UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)  February 27, 2014

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

Nevada   000-53565   20-8530914
(State or other jurisdiction   (Commission   (IRS Employer
of incorporation)   File Number)   Identification No.)

Suite 600 - 666 Burrard Street, Vancouver, British Columbia, Canada V6C 3P6
(Address of principal executive offices and Zip Code)

Registrant’s telephone number, including area code:  (604) 688-3899

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
 [  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
 [  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
 [  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


ii

TABLE OF CONTENTS

GENERAL NOTE. 1
FORWARD-LOOKING STATEMENTS. 1
Item 1.01 Entry into a Material Definitive Agreement. 1
Item 2.01 Completion of Acquisition or Disposition of Assets. 2
DESCRIPTION OF BUSINESS. 3
DESCRIPTION OF PROPERTY. 7
RISK FACTORS. 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. 23
DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS. 25
EXECUTIVE COMPENSATION. 28
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE. 31
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. 32
RECENT SALES OF UNREGISTERED SECURITIES. 34
Description of Securities. 34
INDEMNIFICATION OF DIRECTORS AND OFFICERS. 35
Item 3.02 Unregistered Sales of Equity Securities. 35
Item 5.01 Changes in Control of Registrant. 37
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. 37
Item 5.03 Amendments to Articles of Incorporation of Bylaws; Change in Fiscal Year. 37
Item 5.06 Change in Shell Company Status. 37
Item 9.01 Financial Statements and Exhibits. 39
SIGNATURES. 40


 

1

GENERAL NOTE

This Current Report on Form 8-K is being filed by our company following the completion of our acquisition of International Eco Endeavors Corp., a private British Columbia, Canada corporation (“ Eco Endeavors ”), on February 27, 2014, pursuant to the terms of an Amalgamation Agreement dated June 19, 2013, as amended (collectively, the “ Amalgamation Agreement ”).

In connection with the closing of the Amalgamation Agreement, we experienced a change of control as a new director, a nominee of Eco Endeavors, was appointed to our board of directors, prior management resigned and were replaced by management nominated by Eco Endeavors, and former shareholders of Eco Endeavors were issued common shares that constituted 59% of our issued and outstanding shares on the closing thereof. As a result, we have determined to treat the acquisition of Eco Endeavors as a reverse merger and recapitalization for accounting purposes, with Eco Endeavors as the acquirer for accounting purposes.  As such, the financial information, including the operating and financial results and audited and unaudited financial statements included in this Current Report on Form 8-K are that of Eco Endeavors rather than that of our company prior to the completion of the transactions described herein.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements.  Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “intends”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, or “continue” or the negative of these terms or other comparable terminology.  These statements speak only as of the date of this Current Report and are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks listed under the section entitled “Risk Factors” commencing on page 7 of this report, which may cause our or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

In this report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

As used in this report and unless otherwise indicated, the terms “we”, “us” and “our” refer to Blox, Inc.

Item 1.01 Entry into a Material Definitive Agreement.

Consulting Agreements

On February 27, 2014, our company entered into a consulting agreement with Robert Abenante, a director and officer of our company, and an additional consulting agreement with Emerald Power Consulting Inc., a private British Columbia company wholly-owned by Mr. Abenante.  The disclosure under Item 2.01 of this Current Report on Form 8-K entitled “Executive Compensation – Consulting Agreements with Robert Abenante” is responsive to this Item and is hereby incorporated by reference.

Royalty Agreement

On February 27, 2014, Kenderes Biogaz Termelo Korlatolt Fele Lossegu Tarsasag (“ Kenderes Biogaz ”), our indirect wholly-owned subsidiary which owns our Hungarian biogas plant, entered into a royalty agreement with Waratah Investments Limited, a Ghana corporation, whereby Kenderes Biogaz agreed to pay a royalty to Waratah Investments Limited calculated at 3% of all revenues generated from the plant and an additional royalty calculated at 1.5% of all revenue generated from all other assets of Kenderes Biogaz other than the existing biogas plant.


 

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Item 2.01 Completion of Acquisition or Disposition of Assets

Closing of the Amalgamation Agreement

Further to the Form 8-K dated June 23, 2013 and filed on June 27, 2013, which disclosed the entry into the Amalgamation Agreement, among our company, Ourco Capital Ltd. (“ Ourco ”), our wholly-owned subsidiary, Eco Endeavors, Kenderesh Endeavors Corp. (“ Kenderesh ”), and Kenderes Biogaz, we closed the Amalgamation Agreement and completed the amalgamation of Ourco and Eco Endeavors under the name “Blox Energy Inc.” (“ Amalco ”), thereby acquiring all of the issued and outstanding shares of Amalco on February 27, 2014.  Amalco is a private company incorporated pursuant to the Business Corporations Act (British Columbia) and is a renewable energy company that indirectly owns an operating biogas plant in Hungary and is further engaged in the development of renewable energy projects and intends to expand into the provision of renewable energy services.

Pursuant to the terms of the Amalgamation Agreement, and on the closing date thereof, all of the issued and outstanding common shares of Eco Endeavors was cancelled, and the former shareholders of Eco Endeavors received in exchange 60,000,000 units of our company on a pro rata basis.  Each unit consists of one common share and one share purchase warrant, each warrant exercisable into an additional common share of our company at an exercise price of US$0.05 per share for a period of five years from the closing date.  Based upon the price of the concurrent financing of US$0.05 per unit, the aggregate value of the common shares issued to the former Eco Endeavors shareholders was US$3,000,000.

Following the closing of the transaction, our company had 101,572,464 common shares issued and outstanding.  New directors and officers of our company and new directors of Amalco received 6,100,000 common shares (or 6% on a non-diluted basis) in connection with the closing of the Amalgamation Agreement.  Pursuant to a consulting agreement dated February 27, 2014 between our company and Robert Abenante, a director and officer of our company, Mr. Abenante received an additional 9,233,860 common shares and 8,000,000 share purchase warrants (or 9.1% on a non-diluted basis).  The entry into the consulting agreement was a condition of closing of the Amalgamation Agreement.

Following the closing of the transaction, we directly acquired all of the common shares of Amalco.  On such date, Amalco became a wholly-owned subsidiary of our company.

A copy of the Amalgamation Agreement was filed as Exhibit 10.7 to the Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on September 17, 2013 and is incorporated herein by reference.  An amendment to the Amalgamation Agreement was subsequently filed on Form 8-K with the Securities and Exchange Commission on February 24, 2014 and is also incorporated herein by reference.

Concurrent Financing

In connection with the closing of the Amalgamation Agreement on February 27, 2014, we completed a non-brokered private placement, pursuant to which we issued an aggregate of 20,000,000 units at a price of US$0.05 per unit for gross proceeds of US$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 US$0.05 for a period of 5 years from the closing of the financing.  The units were issued to two non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 , as amended.

Change of Officers and Directors

Upon the closing of the Amalgamation Agreement, our board of directors appointed Robert Abenante as a director of our company and Robert Abenante, Robert Ironside and Cedric Wilson were appointed directors of Amalco.  Effective as of the closing of the Amalgamation Agreement, Ronald Renne resigned from all executive officer positions and Robert Abenante was appointed as Chief Executive Officer and President, Kimberly Gillett was appointed Corporate Secretary and Marco Parente was appointed as Interim Chief Financial Officer.


 

3

General Matters

Except for the Amalgamation Agreement and the transactions contemplated therein, none of our company, associates of our company, directors or officers of our company serving prior to the closing of the Amalgamation Agreement, or associates of such directors and officers, had any material relationship with Eco Endeavors or any of the shareholders of Eco Endeavors prior to the transactions described above.

The securities of our company that were issued to the former shareholders of Eco Endeavors upon the closing of the Amalgamation Agreement and to subscribers in the concurrent private placement financing have not been and will not be registered under the Securities Act of 1933 , as amended, or under the securities laws of any state in the United States, and were issued in reliance upon an exemption from registration under the Securities Act of 1933 , as amended.  The securities may not be offered or sold in the United States absent registration under the Securities Act of 1933 , as amended, or an applicable exemption from such registration requirements.

We have determined to treat the acquisition of Eco Endeavors as a reverse merger and recapitalization for accounting purposes.  As we were a shell company prior to completion of the transactions described above, this Current Report includes audited consolidated annual financial statements of Eco Endeavors for the two years ended March 31, 2013 and unaudited interim financial statements of Eco Endeavors for the nine months ended December 31, 2013.

DESCRIPTION OF BUSINESS

Corporate Overview

We were incorporated on July 21, 2005 under the laws of the state of Nevada.  The principal office of our company is located at suite 600 - 666 Burrard Street, Vancouver, British Columbia, Canada  V6C 3P6.

Eco Endeavors was incorporated on April 28, 2011 under the laws of the Province of British Columbia.  The principal office of Eco Endeavors was located at suite 600 - 666 Burrard Street, Vancouver, British Columbia, Canada  V6C 3P6.  Ourco was incorporated on August 3, 2011 under the laws of the Province of British Columbia and its principal office was located at suite 600 - 666 Burrard Street, Vancouver, British Columbia, Canada  V6C 3P6.  On the closing date, Ourco and Eco Endeavors amalgamated to form Amalco with the same principal office.

Description of Business

Company Overview

Following the closing of the Amalgamation Agreement, our company became engaged as a renewable energy company that indirectly owns an operating biogas plant in Hungary and is further engaged in the development of renewable energy projects and intends to expand to provide renewable energy services.

We commenced business through the acquisition of a 1.14 MW biogas plant located in close proximity to Budapest, Hungary which occurred on April 28, 2012.  The biogas plant is held by our indirect subsidiary, Kenderes Biogas, a Hungarian corporation.  Following the acquisition, we undertook operational changes which included the elimination of redundant management, reducing costs, and injecting capital into the plant to increase operational efficiencies.  These changes resulted in the plant operating at 100% capacity and increased revenue.  The biogas plant takes in waste materials from local farms and other establishments and converts the emitted methane gas into electricity using two GE Jenbacher engines. Kenderes Biogaz has several suppliers including Atev Zrt and Szatev Zrt, who provide animal waste, Progoods KFT who provides corn husks and some green waste, Kuntej KFT and Friesland KFT, who provide milk whey, Turmix Bt, who provides frozen vegetable waste, sugar and fat and Alkaloida Zrt, who provides poppy heads.  There are additional intermittent suppliers who provide mostly food or organic waste.  Liquid pig waste is also provided from a neighboring farm, which is a significant source of biomass for our plant.  Due to the short-term nature of these supply agreements, our company’s operations are susceptible to significant supply risk which would affect our operating capacity and revenue. Should these contracts cease in the future, it would pose a significant risk to our company’s business and operations.  The electricity is fed directly into the Hungarian grid and is sold to the regional utility under the terms of a feed-in tariff contract. The biogas plant also has the potential to sell heat and fertilizer generated during operations thereby maximizing the total use of materials leaving minimal waste to spare.  The biogas plant utilizes automatic feeders and computerized monitoring systems to mitigate errors. It is capable of operating year round and its output can be increased or decreased accordingly to capitalize on peak electricity rates and maximize returns.


