable
a) CEBA Loan
As at October 31, 2024, the CEBA loan has a balance outstanding of $Nil (January 31, 2024 -
14
CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
$Nil). During the nine months ended October 31, 2024, the Company recognized interest expense $Nil (Oct 31, 2023 - $4,260). The company repaid the amount of $40,000 on January 18, 2024 and received a loan forgiveness of $16,865 during the year ended January 31, 2024 through other income.
b) XLabs Therapeutics (ONT) Inc. Loan
The loans advances mature one year from the effective date. The loan advances have an interest rate of 18% compounded annually and due on the maturity date.
| Effective Date of Advance | Principal Amount | Interest Accrued Nine months ended October 31, 2024 |
|---|---|---|
| January 18, 2024 | $40,000 | $5,661 |
| March 28, 2024 | $75,000 | $8,026 |
| May 7, 2024 | $60,000 | $5,237 |
| May 24, 2024 | $25,000 | $1,973 |
| June 25, 2024 | $25,000 | $1,578 |
| August 22, 2024 | $30,000 | $1,036 |
c) 1437160 BC Ltd. Loan
On October 29, 2024, the Company received a loan of $8,000 from 1437160 BC Ltd. that will accrue interest of 18% compounded annually until maturity date of October 29, 2025. During the nine months ended October 31, 2024, no interest was accrued.
10. Share Capital
Authorized: Unlimited common shares without par value
On November 1, 2023, the Company completed a 10:1 consolidation of its total issued and outstanding shares. No fractional shares were issued. All fractional shares that resulted from the consolidation were rounded up or down to the nearest whole number. All share figures and references have been retroactively adjusted to reflect the share consolidation.
Share issuances:
For the nine months ended October 31, 2024
a) On March 11, 2024, the company issued 54,545 shares at the value per share of $0.55 for total consideration for $30,000 for CEO debt conversion.
b) On March 11, 2024, the company issued 54,545 shares at the value per share of $0.55 for total consideration for $30,000 for a consultant debt conversion.
c) On August 1, 2024, the Company issued 25,000 shares for stock options were exercised at an exercise price of $0.065 per stock option for total proceeds of $1,625 and fair value of $1,375.
d) On August 2, 2024, the Company issued 93,750 shares for stock options were exercised at an exercise price of $0.065 per stock option for total proceeds of $6,094 and fair value of $5,156.
e) On August 12, 2024, the Company issued 93,750 shares for stock options were exercised at an exercise price of $0.065 per stock option for total proceeds of $6,094 and fair value of $5,156.
f) On August 20, 2024, the Company issued 937,500 shares for stock options were exercised at an exercise price of $0.065 per stock option for total proceeds of $6,938 and fair value of $51,563.
g) On October 30, 2024, the Company issued 5,000,000 restricted share units ("RSUs") with market
15
CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
price of $0.175 per unit, 2,000,000 to CEO and 3,000,000 to two consultants of the Company that vest as follows: (i) 25% to vest four (4) months from issuance; (ii) 25% to vest eight (8) months from issuance; (iii) 25% to vest twelve (12) months from issuance; and (iv) 25% to vest sixteen (16) months from issuance. During the three months ended October 31, 2024, the Company incurred an expense of $3,756.
For the year ended January 31, 2024
a) On June 12, 2023, the Company issued 714,286 common shares at a price of $0.14 for a deemed transaction value of $100,000 to the directors and officer of the Company for directors' fees for the year ended January 31, 2023.
b) On June 29, 2023, the Company issued 11,828,080 common shares at a fair value of $0.15 to Redwater shareholders for total consideration of $1,774,212 as part of consideration of Red Water acquisition.
c) On November 20, 2023, the Company has entered into a patent license agreement with Crypto Green Tech Inc., ("Crypto Green") and a finders fees for 42,800,000 common shares at a fair value of $0.025 per common share for a total consideration of $1,070,000.