 

4

We acquired the biogas plant as a test plant to gain knowledge and expertise in operating small scale renewable energy power plants.  We anticipate that the plant will continue to operate at full capacity, unless government regulations change and unless our biogas supply chain is reduced or disrupted, which includes our current working relationship with a neighboring farm.  Should any of these factors change, our operations and the future of our plant would need to be re-evaluated.  Our goal is to acquire additional small-scale renewable energy plants or build such plants where circumstances warrant in prospective locations, including in areas of close proximity to mines or other large facilities with substantial energy needs.  Additionally, our company intends to leverage the skills and expertise acquired to date to expand our business model to include the provision of renewable energy services to develop, construct and operate small-scale renewable energy plants for third parties.  As the Hungarian plant was partially acquired as a test plant, and if circumstances warrant, we may elect to sell such plant and use the proceeds to further expand our business and acquire and develop additional plants. If the conditions in Hungary change significantly and operating the plant in that jurisdiction no longer proves economical, we may elect to move the plant to a more favorable location.

Our biogas plant is subject to two royalties.  The first is a royalty payable by Kenderes Biogaz to Palladio Projects Kft calculated at 10% of the earnings before interest, taxes, depreciation and amortization of the Hungarian biogas plant.  In addition, and on the closing of the Amalgamation Agreement, Kenderes Biogaz entered into another royalty agreement with Waratah Investments Limited, whereby Kenderes Biogaz agreed to pay a royalty calculated at 3% of all revenues generated from the Kenderes biogas plant and an additional royalty to Waratah Investments Limited calculated at 1.5% of all revenue generated from all other assets of Kenderes Biogaz other than the biogas plant.

We intend to expand our company’s business to offer services regarding the development, construction and operation of small-scale renewable energy plants.  We are expanding into this business division as a way to leverage the expertise, technologies and services we have developed thus far as a result of acquiring, maintaining and developing our existing biogas plant in Hungary.

We intend to offer services to third parties related to the construction and design of a wide range of renewable energy plants that may include biogas, solar, wind, biomass and hydro sources of energy. Our expertise to date has been limited to biogas but we intend to expand our expertise internally and through acquisitions to expand into other renewable energy categories.

For our proposed services business, and depending on the customer’s preference, we intend to either build, own and operate the completed plant or build it for the customer to own. We anticipate we will sell the electricity, gas, heat or cooling generated by small-scale plants that we own under long-term contracts, typically to utilities, industrial facilities or other large consumers of energy. We anticipate that output will typically be sold under a sales agreement with a term covering 5 to 10 years of plant operation. The right to use the site for the energy plant, and the purchase of the renewable energy needed to fuel the plant, are anticipated to also be obtained under long-term agreements with terms at least as long as that of the associated output sales agreement. Initially, we anticipate that our projects will generally be designed and permitted by assistance from consulting engineers until such time as we are able to attract and hire engineers in-house. We anticipate that we will also subcontract installation of project equipment, under the supervision of our management.


 

5

Competition

We face significant competition from a large number of companies.  For our proposed services division, our principal competitors include large established companies such as Chevron Energy Solutions, Constellation Energy, Honeywell, Johnson Controls, NORESCO, Siemens Building Technologies, TAC Energy Solutions, Trane and Ameresco. As such entities have considerably more funds, expertise and experience, and as we are just initiating our services division based upon our experiences with our Hungarian biogas plant, we believe that we can compete with such entities based on project size and opt at least initially to pursue smaller renewable energy projects that such competitors will most likely not pursue.

For our renewable energy plant business, we compete primarily with large independent power producers and utilities, as well as a large number of developers of renewable energy projects. We compete for renewable energy projects primarily on the basis of project size, electing to pursue small scale projects that larger competitors will most likely not pursue.

Many of our competitors have longer operating histories and greater resources than we do, and we may be unable to compete effectively against our current competitors or additional companies that may enter our markets.

In addition, we may also face competition based on technological developments that reduce demand for electricity, increase power supplies through existing infrastructure or that otherwise compete with our energy efficiency and renewable energy projects and services. We also expect to encounter competition in the form of potential customers electing to develop solutions or perform services internally rather than engaging an outside provider.

Intellectual Property

We have no registered intellectual property rights.  Our intellectual property consists of various trade secrets and know-how related to the construction, operation and development of biogas plants and we protect this information through non-disclosure agreements and restricted access to our existing plant.

Sources and availability of Biomass

We generally source our biomass on a monthly basis.  Currently, we have a number of suppliers that we rely upon including Atev Zrt and Szatev Zrt, who provide animal waste, Progoods KFT who provides corn husks and some green waste, Kuntej KFT and Friesland KFT, who provide milk whey, Turmix Bt, who provides frozen vegetable waste, sugar and fat and Alkaloida Zrt, who provides poppy heads.  Additionally, we regularly augment our main current suppliers from smaller suppliers from the surrounding area who provide mostly food or organic waste.  Biomass in the form of liquid pig waste is also provided from a neighboring farm.  Due to the short-term nature of these supply agreements, our company’s operations are susceptible to significant supply risk which would affect our operating capacity and revenue. Should these contracts cease in the future, it would pose a significant risk to our company’s business and operations.

Dependence on one or a few major customers

To date, we have one customer, MAVIR or Magyar Villamosenergia-Ipari Átviteli Rendszerirányító Zrt, which purchases all of the electricity from our sole operating biogas plant in Hungary. The price of the electricity supplied is at the highest maximized official price as defined in Annex 5 of the Hungarian Government decree.

Sales and Marketing

For our renewable energy projects business, we rely on management to identify, negotiate and acquire sites on which to build such projects or to acquire existing projects.  For renewable energy plants that are not located on a customer’s site or use sources of energy not within the customer’s control, we anticipate the sales process will also involves the identification of sites with attractive sources of renewable energy, such as a landfill or a site in close proximity to biomass to feed a proposed biogas plant, and obtaining necessary rights and governmental permits to develop a plant on that site. For example, for a biogas project, we start with gaining control of a biomass resource located close to the prospective customer. For other projects, we intend to look for sites where utilities are interested in purchasing renewable energy power at rates that are sufficient to make a project feasible. Where governmental agencies control the site and resource, such as a landfill owned by a municipality, the customer may be required to issue a request for proposal (RFP) to use the site or resource. Once we believe we are likely to obtain the rights to the site and the resource, we seek customers for the energy output of the potential project.


 

6

For our proposed services business, we will initially rely on our existing management team to perform sales and marketing functions until such time as we can hire additional personnel to perform this function.  We intend to offer customers customized and comprehensive energy efficiency solutions tailored to meet their economic, operational and technical needs. We anticipate that the sales, design and construction process for energy efficiency and renewable energy projects will take from 12 to 36 months. We anticipate identifying project opportunities through referrals, requests for proposals, or RFPs, conferences, web searches and telemarketing. We intend to hire a small direct sales force in the near future to develop and follow up on marketing efforts.

Government Regulation

Various regulations affect the conduct of our business. Our projects, including our existing Hungarian biogas plant, must conform to all applicable electric reliability, building and safety, and environmental regulations and codes, which will vary from place to place and time to time. Various federal, state, provincial and local permits are required to construct an energy efficiency project or renewable energy plant.

Renewable energy projects are also subject to specific governmental safety and economic regulation.  The sale and distribution of electricity at the retail level is subject to state and provincial regulation, and the sale and transmission of electricity at the wholesale level is subject to federal regulation. While we do not own or operate retail-level electric distribution systems or wholesale-level transmission systems, the prices for the products we offer can be affected by the tariffs, rules and regulations applicable to such systems, as well as the prices that the owners of such systems are able to charge. The construction of power generation projects typically is regulated at the state and provincial levels, and the operation of these projects also may be subject to state and provincial regulation as “utilities.” At the federal level, the ownership, operation, and sale of power generation facilities may be subject to regulation. In addition, the state, provincial and federal regulations that govern qualifying facilities and other power sellers frequently change, and the effect of these changes on our business cannot be predicted.

Renewable energy projects may also be eligible for certain governmental or government-related incentives from time to time, including tax credits, cash payments in lieu of tax credits, and the ability to sell associated environmental attributes, including carbon credits. Government incentives and mandates typically vary by jurisdiction. In January 2014, our company received approval for a new permit to produce and sell electric power from a renewable source of biogas for five years.

Number of total employees

As at February 27, 2014, we had 1 employee operating out of our corporate head office located at 600 – 666 Burrard Street, Vancouver, B.C., Canada and had 4 employees operating at the biogas plant site located at 5331 Kenderes, Hungary.  We had a total of 5 employees, none of which are subject to a collective bargaining agreement.

Seasonality of Business

We are subject to seasonal fluctuations in Hungary, which experiences colder weather during the winter months. For our proposed services division, we anticipate that government contracting cycles will be affected by the timing of, and delays in, the legislative process related to government programs and incentives that help drive demand for energy efficiency and renewable energy projects. Further, the plant requires a solid material such as corn husks or sorghum to be purchased during the spring months, for delivery in the summer months.  This shipment usually facilitates the solid material supply base for the following 12 months.  Without this type of investment in inventory, our company would be subject to month to month purchases of supply which would create a significant supply risk to our company.


 

7

Subsidiaries 

Amalco is our sole direct wholly-owned subsidiary.  Amalco was formed pursuant to the amalgamation of Eco Endeavors and Ourco, a non-operating British Columbia corporation that was used by us solely to facilitate the amalgamation.  The amalgamation occurred on the closing of the Amalgamation Agreement on February 27, 2014.  We also hold two additional indirect subsidiaries through Amalco, consisting of Kenderesh, a British Columbia corporation, and Kenderes Biogaz, a Hungarian corporation.  Kenderes Biogaz holds all right, title and interest in our operating biogas plant located in Hungary.

DESCRIPTION OF PROPERTY

Executive Offices and Registered Agent

Our executive offices are located on the 6th floor at 666 Burrard Street, Vancouver, British Columbia, Canada  V6C 3P6.  Our company has leased two offices, consisting of suites 655 and 606 from November 1, 2013 to October 31, 2015, for a total of Cdn$3,188 per month.  We believe that this space is sufficient for the foreseeable future.

The transfer agent and registrar for our common shares Nevada Agency and Trust Company. 50 West Liberty Street, Suite 880, Reno, NV 89501, Tel: 775-322-0626, Fax: 775-322-5623.

The biogas plant is located on farmland in Kenderes Hungary, located a couple hours away from the capital city Budapest.  The lot which is wholly-owned by Kenderes Biogaz is 308 square hectares which is large enough to house all components necessary for the operation of the biogas plant, including storage for the inventory and the solid waste that results from the process.

RISK FACTORS

Much of the information included in this report includes or is based upon estimates, projections or other forward-looking statements.  Forward-looking statements are statements that relate to future events or future financial performance.  In some cases, you can identify forward-looking statements by the use of terminology such as “may”, “should”, “intend”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “project”, “predict”, “potential”, or “continue” or the negative of these terms or other comparable terminology.  Such forward-looking statements include any projections and estimates made by our management in connection with our business operations.  These statements speak only as of the date of this overview.  While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

Such estimates, projections or other forward-looking statements involve various risks and uncertainties as outlined below.  We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other forward-looking statements.

The material assumptions supporting our forward-looking statements include, among other things: (1) our ability to obtain any necessary financing on acceptable terms; (2) timing and amount of capital expenditures; (3) timely receipt of regulatory approvals; (4) our management team’s ability to implement our business plan; (5) effects of government regulation; (6) general economic and financial market conditions; (7) ability of Kenderes Biogaz to maintain profitable operations, including the provision of a steady and cost effective supply of biomass and the ability to sell electricity to the grid on favorable terms.

An investment in our common stock involves a number of very significant risks.  You should carefully consider the following known material risks and uncertainties in addition to other information in this report in evaluating our company and our business, before purchasing shares of our company’s common stock.  Additional risks not presently known to us may also impair our business operations.  You could lose all or part of your investment due to any of these risks.


 

8

Risks Relating to Our Company

Our auditors have expressed substantial doubt about our ability to continue as a going concern.

We will be required to expend substantial amounts of working capital in order to develop our operations.  We have not generated sustained income from operations since inception, have incurred losses in developing our business, and further losses are anticipated.  Our operations to date were largely funded from capital raised from our private offerings of equity and debt securities.  We will continue to require additional financing to meet our obligations and the costs of operations and to execute our business strategy.  For the year ended March 31, 2013 we incurred a loss of Cdn$962,854, for the nine month interim period ended December 31, 2013 we incurred a loss of Cdn$1,007,443, a deficit to date of Cdn$2,402,254 and we expect losses to continue in the future. These factors raise substantial doubt about our company’s ability to continue as a going concern. After auditing our consolidated financial statements, our independent auditor issued a going concern opinion and our ability to continue is dependent on our ability to raise additional capital. If we are unable to obtain necessary financing, we will likely be required to curtail our development plans which could cause us to become dormant and could cause our shareholders to lose their investment in our company.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We will require additional funds which we plan to raise through the sale of our common stock, which requires favorable market conditions and interest in our activities by investors. We may not be able to sell our common stock and funding may not be available for continued operations.

Our ability to continue and grow our operations is dependent on our ability to raise additional capital and our operations could be curtailed if we are unable to obtain required additional funding when needed. We anticipate that our current cash and cash equivalents of approximately Cdn$1,036,657 following the closing of the Amalgamation Agreement and concurrent private placement financing will be sufficient for a period of 12 months. Subsequent activities will require additional funding. Until our business operations provide sustained profits, for which we can offer no assurance, our primary means of financing our activities is anticipated to occur through the sale of our debt and equity securities. The sale of common stock requires favorable market conditions, as well as specific interest in our stock, neither of which may exist. The issuance of debt securities may not be available on acceptable terms, if at all. If we are unable to raise additional funds in the future, we may have to cease our operations.

If we do not obtain additional financing, we will not be able to conduct our business operations and achieve our business objectives. 

To achieve our objectives established in our business plan, capital is required to maintain operations, maintain and purchase equipment, purchase biomass to feed our existing plant and invest in infrastructure to grow our business. We will require significant additional funds to execute and grow our business.

If demand for our renewable energy services business does not develop as we expect, or if current business conditions related to our Hungarian biogas plant does not improve, our revenue will suffer and our business will be harmed.

We believe, and our growth plans assume, that the market for renewable energy services will continue to grow, that we will increase our penetration of this market and that our revenue from selling into this market will continue to increase over time.  Similarly, we assume that operations at our Hungarian biogas plant will continue to develop and that revenue from this plant will increase over time. Finally, we assume we will be able to locate and build or acquire additional renewable energy plants to increase our business.  If our expectations as to our planned growth strategy, including the growth of our operations at our Hungarian biogas plant are not correct and if the size of the renewable energy services business and our ability to sell our services in this market are not correct, our revenue will suffer and our business will be harmed.


 

9

Our business depends in part on federal, state, provincial and local government support for energy efficiency and renewable energy, and a decline in such support could harm our business.

We depend in part on legislation and government policies that support energy efficiency and renewable energy projects and that enhance the economic feasibility of (i) our existing Hungarian biogas plant, (ii) the proposed renewable energy services business and (iii) our proposed small-scale renewable energy projects that we plan to undertake on a going forward basis. Several governments currently support renewable energy through legislation and regulations that authorize and regulate the manner in which certain governmental entities do business with plants that operate renewable energy plants, encourage or subsidize governmental procurement of services, provide regulatory, tax and other incentives to others to procure services for such plants and provide tax and other incentives that reduce costs or increase revenues.

We depend upon such programs for the success of our existing plant and we, and our prospective customers for our renewable energy services business and renewable energy projects business, will likely depend on these programs to help justify the costs associated with, and to finance, energy efficiency and renewable energy projects. If any of these incentives are adversely amended, eliminated or not extended beyond their current expiration dates, or if funding for these incentives is reduced, it could adversely affect our ability to pursue such projects for prospective customers and obtain project commitments from new customers. A delay or failure by government agencies to administer, or make procurements under, these programs in a timely and efficient manner could have a material adverse effect on our potential customers’ willingness to enter into project commitments with us.

Additional projects we may undertake for direct ownership or for our customers will generally require significant capital, which our customers or we may finance through third parties, and such financing may not be available to our customers or to us on favorable terms, if at all.

The significant disruptions in the global credit and capital markets in the last several years have made it more difficult for our potential customers and us to obtain financing on acceptable terms or, in some cases, at all. If we or our potential customers are unable to raise funds on acceptable terms when needed, we may be unable to finance or acquire additional projects or secure customer contracts. The acquisitions or size of contracts we do obtain may be smaller or we could be required to delay the development and construction of projects, reduce the scope of those projects or otherwise restrict our operations. Any inability by us or our customers to raise the funds necessary to finance our projects could materially affect our operations and business.

Failure of third parties to manufacture quality products or provide reliable services in a timely manner could cause delays in the delivery of our services and completion of our projects, which could damage our reputation, have a negative impact on our relationships with our customers and adversely affect our growth.

Our success depends on our ability to provide services and complete projects in a timely manner, which in part depends on the ability of third parties to provide us with timely and reliable services and products, such as Power Serviz to service and perform regular required maintenance on the gas engines and other complex components.

We will rely on subcontractors to perform substantially all of the construction and installation work related to our projects. Currently, we retain third parties to provide all design and engineering work related to, and act as the general contractor for, our projects. If any of our subcontractors are unable to provide services that meet or exceed our customers’ expectations or satisfy our contractual commitments, our reputation, business and operating results could be harmed.

Our business will depend on experienced and skilled personnel and substantial specialty subcontractor resources, and if we are unable to attract and integrate additional skilled personnel, it will be more difficult for us to manage our business and complete projects.

The success of our business depends in large part on the skill of our personnel. Accordingly, it is critical that we maintain, and continue to build, a highly experienced management team and specialized workforce, including engineers, project and construction management, and business development and sales professionals. In addition, our proposed construction projects will require a significant amount of trade labor resources, such as electricians, mechanics, carpenters, masons and other skilled workers, as well as certain specialty subcontractor skills.


 

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Competition for personnel, particularly those with expertise in the energy services and renewable energy industries, is high, and identifying candidates with the appropriate qualifications can be costly and difficult. We may not be able to hire the necessary personnel to implement our business strategy given our anticipated hiring needs, or we may need to provide higher compensation or more training to our personnel than we currently anticipate.

In the event we are unable to attract, hire and retain the requisite personnel and subcontractors, we may experience delays in completing projects in accordance with project schedules and budgets, which may have an adverse effect on our financial results, harm our reputation and cause us to curtail our pursuit of new projects. Further, any increase in demand for personnel and specialty subcontractors may result in higher costs, causing us to exceed the budget on a project, which in turn may have an adverse effect on our business, financial condition and operating results and harm our relationships with our customers.

Our future success is particularly dependent on the vision, skills, experience and effort of Robert Abenante, our Chief Executive Officer, President and a director. If we were to lose the services of Robert Abenante or other key employees, our ability to effectively manage our operations and implement our strategy could be harmed and our business may suffer.

We operate in a highly competitive industry, and our current or future competitors may be able to compete more effectively than we do, which could have a material adverse effect on our business, revenue, growth rates and market share.

Our industry is highly competitive, with many companies of varying size and business models, many of which have their own proprietary technologies, competing for the same business as we do. Many of our competitors have longer operating histories and greater resources than us, and could focus their substantial financial resources to develop a competing business model, pay more for existing projects, develop products or services that are more attractive to potential customers than what we offer or convince our potential customers that they should require financing arrangements that would be impractical for smaller companies to offer. Our competitors may also offer energy solutions at prices below cost, devote significant sales forces to competing with us or attempt to recruit our key personnel by increasing compensation, any of which could improve their competitive positions. Any of these competitive factors could make it more difficult for us to attract and retain customers, cause us to lower our prices in order to compete, and reduce our market share and revenue, any of which could have a material adverse effect on our financial condition and operating results. We can provide no assurance that we will continue to effectively compete against our current competitors or additional companies that may enter our markets.

In addition, we may also face competition based on technological developments that reduce demand for electricity, increase power supplies through existing infrastructure or that otherwise compete with our products and services. We also encounter competition in the form of potential customers electing to develop solutions or perform services internally rather than engaging an outside provider such as us.

In order to secure contracts for new projects for our business, we anticipate we will face a long and variable selling cycle that requires significant resource commitments and will require a long lead time before we realize revenue.

The sales, design and construction process for energy efficiency and renewable energy projects we estimate will take from 12 to 36 months on average. Potential customers generally follow extended budgeting and procurement processes, and sometimes must engage in regulatory approval processes, related to such services. We anticipate that most of our potential customers will issue a request for proposal (RFP), as part of their consideration of alternatives for their proposed project. In preparation for responding to an RFP, we anticipate we will conduct a preliminary audit of the customer’s needs and the opportunity to reduce its energy costs. This extended sales process will require the dedication of significant time by our management personnel and our use of significant financial resources, with no certainty of success or recovery of our related expenses. A potential customer may go through the entire sales process and not accept our proposal. These factors could also adversely affect our business, financial condition and operating results due to increased spending by us that is not offset by increased revenue.


 

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We may be unable to build, complete or operate our projects on a profitable basis or as we have committed to our customers.

Development, installation and construction of our renewable energy projects business, and operation of our renewable energy projects, entails many risks, including:

  • failure to receive critical components and equipment that meet our design specifications and can be delivered on schedule;
  • failure to obtain all necessary rights to land access and use;
  • failure to receive quality and timely performance of third-party services;
  • increases in the cost of labor, equipment and commodities needed to construct or operate projects;
  • permitting and other regulatory issues, license revocation and changes in legal requirements;
  • shortages of equipment or skilled labor;
  • unforeseen engineering problems;
  • failure of a customer to accept or pay for renewable energy that we supply;
  • weather interferences, catastrophic events including fires, explosions, earthquakes, droughts and acts of terrorism; and accidents involving personal injury or the loss of life;
  • labor disputes and work stoppages;
  • mishandling of hazardous substances and waste; and
  • other events outside of our control.

Any of these factors could give rise to construction delays and construction and other costs in excess of our expectations. This could prevent us from completing construction of our proposed projects, cause defaults under any financing agreements or under contracts that require completion of project construction by a certain time, cause projects to be unprofitable for us, or otherwise impair our business, financial condition and operating results.

Our small-scale renewable energy plants, including our existing Hungarian biogas plant, may not generate expected levels of output.

The small-scale renewable energy plants that we anticipate we will construct will be subject to various operating risks that may cause them to generate less than expected amounts of processed electricity or thermal energy. These risks include a failure or degradation of our, our customers’ or utilities’ equipment; an inability to find suitable replacement equipment or parts; less than expected supply of the plant’s source of renewable energy, such as biomass; or a faster than expected diminishment of such supply. Any extended interruption in the plant’s operation, or failure of the plant for any reason to generate the expected amount of output, could have a material adverse effect on our business and operating results. In addition, we could in the future incur material asset impairment charges if any of our renewable energy plants incurs operational issues that indicate that our expected future cash flows from the plant are less than its carrying value. Any such impairment charge could have a material adverse effect on our operating results in the period in which the charge is recorded.

Our renewable energy projects depend on locating and acquiring suitable operating sites, of which there are a limited number.