The following tables present share issuance continuity for the year ended January 31, 2024 and the nine months ended October 31, 2024.
| Number of Shares | Value $ | |
|---|---|---|
| Balance net of share issuance cost, January 31, 2023 | 53,863,143 | 47,796,278 |
| Shares issued for directors' fees | 714,286 | 100,000 |
| Shares issued for Red Water acquisition | 11,828,080 | 1,774,212 |
| Shares issued for Crypto Green acquisition | 42,800,000 | 1,070,000 |
| Share issuance costs | - | (70,000) |
| Balance net of share issuance cost, January 31, 2024 | 109,205,509 | 50,740,490 |
| Shares issued for CEO debt conversion | 54,545 | 30,000 |
| Shares issued for consultant debt conversion | 54,546 | 30,000 |
| Shares issued for Stock options exercised | 1,150,000 | 138,000 |
| Balance October 31, 2024 | 110,464,600 | 50,938,490 |
11. Purchase Warrants
The following table summarizes information about the warrants at and October 31, 2024 and the changes for the period then ended:
| October 31, 2024 | January 31, 2024 | |||
|---|---|---|---|---|
| Number of Warrants | Weighted average exercise price $ | Number of Warrants | Weighted average exercise price $ | |
| Warrants outstanding – beginning of year | 3,018,680 | 6.27 | 12,849,180 | 1.55 |
| Expired | (1,560,280) | 5.00 | (7,600,000) | 0.08 |
| Expired | (1,008,400) | 10.00 | (2,230,500) | 0.17 |
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CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
| Warrants outstanding – end of the period / year | 450,000 | 2.50 | 3,018,680 | 6.27 |
|---|---|---|---|---|
On February 11, 2024, 1,560,280 share purchase warrants with an exercise price of $5.00 expired.
On April 1, 2024, 638,000 share purchase warrants with an exercise price of $10.00 expired.
On June 9, 2024, 370,400 shares purchase warrants with an exercise price of $10.00 expired.
The following table summarizes information about granted, exercised purchase warrants and outstanding warrants at October 31, 2024.
| Date issued | Expiry date | Number of warrants issued | Exercise price | Number of warrants Exercised | Exercised Amount | Number of warrants Outstanding |
|---|---|---|---|---|---|---|
| Jan 17, 2022 | Jan 17, 2025 | 450,000 | 2.50 | - | - | 450,000 |
| Balance at October 31, 2024 | 450,000 | 2.50 | - | - | 450,000 |
12. Stock Options
The Company has a stock option plan that provides for the issuance of options to its directors, officers, and employees. The maximum number of outstanding options must be no more than 10% of the issued and outstanding shares of the Company at any point in time. The term of the options must be no longer than 10 years and the directors determine the vesting period.
On August 14, 2023, 270,000 stock options with an exercise price of $0.10 expired.
On January 24, 2024, the Company granted 5,700,000 stock options exercisable at $0.065 per share for a period of five years. The options vest over a schedule of three years, starting with 25% immediately and 12.5% after each six months, totaling 100% vesting in three years. The fair value of the stock options is $0.055 per stock option and was calculated using the Black-Scholes model.
On October 31, 2024, 156,250 stock options with a fair value of $0.055 per option were cancelled due to the resignation of a consultant on August 2, 2024.
During the nine months ended October 31, 2024, the company recognized stock option expense of $119,073 (October 31, 2023 - $Nil) (Note 5).
The following table summarizes information about the options at October 31, 2024 and January 31, 2024, and the changes for the periods ended:
| October 31, 2024 | January 31, 2024 | |||
|---|---|---|---|---|
| Number of options | Weighted average exercise price | Number of options | Weighted average exercise price | |
| $ | $ | |||
| Options outstanding – beginning of year | 5,700,000 | 0.065 | 270,000 | 0.10 |
| Expired | (156,250) | 0.065 | (270,000) | 0.10 |
17
CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
| Stock options issued | - | - | 5,700,000 | 0.065 |
|---|---|---|---|---|
| Stock options exercised | 1,150,000 | 0.065 | - | - |
| Options outstanding – end of the period | 4,393,750 | 0.065 | 5,700,000 | 0.065 |
13. Commitments and Contingencies
a) As a result of a Temporary Order issued on November 26, 2018, issued by the B.C. Securities Commission against certain consultants, the Company is reviewing a private placement that closed in June 2018. The Order cites improper use of the "consultant's exemption" contained in section 2.24 of National Instrument 45-106 and the payment of consulting fees to the persons named in the Order. The June 2018 private placement involved multiple consultants named in the Order. Following completion of the private placement, the Company paid consulting fees to these consultants. There is a risk that the Commission in its review may view the private placement to the consultants and the use of proceeds, as an improper use of s.2.24 and an illegal distribution of shares. If such is adjudicated to be the case, the Company may be required to take remedial action. Such action, if required, cannot at this time be determined.
b) On July 11, 2019, two individuals filed a Notice of Civil Claim in the Supreme Court of British Columbia seeking certification for a class action against the Company and numerous other parties. Management is not able to quantify the impact of this action.