Our biogas renewable energy projects must be sited at locations where we can secure sufficient supplies of biomass and economical connections to provide power or biofuel to customers. Sites for our renewable energy plants must be suitable for construction and efficient operation, which, among other things, requires appropriate road access. Further, electric plants must be interconnected to electricity transmission or distribution networks. Once we have identified a suitable project site, obtaining the requisite lease or other land rights (including access rights, setbacks and other easements) requires us to negotiate with landowners and local government officials. These negotiations can take place over a long time, are not always successful and sometimes require economic concessions not in our original plans. The property rights necessary to construct and interconnect our plants must also be insurable and otherwise satisfactory to our financing counterparties.


 

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Any future acquisitions that we may make could disrupt our business, cause dilution to our stockholders and harm our business, financial condition or operating results.

If we are successful in consummating acquisitions, those acquisitions could subject us to a number of risks, including:

  • the purchase price we pay could significantly deplete our cash reserves or result in dilution to our existing stockholders;
  • we may find that the acquired company or assets do not improve our customer offerings or market position as planned;
  • we may have difficulty integrating the operations and personnel of the acquired company;
  • key personnel and customers of the acquired company may terminate their relationships with the acquired company as a result of the acquisition;
  • we may experience additional financial and accounting challenges and complexities in areas such as tax planning and financial reporting;
  • we may incur additional costs and expenses related to complying with additional laws, rules or regulations in new jurisdictions;
  • we may assume or be held liable for risks and liabilities (including for environmental-related costs) as a result of our acquisitions, some of which we may not discover during our due diligence or adequately adjust for in our acquisition arrangements;
  • our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises;
  • we may incur one-time write-offs or restructuring charges in connection with the acquisition;
  • we may acquire goodwill and other intangible assets that are subject to amortization or impairment tests, which could result in future charges to earnings; and
  • we may not be able to realize the cost savings or other financial benefits we anticipated.

These factors could have a material adverse effect on our business, financial condition and operating results.

We need governmental approvals and permits, and we typically must meet specified qualifications, in order to undertake our renewable energy projects and construct, own and operate our small-scale renewable energy projects, and any failure to do so would harm our business.

The design, construction and operation of our small-scale renewable energy projects require various governmental approvals and permits, and may be subject to the imposition of related conditions that vary by jurisdiction. In some cases, these approvals and permits require periodic renewal. We cannot predict whether all permits required for a given project will be granted or whether the conditions associated with the permits will be achievable. The denial of a permit essential to a project or the imposition of impractical conditions would impair our ability to develop the project. In addition, we cannot predict whether the permits will attract significant opposition or whether the permitting process will be lengthened due to complexities and appeals. Delay in the review and permitting process for a project can impair or delay our ability to develop that project or increase the cost so substantially that the project is no longer attractive to us. If we were to commence construction in anticipation of obtaining the final, non-appealable permits needed for that project, we would be subject to the risk of being unable to complete the project if all the permits were not obtained. If this were to occur, we would likely lose a significant portion of our investment in the project and could incur a loss as a result. Further, the continued operations of our projects require continuous compliance with permit conditions. This compliance may require capital improvements or result in reduced operations. Any failure to procure, maintain and comply with necessary permits would adversely affect ongoing development, construction and continuing operation of our projects.

Compliance with environmental laws could adversely affect our operating results.

Costs of compliance with federal, state, provincial, local and other foreign existing and future environmental regulations could adversely affect our cash flow and profitability. We are required to comply with numerous environmental laws and regulations and to obtain numerous governmental permits in connection with energy efficiency and renewable energy projects, and we may incur significant additional costs to comply with these requirements. If we fail to comply with these requirements, we could be subject to civil or criminal liability, damages and fines. Existing environmental regulations could be revised or reinterpreted and new laws and regulations could be adopted or become applicable to us or our projects, and future changes in environmental laws and regulations could occur. These factors may materially increase the amount we must invest to bring our projects into compliance and impose additional expense on our operations.


 

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In addition, private lawsuits or enforcement actions by federal, state, provincial and/or foreign regulatory agencies may materially increase our costs. Certain environmental laws make us potentially liable on a joint and several basis for the remediation of contamination at or emanating from properties or facilities we arranged for the disposal of hazardous substances. Such liability is not limited to the cleanup of contamination we actually caused. Although we seek to obtain indemnities against liabilities relating to historical contamination at the facilities we own or operate, we cannot provide any assurance that we will not incur liability relating to the remediation of contamination, including contamination we did not cause.

We currently generate all of our revenue from operations in Hungry related to our biogas plant and as such, we face certain risks as a result of doing business in this jurisdiction.

Our operations are subject to a variety of risks, including:

  • building and managing highly experienced foreign workforces and overseeing and ensuring the performance of foreign subcontractors;
  • increased travel, infrastructure and legal and compliance costs associated with multiple international locations;
  •  additional withholding taxes or other taxes on our foreign income, and tariffs or other restrictions on foreign trade or investment;
  •  imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements, many of which differ from those in the United States;
  •  increased exposure to foreign currency exchange rate risk;
  • longer payment cycles for sales in some foreign countries and potential difficulties in enforcing contracts and collecting accounts receivable;
  • difficulties in repatriating overseas earnings;
  • general economic conditions in the countries in which we operate; and
  • political unrest, war, incidents of terrorism, or responses to such events.

Our overall success will depend, in part, on our ability to succeed in differing legal, regulatory, economic, social and political conditions. We may not be successful in developing and implementing policies and strategies that will be effective in managing these risks in each country where we do business. Our failure to manage these risks successfully could harm our international operations, reduce our international sales and increase our costs, thus adversely affecting our business, financial condition and operating results.

Our insurance and contractual protections may not always cover lost revenue, increased expenses or liquidated damages payments.

Although we maintain insurance, obtain warranties from suppliers, obligate subcontractors to meet certain performance levels and attempt, where feasible, to pass risks we cannot control to our customers, the proceeds of such insurance, warranties, performance guarantees or risk sharing arrangements may not be adequate to cover lost revenue, increased expenses or liquidated damages payments that may be required in the future.

If the cost of energy generated by traditional sources does not increase, or if it decreases, demand for our services may decline.

Decreases in the costs associated with traditional sources of energy, such as prices for commodities like coal, oil and natural gas, may reduce demand for energy efficiency and renewable energy solutions. Technological progress in traditional forms of electricity generation or the discovery of large new deposits of traditional fuels could reduce the cost of electricity generated from those sources and as a consequence reduce the demand for our solutions. Any of these developments could have a material adverse effect on our business, financial condition and operating results.


 

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Our activities and operations are subject to numerous health and safety laws and regulations, and if we violate such regulations, we could face penalties and fines.

We are subject to numerous health and safety laws and regulations in each of the jurisdictions in which we operate. These laws and regulations require us to obtain and maintain permits and approvals and implement health and safety programs and procedures to control risks associated with our projects. Compliance with those laws and regulations can require us to incur substantial costs. Moreover, if our compliance programs are not successful, we could be subject to penalties or to revocation of our permits, which may require us to curtail or cease operations of the affected projects. Violations of laws, regulations and permit requirements may also result in criminal sanctions or injunctions.

Health and safety laws, regulations and permit requirements may change or become more stringent. Any such changes could require us to incur materially higher costs than we currently have. Our costs of complying with current and future health and safety laws, regulations and permit requirements, and any liabilities, fines or other sanctions resulting from violations of them, could adversely affect our business, financial condition and operating results.

We cannot offer any assurance as to our future financial results. You may lose your entire investment.

We cannot assure that we can operate in a profitable manner in the future. Even if we generate future revenues sufficient to expand operations, increased infrastructure, operating and inventory costs could impair or prevent us from generating profitable returns. We recognize that if we are unable to generate significant revenues from the sale of electricity, we will not be able to earn profits or potentially continue operations. There is limited history upon which to base any assumption as to the likelihood that we will be successful, and we may not be able to generate significant revenues or maintain profitability. If we are unsuccessful in addressing these risks, our business will most likely fail.

Changes in the exchange rates between the United States dollar and foreign currencies may be volatile and may negatively impact our costs, which in turn could adversely affect our operating results.

When operating in foreign countries, such as Hungary, we expect to incur a certain amount of our expenses from our operations in foreign currency and translate these amounts into United States dollars for purposes of reporting operating results. As a result, fluctuations in foreign currency exchange rates may adversely affect our expenses and results of operations, as well as the value of our assets and liabilities. Fluctuations may adversely affect the comparability of period-to-period results. In addition, we anticipate holding foreign currency balances, which will create foreign exchange gains or losses, depending upon the relative values of the foreign currency at the beginning and end of the reporting period, which may affect our net income and earnings per share. Although we may use hedging techniques in the future (which we currently do not use), we may not be able to eliminate the effects of currency fluctuations. Thus, exchange rate fluctuations could have a material adverse impact on our operating results and stock price.

Moreover, if we attempt to hedge our risk in the currency markets and are unsuccessful and or if our competitors are more successful arbitraging the currency risk we may find ourselves at a competitive disadvantage to other market participants which would have a material adverse effect on our business operations.

We depend on the efforts of our management. Our management team lacks experience in managing a public company and the obligations incident to being a public company will place significant demands on our management.

Our officers lack experience in operating a public company. Our success is substantially dependent on the performance of our executive officers.  In particular, our success depends substantially on the continued efforts of Robert Abenante, our Chief Executive Officer and President for his working knowledge of the biogas industry in Hungary.


 

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Since our officers and directors have the ability to be employed by or consult for other companies, their other activities could slow down our operations.

Robert Abenante, our President, Chief Executive Officer and a director, works with other companies. Our officers and directors are not required to work exclusively for us and do not devote all of their time to our operations. Therefore, it is possible that a conflict of interest with regard to their time may arise based on their employment by other companies. Their other activities may prevent them from devoting full-time to our operations which could slow our operations and may reduce our financial results because of the slowdown in operations. It is expected that Mr. Abenante will devote between 20 to 30 hours per week and each of our directors will devote between 5 and 10 hours per month to our operations on an ongoing basis, and when required will devote whole days and even multiple days at a stretch when property visits are required or when extensive analysis of information is needed. We do not have any written procedures in place to address conflicts of interest that may arise between our business and the business activities of Mr. Abenante, or any of our other officers or directors.

All of our assets and all of our directors and officers are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our directors or officers.

All of our assets are located outside the United States and we do not currently maintain a permanent place of business within the United States. In addition, all of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons' assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our directors or officers, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under United States federal and state securities laws against us or any of our directors or officers.

Risks Relating to Our Common Stock

Since public trading in our common stock is limited and sporadic, there can be no assurance that our stockholders will be able to liquidate their holdings of our common stock.

Our common stock price is currently quoted on the OTCQX under the symbol “BLXX”.  However, trading has been limited and sporadic and we can provide no assurance that the market for our common stock will be sustained. We cannot guarantee that any stockholder will find a willing buyer for our common stock at any price, much less a price that will result in realizing a profit on an investment in our shares. There may be limited opportunity for stockholders to liquidate any of their holdings in common stock of the company. Trading volume may be insignificant and stockholders may be forced to hold their investment in our company’s shares for an extended period of time. The lack of liquidity may also cause stockholders to lose part or all of their investment in our common stock.

Since public trading in our common stock is limited and sporadic, the market price of our common stock may be subject to wide fluctuations.

There is currently a limited public market for our common stock and we can provide no assurance that the market for our common stock will be sustained. If a market is sustained, however, we anticipate that the market price of our common stock will be subject to wide fluctuations in response to several factors, including:

  • actual or anticipated variations in our results of operations;
  • our ability or inability to generate revenues;
  • increased competition; and
  • conditions and trends in the biogas industry.

 

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Further, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations, may adversely affect the market price of our common stock.

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

Under U.S. federal securities legislation, our common stock will constitute “penny stock”.  Penny stock is any equity security that has a market price of less than US$5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a potential  investor’s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve an investor’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, which, in highlight form, sets forth the basis on which the broker or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a shareholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for its shares.

We may, in the future, issue additional shares of common stock, which would reduce investors’ percent of ownership and may dilute our share value.

Our Articles of Incorporation authorize the issuance of 400,000,000 shares of common stock. As of the date hereof, our company had 101,572,464 shares of common stock outstanding. Accordingly, we may issue up to an additional 298,427,536 shares of common stock. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.


 

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State securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell shares of our common stock.

Secondary trading in our common stock will not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or an exemption from registration is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of our common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment.

Our company is subject to Multilateral Instrument 51-105 as adopted by all jurisdictions in Canada except the Province of Ontario which, among other things, imposes certain resale restrictions and legending requirements on our shares.

As a reporting issuer in the Province of British Columbia, our company is subject to Multilateral Instrument 51-105 which regulates companies with certain connections to any jurisdiction in Canada other than the Province of Ontario that have a class of securities that has been assigned a ticker symbol by the Financial Industry Regulatory Authority in the United States for use on any of the over-the-counter markets in the United States and includes a class of securities whose trades have been reported in the grey market.  In addition to disclosure and reporting obligations required under MI 51-105, the instrument imposes certain resale requirements of private placement securities acquired after the ticker-symbol date including the following:

  • a four month period has passed from the date of distribution of the security (unless the person is a control person of the issuer in which case the person must hold the security for a period of at least 6 months);
  • the number of securities the person proposed to trade, plus the number of securities of the same class that the person has traded in the prior 12 months does not exceed 5% of the issuer’s outstanding securities of the same class;
  •  the person trades the securities through an investment dealer registered in a jurisdiction in Canada;
  • the investment dealer executes the trade through any of the over-the-counter markets in the United States; and
  • the certificate representing the security bears a legend which states that the holder must not trade the securities of the issuer unless the conditions in Section 13 of MI 51-105 are met.

As a result, it may be difficult for our shareholders to resell their securities and may result in reducing demand for our shares and reduced trading activity of our stock.

Because we do not intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.

We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no assurance that stockholders will be able to sell shares when desired.  

Trends, Risks and Uncertainties

We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.


 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with Eco Endeavor’s audited and unaudited consolidated financial statements and the related notes that appear elsewhere in this Current 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 Current Report, particularly in the section entitled “Risk Factors”.

Eco Endeavor’s audited and unaudited consolidated financial statements are stated in Canadian dollars and are prepared in accordance with International Financial Reporting Standards.

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 on February 27, 2014, our company commenced focusing on the business currently carried on by Amalco, which is engaged as a renewable energy company that indirectly owns an operating biogas plant in Hungary and is further 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.

Because the operations and assets of Eco Endeavors represent substantially our entire business and operations as of the closing date of the Amalgamation Agreement, our management’s discussion and analysis is based on Eco Endeavors’ operations. Eco Endeavors was a private corporation incorporated under the laws of British Columbia, Canada that amalgamated with Ourco to form Amalco on the closing of the Amalgamation Agreement.  Amalco operates out of its offices at Suite 600 - 666 Burrard Street, Vancouver, British Columbia, Canada V6C 3P6, and operates a biogas company near Budapest, Hungary through its subsidiaries. Eco Endeavors’ financial statements contained herein are stated in Canadian dollars and are prepared in accordance with International Financial Reporting Standards.

Results of Operations for the Nine Months Ended December 2013 and 2012

      Nine Months Ended     Nine Months Ended  
      December 31, 2013
Unaudited
($Cdn)
    December 31,
2012
Unaudited
($Cdn)
 
  Total Revenues   707,420     764,160  
  Cost of Goods Sold   1,047,105     653,656  
  Gross Margin   (360,908 )   110,503  
  Operating Expenses   646,535     614,574  
  Net Loss   1,007,443     504,071  

Total revenues decreased from Cdn$764,160 during the nine months ended December 31, 2012 to Cdn$707,420 during the nine months ended December 31, 2013 as a result of lower output due to reduced availability of biogas supply which resulted in lower sales.  Cost of goods increased from Cdn$653,656 during the nine months ended December 31, 2012 to Cdn$1,047,105 during the nine months ended December 31, 2013.  Our cost of goods was 148% of our revenues for the nine months ended December 31, 2013 and 86% of our revenues for the nine months ended December 31, 2012.  Our cost of goods sold increased during the nine months ended December 31, 2013 primarily due to a lack of supply which resulted in higher prices.  This was largely due to poor weather conditions for growing sorghum and corn husks, which are key inputs for our biogas plant.  These weather conditions resulted in limited supply and higher prices. Management believes that cost of goods sold will decrease in the immediate future due to recent improvements in the availability of supply.  Total operating expenses increased from Cdn$614,574 during the nine months ended December 31, 2012 to Cdn$645,345 during the nine months ended December 31, 2013, which reflects the increased business activities for this period.  The increase in operating expenses was largely the result of our decreased bargaining position for supply with the plant’s supplier of raw materials and an increase in tariffs imposed by the Hungarian government.  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 .


 

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Results of Operations for the Year Ended March 31, 2013 and the period from incorporation on April 28, 2011 to March 31, 2012

      Year Ended     Period from  
      March 31, 2013 Audited
(CDN$)
    Incorporation on
April 28, 2011 to
March 31, 2012

Audited
(CDN$)
 
  Revenue   903,120     -  
  Royalties   (27,094 )   -  
  Net Revenue   876,026     -  
  Cost of Sales   1,021,125     -  
  Gross Loss   145,099     -  
  Operating Expenses   757,755     491,957  
  Net Loss   902,854     491,957  

Revenue was Cdn$903,120 during the year ended March 31, 2013, with net revenue of Cdn$876,026 after payment of Cdn$27,094 in royalties.  Cost of sales, which includes raw materials, labour and amortization, was Cdn$1,021,125 during the year ended March 31, 2013 resulting in a gross loss of Cdn$145,099.  Comparisons to the prior period from incorporation on April 28, 2011 to March 31, 2012 are inapplicable as Eco Endeavors acquired its sole revenue producing biogas plant on April 28, 2012.  Management anticipates that revenues will stay consistent or decrease in the future due to declining relations with one of our suppliers for raw materials and government tariffs that have resulted in higher operating costs. The government tariffs have also caused a significant amount of suppliers to leave Hungary, making it more difficult to procure necessary input materials required each month.  Total operating expenses increased from Cdn$491,957 during the period from incorporation on April 28, 2011 to March 31, 2012 to Cdn$757,755 during the year ended March 31, 2013 which largely reflects the increased operating costs associated with the operation of our biogas plant that was acquired on April 28, 2012 and reflects the longer reporting period in fiscal 2013.  Specifically, interest expense increased by Cdn$132,511, office and administration expenses increased Cdn$86,251 and plant acquisition costs increased Cdn$218,498 during the year ended March 31, 2013 as compared to the prior period from April 28, 2011 to March 31, 2012.  These increases were offset by decreases in shares issued for services of Cdn$108,000 and other expenses of Cdn$103,016 during the year ended March 31, 2013 from the prior period from April 28, 2011 to March 31, 2012.  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

As at December 31, 2013, we had cash of Cdn$28,852 and a working capital deficiency of Cdn$806,013 as compared to cash of Cdn$22,640 and a working capital deficiency of Cdn$444,442 as at March 31, 2013.  We estimate the operating expenses for the next 12 months will be Cdn$680,000 consisting primarily of rent, consulting expenses and general and administrative costs.  On the closing of the Amalgamation Agreement on February 27, 2014, we raised gross proceeds of US$1,000,000 through a non-brokered equity private placement financing.


 

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We are in the early stages of our business. We are required to fund growth from the generation of financing activities, and we intend to rely on a combination of equity and debt financings. Due to market conditions and the early stage of our operations, however, there is considerable risk in our company being able to raise such equity financings and on terms that are not overly dilutive to our existing shareholders and such debt financings on acceptable terms with respect to interest rate, maturity dates, and other debt costs. We can offer no assurance that we will be able to raise such funds.

Operating Activities

      Nine Months Ended        
      December 31, 2013
Unaudited
($Cdn)
       
  Cash Flows from Operating Activities   (218,573 )      
  Cash Flows from Investing Activities   (17,674 )      
  Cash Flows from Financing Activities   242,459        
  Net Loss   1,007,443        

      Year Ended     Period Ended  
      March 31, 2013
Audited
($Cdn)
    March 31, 2012
Audited
($Cdn)
 
  Cash Flows from Operating Activities   (693,718 )   (336,437 )
  Cash Flows from Investing Activities   (927,380 )   (100,070 )
  Cash Flows from Financing Activities   1,585,245     495,000  
  Net Loss   (902,854 )   (491,957 )

Operating activities used cash of Cdn$218,573 during the nine months ended December 31, 2013. Investing activities used cash of Cdn$17,674 during the nine months ended December 31, 2013.  Financing activities provided cash of Cdn$242,459 during the nine months ended December 31, 2013 from proceeds from long-term debt.

Operating activities used cash of Cdn$693,718 during the year ended March 31, 2013 as compared to using cash of Cdn$336,437 during the period ended March 31, 2012.  Investing activities used cash of Cdn$927,380 during the year ended March 31, 2013 as compared to using cash of Cdn$100,070 during the period ended March 31, 2012.  Financing activities provided cash of Cdn$1,585,245 during the year ended March 31, 2013 mainly from proceeds from long-term debt as compared to providing Cdn$491,957 during the period ended March 31, 2012 from shares issued for cash.

Critical Accounting Policies

Foreign Currency Transactions

Transactions in foreign currencies are translated to the respective functional currencies of our company’s entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical costs in a foreign currency are translated using the exchange rate at the date of transaction. Foreign currency differences arising on retranslation are recognized in profit or loss, except for differences arising on the translation of available-for-sale financial instruments, which are recognized in other comprehensive income.


 

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Foreign Operations

The assets and liabilities of foreign operations are translated to Canadian dollars at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Canadian dollars at exchange rates at the dates of the transactions.  Foreign currency differences are recognized in other comprehensive income.  When a foreign operation is disposed of, the relevant amount in the accumulated other comprehensive income is transferred to profit or loss as part of the gain or loss on disposal.

Financial Assets

All financial assets are initially recorded at fair value and classified upon inception into one of the following four categories: held to maturity, available for sale, loans and receivables or at fair value through profit or loss (“ FVTPL ”). Financial assets classified as FVTPL are measured at fair value with unrealized gains and losses recognized through earnings. Our company’s cash and amounts receivable are classified as FVTPL. Financial assets classified as loans and receivables and held to maturity assets are measured at amortized cost. Financial assets classified as available for sale are measured at fair value with unrealized gains and losses recognized in other comprehensive income and loss except for losses in value that are considered other than temporary which are recognized in earnings. Transactions costs associated with FVTPL financial assets are expensed as incurred, while transaction costs associated with all other financial assets are included in the initial carrying amount of the asset. A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows, discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost, this reversal is recognized in profit or loss.