14. Financial Instruments
a) Fair Values
Assets and liabilities measured at fair value on a recurring basis were presented on the Company's consolidated statement of financial position as at October 31, 2024, as follows:
| Quoted prices in active markets for identical instruments (Level 1) $ | Significant other observable inputs (Level 2) $ | Significant unobservable inputs (Level 3) $ | |
|---|---|---|---|
| Cash | 12,584 | - | - |
| Investment in securities (Note 3) | - | - | 1,725,483 |
| Investment in Voltaire | - | 1 | |
| Balance October 31, 2024 | 12,584 | - | 1,725,484 |
The fair values of other financial instruments, which include accounts receivable, accounts payable, loans payable, liability on purchase contracts, obligation to issue shares, and amounts due to related parties, approximate their carrying values due to the relatively short-term maturity of these instruments.
The investment in Modern Battery Solutions Inc. (Modern) is an investment in a private company valued at fair value. The acquisition of this investment was between two arm's length parties and occurred on January 2, 2024, for consideration of $1,725,483.
b) Credit Risk
18
CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and accounts receivable. The Company limits exposure to credit loss by placing its cash with high credit quality financial institutions. The Company performs ongoing credit evaluations, does not require collateral and establishes an allowance for doubtful accounts based on the age of the receivable and the specific identification of receivables the Company considers at risk. The carrying amount of financial assets represents the maximum credit exposure.
c) Foreign Exchange Rate Risk
Foreign exchange rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company has exposure to currency risk from assets and liabilities denominated in US dollars. The Company does not use derivative instruments to hedge exposure to foreign exchange rate risk. However, management believes that the risk from fluctuations in foreign exchange rates is not significant.
d) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company currently settles its financial obligations with cash. The ability to do this relies on the Company raising debt or equity financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs. Liquidity risk is assessed as high.
e) Classification of Financial Instruments
Financial assets and liabilities included in the consolidated statement of financial position are as follows:
| October 31, 2024 | January 31, 2024 | |
|---|---|---|
| $ | $ | |
| Financial assets classified as fair value through profit or loss: | ||
| Cash | 12,584 | 3,276 |
| Non-derivative financial liabilities: | ||
| Trade payables | 1,250,518 | 1,200,933 |
| Income tax payable | 4,332 | 4,332 |
| Due to related parties | 47,063 | 75,000 |
| Loan Payable (Note 9) | 263,000 | 40,000 |
| Liability on purchase contracts (Note 8) | 1,607,322 | 1,607,322 |
| Obligation to issue shares (Note 8) | 1,216,921 | 1,216,921 |
| 4,389,156 | 1,901,411 |
15. Concentrations
The Company did not generate revenue during the nine months ended October 31, 2024 (October 31, 2023 - $Nil). As at October 31, 2024, the Company's loan receivable due from Optimal CP was $281,216 (January 31, 2024 - $263,200).
16. Subsequent Events
On November 13, 2024, the Company completed an asset purchase agreement with 1001038815 Ontario Inc. to purchase five (5) IceRiver KS3 Kaspa mining units. Following the closing of this transaction, the Company and the Vendor have entered into a Management Services Agreement (the "MSA") to provide for the hosting, set up, operations and ongoing maintenance, of the Miners by the Vendor. As consideration for the Agreement, the Company has issued 11,000,000 common shares at a deemed price of $0.10 per share for a deemed transaction value of $1,100,000. The Company also paid a finder's fee of 550,000 common shares at a deemed price of $0.10 per share, for total
19
CRYPTOBLOX TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended October 31, 2024
(Expressed in Canadian dollars)
consideration of $55,000.
On November 22, 2024, the Company received $22,500 one-year term loan from Baiocchi Ventures Inc. at an interest rate of 18% payable on maturity.
On December 2, 2024, the Company entered into a Securities Exchange Agreement to acquire 100% of Kaspa Mining Limited. Kaspa Mining currently owns and operates twenty-five (25) Bitmain KS5 Pro Kaspa Miners. This transaction is not closed as of the date of this report.