Property, Plant and Equipment

Property, plant, and equipment are carried at cost less accumulated depreciation and impairment losses, if any.  Depreciation is provided at rates and methods designed to write off cost of the assets over their estimated useful lives as follows:

  Plant 3%
  Equipment 25%
  Furniture, fixtures and other 20%

Management reviews the depreciation method, useful lives and residual values annually and accounts for any changes in estimates on a prospective basis. Where an item of plant and equipment comprises major components with different useful lives, the components are accounted for as separate items of production facility, and depreciated separately.

Revenue Recognition

Revenue from the sale of electricity is recognized when the significant risks and rewards of ownership of, and the continuing managerial involvement with, the product have been transferred to the buyer, the amount of revenue and the costs incurred or to be incurred with respect to the sale can be measured reliably, and the economic benefits associated with the sale will flow to our company.  Revenue is measured at the fair value consideration received or receivable.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements.


 

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Contractual Obligations

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Recently Issued Accounting Pronouncements

Certain new accounting standards, amendments to standards and interpretations have been issued, effective for annual periods beginning on or after January 1, 2013. These standards have been assessed to not have a significant impact on our company’s financial statements:

  • IFRS 10 Consolidated Financial Statements;
  • IFRS 11 Joint Arrangements;
  • IFRS 12 Disclosure of Interests in Other Entities;
  • IFRS 13 Fair Value Measurement;
  • IAS 27 (Amendment) Separate Financial Statements;
  • IAS 28 (Amendment) Investments in Associates and Joint Ventures; and
  • IFRS 9, Financial instruments
  • IFRS 13 Fair Value Measurement
  • IAS 1 Presentation of Financial Statements

Our company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective and determined that the following may have an impact on its financial statements.

IFRS 10, Consolidated Financial Statements, introduces a new single control model and single consolidation model built on a revised definition of control and criteria for assessment of consolidation. The new Standard requires an entity to consolidate an investee when it has power over the investee, is exposed, or has rights, to variable returns from its involvements with the investee and has the ability to affect those returns through its power over the investee. Under existing IFRS, consolidation is required when an entity has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. IFRS 10 replaces SIC-12, Consolidation – Special Purpose Entities, and parts of IAS 27, Consolidated and Separate Financial Statements. IFRS 10 is not expected to have a material impact on amounts recorded in the consolidated financial statements of our company.

IFRS 11, Joint Arrangements, redefines joint operations and joint ventures with a focus on the rights and obligations of an arrangement, rather than its legal form. The new Standard requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using the equity method of accounting, whereas for a joint operation the venturer will recognize its share of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or equity account for interest in joint ventures. IFRS 11 supersedes IAS 31, Interests in Joint Ventures, and SIC-13, Jointly Controlled Entities – Non-monetary Contributions by Venturers. IFRS 11 is not expected to have a material impact on amounts recorded in the consolidated financial statements of our company.

IFRS 12, Disclosure of Interests in Other Entities, establishes disclosure requirements for interests in other entities, such as subsidiaries, joint arrangements, associates, and unconsolidated structured entities. The Standard carries forward existing disclosures and also introduces significant additional disclosures that address the nature of, and risks associated with, an entity’s interests in other entities. IFRS 12 is not expected to have a material impact on amounts recorded in the consolidated financial statements of our company.

There have been amendments to existing standards, including IAS 27 (2011), Separate Financial Statements, and IAS 28 (2011), Investments in Associates and Joint Ventures. IAS 27 (2011) addresses accounting for subsidiaries, jointly controlled entities and associates in non-consolidated financial statements. IAS 28 (2011) sets out the equity accounting for joint ventures, as well as associates, once the assessment of the arrangement has been made under IFRS 11. The amendments to IAS 27 and IAS 28 are not expected to have a material impact on amounts recorded in the consolidated financial statements of our company.


 

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IFRS 9, Financial Instruments, addresses classification and measurement of financial assets and financial liabilities, and is effective January 1, 2015, with earlier adoption permitted. The Standard replaces the multiple category and measurement models in IAS 39, Financial Instruments – Recognition and Measurement. The new Standard limits the number of categories for classification of financial assets to two: amortized cost and fair value through profit or loss. The requirements for financial liabilities are largely in line with IAS 39. IFRS 9 also replaces the models for measuring equity instruments. Equity instruments are either recognized at fair value through profit or loss or at fair value through other comprehensive income. The ability to recognize unquoted equity instruments at cost under IAS 39 is eliminated. IFRS 9 is not expected to have a material impact on amounts recorded in the consolidated financial statements of our company.

IFRS 13, Fair Value Measurement, is a comprehensive standard for fair value   measurement and disclosure for use across all IFRS standards. The new standard clarifies that fair value is the price that would be received on sale of an asset, or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. Under existing IFRS, guidance on measuring and disclosing fair value is dispersed among the specific standards requiring fair value measurements and does not always reflect a clear measurement basis or consistent disclosures. IFRS 13 is not expected to have a material impact on amounts recorded in the consolidated financial statements of our company.

IAS 1, Presentation of Financial Statements, has been amended to require entities to separate items presented in other comprehensive income (“ OCI ”) into two groups, based on whether or not items may be recycled to net income in the future. Entities that choose to present OCI items before tax will be required to show the amount of tax related to the two groups separately. The amendment is effective for annual periods beginning on or after July 1, 2012, with earlier application permitted. IAS 1 is not expected to have a material impact on amounts recorded in the consolidated financial statements of our company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Principal Stockholders

The following tables set forth, as of February 27, 2014, certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock, and by each of our current directors and executive officers. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

In the following tables, we have determined the number and percentage of shares beneficially owned in accordance with Rule 13d-3 of the Securities Exchange Act of 1934 based on information provided to us by our controlling stockholder, executive officers and directors, and this information does not necessarily indicate beneficial ownership for any other purpose. In determining the number of shares of our common stock beneficially owned by a person and the percentage ownership of that person, we include any shares as to which the person has sole or shared voting power or investment power, as well as any shares subject to warrants or options held by that person that are currently exercisable or exercisable within 60 days.


 

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Title of Class Name and Address of
Beneficial Owner
Amount and Nature of Beneficial
Ownership
Percentage of Class (1)
Common Stock Robert Abenante
Chief Executive Officer,
President and Director
600-666 Burrard Street,
Vancouver, B.C., Canada
21,576,632 Direct 19.3%  (2)
Common Stock Robert Ironside
Director of Amalco
600-666 Burrard Street,
Vancouver, B.C., Canada
1,016,342 Direct 1.0% (3)
Common Stock Cedric Wilson
Director of Amalco
600-666 Burrard Street,
Vancouver, B.C., Canada
1,016,342 Direct 1.0% (3)
Common Stock Ronald Renne
Director
88 Linton Avenue
Borehamwood, Hertfordshire
United Kingdom
WD6 4QY
Nil Not applicable Not applicable
Common Stock Kimberly Gillett
Corporate Secretary
600-666 Burrard Street,
Vancouver, B.C., Canada
1,326,148 Direct 1.3% (4)
Common Stock Marco Parente
Interim Chief Financial Officer
600-666 Burrard Street,
Vancouver, B.C., Canada
303,268 Direct 0.3% (5)
  Directors and Officers as a
group (6 persons)
25,233,250 Direct 22.1% (6)
Common Stock Nicholas Taylor
#2 – 59 Rockford Street
Mandurah, WA Australia
6210
138,275,630 Indirect 81.0 (7)

  (1) Based on 101,572,464 shares of common stock issued and outstanding as of February 27, 2014. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable.

  (2) Consists of 11,402,496 common shares and 10,168,636 share purchase warrants, each warrant of which is exercisable into one common share at the exercise price of US$0.05 per share for a period of five years from the closing of the Amalgamation Agreement.

  (3) Consists of 258,171 common shares, 500,000 stock options and 258,171 share purchase warrants. Each option is exercisable into one common share at the exercise price of US$0.01 per share for a period of five years from the closing of the Amalgamation Agreement.  The common shares underlying the stock options are subject to an escrow agreement whereby, 25% may be released on the closing of the Amalgamation Agreement, and 25% may be released in subsequent six month periods. Each warrant is exercisable into one common share at the exercise price of US$0.05 per share for a period of five years from the closing of the Amalgamation Agreement.

  (4) Consists of 413,074 common shares, 500,000 stock options and 413,074 share purchase warrants. Each option is exercisable into one common share at the exercise price of US$0.01 per share for a period of five years from the closing of the Amalgamation Agreement.  The common shares underlying the stock options are subject to an escrow agreement whereby, 25% may be released on the closing of the Amalgamation Agreement, and 25% may be released in subsequent six month periods. Each warrant is exercisable into one common share at the exercise price of US$0.05 per share for a period of five years from the closing of the Amalgamation Agreement.

  (5) Consists of 51,634 common shares, 200,000 stock options and 51,634 share purchase warrants. Each option is exercisable into one common share at the exercise price of US$0.01 per share for a period of five years from the closing of the Amalgamation Agreement.  The common shares underlying the stock options are subject to an escrow agreement whereby, 25% may be released on the closing of the Amalgamation Agreement, and 25% may be released in subsequent six month periods. Each warrant is exercisable into one common share at the exercise price of US$0.05 per share for a period of five years from the closing of the Amalgamation Agreement.


 

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  (6) Consists of 12,383,564 common shares, 1,700,000 stock options and 11,149,686 share purchase warrants. Each option is exercisable into one common share at the exercise price of US$0.01 per share for a period of five years from the closing of the Amalgamation Agreement.  The common shares underlying the stock options are subject to an escrow agreement whereby, 25% may be released on the closing of the Amalgamation Agreement, and 25% may be released in subsequent six month periods. Each warrant is exercisable into one common share at the exercise price of US$0.05 per share for a period of five years from the closing of the Amalgamation Agreement.

  (7) Consists of 69,137,815 common shares and 69,137,815 share purchase warrants, each warrant of which is exercisable into one common share at the exercise price of US$0.05 per share for a period of five years from the closing of the Amalgamation Agreement.  Of the securities indirectly held, 52,930,214 common shares and share purchase warrants are indirectly held through Waratah Investments Limited, a Ghana corporation, and 16,207,601 common shares and share purchase warrants are indirectly held through Waratah Capital Ltd., a British Columbia corporation.  Mr. Taylor controls both private companies. Each warrant is exercisable into one common share at the exercise price of US$0.05 per share for a period of five years from the closing of the Amalgamation Agreement.

Changes in Control

As a result of the closing of the Amalgamation Agreement with Eco Endeavors, we experienced a change of control, as former shareholders of Eco Endeavors were issued shares that constituted 59.0% of our issued and outstanding shares on a non-diluted basis.  We know of no other arrangements the operation of which may, at a subsequent date, result in a change of control of our company.

DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS

The following individuals serve as the directors and executive officers of our company. We have no other significant employees.  All directors of our company hold office until the next annual meeting of our shareholders or until their successors have been elected and qualified. The executive officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office.

Name Position Age Date First Elected
or Appointed
Robert Abenante Chief Executive Officer, President and Director 31 February 27, 2014
Robert Ironside Director of Amalco 62 February 27, 2014
Cedric Wilson Director of Amalco 53 February 27, 2014
Ronald Rene Director 36 December 5, 2013
Kimberly Gillett Corporate Secretary 28 February 27, 2014
Marco Parente Interim Chief Financial Officer 29 February 27, 2014

Business Experience

The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

Robert Abenante

Robert Abenante (31 years old) has acted as the Chief Executive Officer, President and a director of our company from February 27, 2014.  Mr. Abenante served as the President, Chief Executive Officer and a director of Eco Endeavors from April 28, 2011. From April 2009 to August 2010, Mr. Abenante served as the Chief Financial Officer of Evergreen Power Corp., a private renewable energy company, and from September 2010 to April 2011, he also served as the Senior VP of Corporate Development for Syntaris Power Corp., a private run-of-river power company. Mr. Abenante is actively engaged with Simon Fraser University a regular lecturer and assists with many events targeting awareness of alternative energy solutions.  He has taught both undergraduate and Masters courses at Simon Fraser University.  He has also served as an expert panelist for EuroMoney and created the “Renewable Energy in America: Markets, Economic Development, and Policy in the 50 States” published by ACORE in 2010.  Prior to joining the renewable energy industry, Mr. Abenante worked with Deloitte and PricewaterhouseCoopers in various senior advisory and assurance roles.  Mr. Abenante holds a Bachelor of Business Administration from Simon Fraser University (2006), a Masters from the University of Saskatchewan (2007), and is a Chartered Professional Accountant (CPA, CA) with the Canadian Institute of Chartered Accountants (2008).


 

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We believe Mr. Abenante is qualified to serve on our board of directors because of his education and business experience, including his experience with Eco Endeavors as described above.

Robert Ironside

Robert Ironside (62 years old) has acted as a director of Amalco from February 27, 2014. Mr. Ironside served as a director of Eco Endeavors from April 28, 2011 until its amalgamation on February 27, 2014.  Mr. Ironside has been a finance professor at Kwantlen University from September 2008 to present. Prior to that, he taught finance at the University of Lethbridge from 2005 to 2007, at the University of Saskatchewan in the summer of 2006 and the University of Calgary from 1984 – 1987.  During his teaching career, Mr. Ironside has been awarded six teaching awards at both the graduate and undergraduate levels.  These were as follows:  Best Teacher Award, Faculty of Management, University of Calgary, 1985 and 1987; Master Teacher Award, University of Calgary, 1987; Best Teacher Award, Faculty of Management, University of Lethbridge, 2006 and 2007; Teaching Award, MPAcc Program, University of Saskatchewan, 2006.  In addition to his academic activities, since September, 2013, Mr. Ironside has been CEO of Golden Birch Energy Ltd., a private Canadian oil company with an interest in the Canadian oilsands near Fort McMurray, Alberta.  He was the President and Chief Executive Officer of Learning Dividends, a private eLearning company, from August, 2000 to December, 2004.  He was a founder and director of Primeline Capital Corp., a Capital Pool Corporation listed on the Alberta Stock Exchange, from 1987 to 1989, at which point it was sold.  From 1995 to present, Mr. Ironside has been an independent consultant, working in approximately twenty countries, some of which include Barbados, Belgium, China, Equatorial Guinea, India, Indonesia, Jamaica, Latvia, Lithuania, Romania, Saudi Arabia, South Africa, Switzerland and the United States.  He has written and published two books, The One Financial Habit that Could Change Your Life (2010), co-authored with Edwin Au Yeung and Financial Recovery in a Fragile World (2011), co-authored with Al Emid and Evelyn Jacks.

We believe Mr. Ironside is qualified to serve on Amalco’s board of directors because of his education, banking and business experience, including his experience with Eco Endeavors as described above.

Cedric Wilson

Cedric Wilson (53 years old) has acted as a director of Amalco from February 27, 2014.  Mr. Wilson served as a director of Eco Endeavors from April 28, 2011 until its amalgamation on February 27, 2014. Mr. Wilson graduated from the University of British Columbia with a Bachelors of Education (Secondary) in May 1985 and brings over 25 years of financial services experience to our company. Prior to working in the renewable energy/cleantech sector, Mr. Wilson spent 18 years (1986-2004) at UnumProvident, a US Fortune 250 financial and insurance services corporation that trades on New York Stock Exchange. His last position with UnumProvident was in the role of Regional Director. The Canadian operations of UnumProvident were purchased by RBC Life Insurance Co. in 2004 where he served as Regional Vice President until he departure in October of 2006. Mr. Wilson applies his skills to the renewable energy/cleantech sector by consulting for renewable energy companies in developing the investment strategy and framework for investor and sales channels, along with advising on the structure of offerings and the planned creation of a tax favoured renewable energy/cleantech partnerships in the sector.

We believe Mr. Wilson is qualified to serve on Amalco’s board of directors because of his financial and business experience, including his experience with Eco Endeavors as described above.

Ronald Renne

Ronald Renne (36 years old) has been a director of our company from December 5, 2013.  From December 5, 2013 to February 27, 2014, Mr. Renne was also the President, Chief Executive Officer and Chief Financial Officer of our company.  Mr. Renne has over 10 years’ experience in the banking sector and managing information technology resources.  Mr. Renne has worked at HFC bank in London and Royal Bank of Scotland as Branch Manager. Mr. Renne graduated from the Manchester Metropolitan University in 2000 with a Bachelor of Arts (Hons). He also holds all the required retail banking certificates to allow him to practice banking services in the United States.


 

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We believe Mr. Renne is qualified to serve on our board of directors because of his financial and business experience.

Kimberly Gillett

Kim Gillett (28 years old) has acted as an officer of our company from February 27, 2014. Ms. Gillett has worked internationally with a variety of public and private companies including Majestic Gold Corp. and Global Hunter Corp. (2004-2009), Evergreen Power Corp. and Syntaris Power Corp. (2010-2011), and International Eco Endeavors Corp. (2011-2014). Ms. Gillett has conducted business throughout North America, Europe, and Asia in her roles as Executive Assistant, Administrative Assistant, and Corporate Secretary, and has been involved in the administrative and financial aspects of business since first entering the industry over 10 years ago. Primarily headquartered in British Columbia, Ms. Gillett has also spent significant time in Germany, the United Kingdom, and China and specializes in facilitating business development and corporate compliance.  Ms. Gillett is experienced in the mining and exploration, oil and gas, and renewable energy sectors and is recognized by her in-depth knowledge of corporate structure, securities compliance, investor management, and administrative and accounting particulars.

Marco Parente

Marco Parente (29 years old) has acted as an officer of our company from February 27, 2014. Mr. Parente is a Chartered Professional Accountant (CPA, CA) with a background in financial accounting, reporting, and taxation matters. Mr. Parente’s experience includes audits of public natural resource companies, not for profit organizations, and private enterprises.  Mr. Parente has served as a Senior Auditor and has experience in the financial services sector.  He has experience in financial services and tax structuring. Mr. Parente received a Bachelor’s of Arts in Economics from Simon Fraser University in 2006 and qualified as a Chartered Accountant in 2011.

Term of Office

Each director of our company is to serve for a term of one year ending on the date of the subsequent annual meeting of stockholders following the annual meeting at which such director was elected. Notwithstanding the foregoing, each director is to serve until his successor is elected and qualified or until his death, resignation or removal. Our board of directors is to elect our officers and each officer is to serve until his successor is elected and qualified or until his death, resignation or removal.

LEGAL PROCEEDINGS

None of our directors or executive officers have been involved in any of the following events during the past ten years:

  (a) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

  (b) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

  (c) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;

  (d) being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;


 

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  (e) being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

  (f) being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

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

EXECUTIVE COMPENSATION

Summary Compensation

The particulars of compensation paid to the following persons:

  (a) our principal executive officer;

  (b) each of our two most highly compensated executive officers who were serving as executive officers at the end of the year ended March 31, 2013; and

  (c) up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the most recently completed financial year,

who we will collectively refer to as the named executive officers, for our years ended March 31, 2013 and 2012, are set out in the following summary compensation table which is set out in Canadian dollars:

Name and principal position Year Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity Incentive Plan Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
Total
($)
Jag Sandhu (1)
Former President,
CEO, CFO and
Director
2013 (6)
2012 (7)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Ronald Renne (2)
Former President,
CEO and CFO
2013 (6)
2012 (7)
Nil
N/A
Nil
N/A
Nil
N/A
Nil
N/A
Nil
N/A
Nil
N/A
Nil
N/A
Nil
N/A
Robert Abenante (3)
President, CEO and
Director
2013 (6)
2012 (7)
Nil
Nil
Nil
Nil
74,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
74,000
Nil
Kimberly Gillett (4)
Corporate Secretary
2013 (6)
2012 (7)
46,042
41,000
1,000
1,000
16,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
63,042
42,000
Marco Parente (5)
Interim CFO
2013 (6)
2012 (7)
Nil
N/A
Nil
N/A
2,000
N/A
Nil
N/A
Nil
N/A
Nil
N/A
Nil
N/A
2,000
N/A


 

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(1) Jag Sandhu resigned from all positions on December 5, 2013.

(2) Ronald Renne was appointed as President, Chief Executive Officer and Chief Financial Officer and director on December 5, 2013 and resigned from all executive positions on February 27, 2014.  Mr. Renne remains a director of our company.

(3) Robert Abenante was appointed as President, Chief Executive Officer and director on February 27, 2014.  The amounts set out in the table above reflects fees paid by Eco Endeavors, which became our wholly-owned subsidiary following the amalgamation of Eco Endeavors and Ourco on the closing of the Amalgamation Agreement.

(4) Kimberly Gillett was appointed as Corporate Secretary on February 27, 2014.  The amounts set out in the table above reflects fees paid by Eco Endeavors, which became our wholly-owned subsidiary following the amalgamation of Eco Endeavors and Ourco on the closing of the Amalgamation Agreement.  Subsequent to the year ended March 31, 2013, our company granted 500,000 stock options to Ms. Gillett, each option exercisable at US$0.01 per share for a period of five years from the closing of the Amalgamation Agreement.  Ms. Gillett received 800,000 common shares of Eco Endeavors at a value of Cdn$0.02 per share pursuant to the terms of a consulting agreement dated March 31, 2013 for a deemed value of Cdn$16,000.

(5) Marco Parente was appointed as Interim Chief Financial Officer on February 27, 2014.  The amounts set out in the table above reflects fees paid by Eco Endeavors, which became our wholly-owned subsidiary following the amalgamation of Eco Endeavors into our pre-existing wholly-owned subsidiary on the closing of the Amalgamation Agreement. Subsequent to the year ended March 31, 2013, our company granted 500,000 stock options to Ms. Gillett, each option exercisable at US$0.01 per share for a period of five years from the closing of the Amalgamation Agreement.

(6) Denotes the current year end of our company following the closing of the Amalgamation Agreement and deemed year end change, being March 31st.

(7) Denotes the former year-end of our company being June 30th.

Employment or Consulting Agreements

Other than noted below, there are no employment contracts, compensatory plans or arrangements, including payments to be received from our company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with our company, or our subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of our company.

Consulting Agreements with Robert Abenante

On February 27, 2014, our company entered into a consulting agreement with Robert Abenante.  Pursuant to the terms of the agreement, Mr. Abenante agreed to provide certain management services to our company in the position of Chief Executive Officer.  In consideration for such services, our company:

  • issued 9,233,860 common shares and 8,000,000 share purchase warrants to Mr. Abenante on the closing of the Amalgamation Agreement, which number is equal to 10% of our common shares issued and outstanding on the closing of the Amalgamation Agreement on a fully diluted basis (each warrant entitling the holder to acquire an additional common share at the exercise price of US$0.05 per share for a period of five years from the closing of the Amalgamation Agreement); and

 

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  • agreed to issue additional common shares and other securities that are equal to 10% of the total number of common shares and other securities that are otherwise exercisable or convertible into our common shares that are issued in connection with the proposed acquisition by our company of Quivira Gold Ltd. from the shareholders thereof.

The consulting agreement will continue indefinitely unless terminated by either party giving at least 30 days’ notice to the other party.

In addition to the consulting agreement set out above, on February 27, 2014, our company entered into a consulting agreement with Emerald Power Consulting Inc., a British Columbia corporation wholly-owned by Robert Abenante, a director and officer of our company.  Pursuant to the terms of the consulting agreement, Emerald Power agreed to provide certain corporate advisory, corporate finance, strategic planning and related advisory services to our company in consideration for a monthly payment of US$10,000 plus applicable taxes. The term of the agreement is one year, and will automatically extend for successive one year periods unless Emerald Power provides written notice to our company that the agreement should not so extend. Notwithstanding the forgoing, our company may terminate the agreement by providing 60 days’ notice to Mr. Abenante after the initial term.

Outstanding Equity Awards

As at March 31, 2013, we had 275,000 stock options issued and outstanding with a weighted exercise price of US$0.01 per share.  All options vested immediately upon the date of grant.

Following the closing of the Amalgamation Agreement, we granted 500,000 stock options to Robert Ironside, a director of Amalco, 500,000 stock options to Cedric Wilson, a director of Amalco, 500,000 stock options to Kimberly Gillett, the Corporate Secretary of our company and 200,000 stock options to Marco Parente, the Interim Chief Financial Officer of our company. Each option entitles the holder to acquire one common share at the exercise price of US$0.01 per share for a period of five years from the closing date of the Amalgamation Agreement.  The common shares underlying the stock options are subject to an escrow agreement among our company, the escrow agent and each of the optionees, whereby 25% of such shares are eligible to be released upon the closing date of the Amalgamation Agreement and 25% are eligible to be released in subsequent 6 month intervals thereafter.  All stock options vested on the date of grant.

Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide retirement or similar benefits for our directors and officers.

Resignation, Retirement, Other Termination, or Change in Control Arrangements

We have no contract, agreement, plan or arrangement, whether written or unwritten, that provides for payments to our directors or executive officers at, following, or in connection with the resignation, retirement or other termination of our directors or executive officers, or a change in control of our company or a change in our directors’ or executive officers’ responsibilities following a change of control.

Director Compensation

Except as set out herein, no director who is not otherwise a named executive officer, received or accrued any compensation for his services as a director during the years ended March 31, 2013 and 2012.  We have no formal plan for compensating our directors for their services in their capacity as directors. Our directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with the attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.


 

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On the closing of the Amalgamation Agreement on February 27, 2014, our company granted 500,000 stock options to each of Robert Ironside and Cedric Wilson, directors of Amalco.  Each option entitles the holder to acquire an additional common share at the exercise price of US$0.01 per common share for a period of 5 years from the closing of the Amalgamation Agreement.  All such stock options vested on the date of grant. The common shares underlying the stock options are subject to an escrow agreement among our company, the escrow agent and each of the optionees, whereby 25% of such shares are eligible to be released upon the closing date of the Amalgamation Agreement and 25% are eligible to be released in subsequent 6 month intervals thereafter.  All stock options vested on the date of grant.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS,
 AND DIRECTOR INDEPENDENCE

Family Relationships

There are no family relationships among any of our directors and officers.

Transactions with Related Persons, Promoters, and Certain Control Persons

Other than as described below, there has been no transaction, since our inception, or currently proposed transaction, in which we were or are to be a participant and the amount involved exceeds the lesser of US$120,000 or one percent of our total assets at year end for the last completed fiscal year and in which any of the following persons had or will have a direct or indirect material interest:

  (1) Any director or executive officer of our company;

  (2) Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;

  (3) Any of our promoters and control persons; and

  (4) Any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of the foregoing persons.

The following constituted related party transactions of Blox since its inception:

  • As at December 31, 2013, Cdn$511 (June 30, 2013 - Cdn$45,000) was due to Jag Sandhu and a company controlled by Jag Sandhu, a former director and officer of our company.  These amounts are unsecured, do not bear interest and have no fixed terms of repayment.

The following constituted related party transactions of Eco Endeavors since its inception:

  • During the year ended March 31, 2013, Eco Endeavors reimbursed office and administrative expenses to Emerald Power Consulting Inc., a private British Columbia corporation that is controlled by Robert Abenante, a director and executive officer of our company.  Such reimbursement payments amounted to Cdn$102,270 (2012 - Cdn$115,987).  As at March 31, 2013, $nil (2012 - Cdn$1,740) was included in accounts receivable from Emerald Power Consulting.

  • During the nine month period ended December 31, 2013, Eco Endeavors reimbursed office and administrative expenses to Emerald Power Consulting amounting to Cdn$45,699.  As at December 31, 2013, Cdn$43 was included in accounts payable to Emerald Power Consultants.  In addition, as at December 31, 2013, managers and directors of Kenderes Biogaz had advanced Cdn$84,189 to Eco Endeavors which is included in loans payable.

  • On March 31, 2013, Eco Endeavors entered into a shares for services agreement with Robert Abenante, whereby Eco Endeavors issued 3,700,000 common shares to Mr. Abenante for services provided.

 

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Director Independence

We are not subject to the listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.”

For the purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2).  The OTCQX on which shares of common stock are quoted does not have any director independence requirements.  The NASDAQ definition of “Independent Officer” means a person other than an Executive Officer or employee of the company or any other individual having a relationship which, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

According to the NASDAQ definition, we do not have any independent directors on our board at this time.  We have determined that Robert Abenante is not independent due to the fact that he is an executive officer of our company and that Ronald Renne is not independent due to the fact that he is a former executive officer of our company. Our company intends to appoint additional directors to our board post-closing upon the identification of suitable directors.

Committees of the Board

We do not currently have any committees of the board.

Legal Proceedings

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation.  There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market information

Quotation of our shares of common stock on the OTC Bulletin Board was approved on July 18, 2008 under the symbol “NAVA”.  Prior to that date there was no active market for our common stock, and since that date there have only been limited or sporadic quotations and only a very limited public trading market for our common stock. Our common shares are currently quoted on the OTCQX under the symbol “BLXX”.  The following table sets forth the high and low bid prices of our common stock for our fiscal years ended March 31, 2013 and 2012 as reported on the OTCQX. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.  All amounts are stated in United States dollars.

Fiscal 2012   HIGH     LOW  
First Quarter $ 0.17   $ 0.04  
Second Quarter $ 0.10   $ 0.02  
Third Quarter $ 0.10   $ 0.10  
Fourth Quarter $ 0.10   $ 0.02  

Fiscal 2013   HIGH     LOW  
First Quarter $ 0.05   $ 0.05  
Second Quarter $ 0.05   $ 0.05  
Third Quarter $ 0.05   $ 0.05  
Fourth Quarter $ 0.05   $ 0.05  


 

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Holders of Common Stock

As of February 27, 2014, our company had 101,572,464 shares of our common stock issued and outstanding held by 39 holders of record.

The last reported sales price of our common stock on the OTCQX on March 3, 2014, was US$0.15.

Dividend Policy

We have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our board of directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the board of directors. There are no contractual restrictions on our ability to declare or pay dividends.

Transfer Agent

The transfer agent and registrar for our common shares Nevada Agency and Trust Company. 50 West Liberty Street, Suite 880, Reno, NV 89501, Tel: 775-322-0626, Fax: 775-322-5623.

Securities Authorized Under Equity Compensation Plans

As of March 31, 2013, securities issued and securities available for future issuance under our Incentive Stock Plan were as follows:

Equity Compensation Plan Information (US$)

    Number of securities to be
 issued upon exercise of 
   outstanding options, 
warrants and rights
    Weighted average
   exercise price of
outstanding options, 
  warrants and rights
    Number of securities
 remaining available for future
   issuance under equity
   compensation plans
 
Equity compensation plans approved by security holders       $ -        
Equity compensation plans not approved by security holders   275,000 (1) $ 0.01     9,637,500  
Total   275,000   $ 0.01     9,637,500  

(1) Represents options to purchase, 250,000 and 25,000 shares of common stock at an exercise price of US$0.01 on August 31, 2010 and November 30, 2010, respectively. These grants have no vesting.

Subsequent to our year ended March 31, 2014, and on February 27, 2014, our board of directors adopted a new Stock Option Plan (the “ Plan ”).  The Plan provides for the grant of incentive stock options to purchase shares of our common stock to our directors, officers, employees and consultants. The Plan is administered by our board of directors, except that it may, in its discretion, delegate such responsibility to a committee comprised of at least two directors. A maximum of 10,000,000 shares are reserved and set aside for issuance under the Plan. Each option, upon its exercise, entitles the optionee to acquire one share of our common stock, upon payment of the applicable exercise price. The exercise price will be determined by the board of directors at the time of grant. Stock options may be granted under the Plan for an exercise period of up to ten years from the date of grant of the option or such lesser periods as may be determined by the board, subject to earlier termination in accordance with the terms of the Plan.


 

34

On February 27, 2014, we granted an aggregate of 1,700,000 stock options to purchase our common stock to directors and officers of our company.  Each option is exercisable into one common share at the exercise price of US$0.01 per share for a period of five years from the closing of the Amalgamation Agreement.  The common shares underlying the stock options are subject to an escrow agreement whereby, 25% may be released on the closing of the Amalgamation Agreement, and 25% may be released in subsequent six month periods. Each warrant is exercisable into one common share at the exercise price of US$0.05 per share for a period of five years from the closing of the Amalgamation Agreement.

RECENT SALES OF UNREGISTERED SECURITIES

Our company issued the following securities within the last three fiscal years on an unregistered basis:

  • On the closing of the Amalgamation Agreement on February 27, 2014, we issued 60,000,000 units to 17 former shareholders of Eco Endeavors who were non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 , as amended.  Each unit consisted of one common share of our company and one share purchase warrant, each warrant entitling the holder to acquire an additional common share at the exercise price of US$0.05 for a period of 5 years.

  • On connection with the closing of the Amalgamation Agreement on February 27, 2014, we completed a non-brokered private placement, pursuant to which we issued an aggregate of 20,000,000 units shares at a price of US$0.05 per unit for gross proceeds of US$1,000,000. The shares were issued to 2   non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 , as amended. Each unit consisted of one common share of our company and one share purchase warrant, each warrant entitling the holder to acquire an additional common share at the exercise price of US$0.05 for a period of 5 years.

  • On the closing of the Amalgamation Agreement on February 27, 2014, we granted 1,700,000 stock options to 4 non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 , as amended.  Each stock option is exercisable at a price of US$0.01 per share until expiry on the date that is 5 years from the closing of the Amalgamation Agreement. All stock options vested on the date of grant. The common shares underlying the stock options are subject to an escrow agreement whereby, 25% may be released on the closing of the Amalgamation Agreement, and 25% may be released in subsequent six month periods. Each warrant is exercisable into one common share at the exercise price of US$0.05 per share for a period of five years from the closing of the Amalgamation Agreement.

  • On the closing of the Amalgamation Agreement on February 27, 2014, we issued 9,233,860 common shares to Robert Abenante, a director and officer of our company pursuant to the terms of a consulting agreement dated February 27, 2014.  The common shares were issued to Mr. Abenante as a non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 , as amended.

Description of Securities

Common Stock

We are authorized to issue 400,000,000 shares of common stock with a par value of US$0.001. As at February 27, 2014, we had 101,572,474 common shares issued and outstanding. Upon liquidation, dissolution or winding up of the corporation, the holders of common stock are entitled to share ratably in all net assets available for distribution to shareholders after payment to creditors. The common stock is not convertible or redeemable and has no preemptive, subscription or conversion rights. There are no conversions, redemption, sinking fund or similar provisions regarding the common stock. Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of shareholders. There are no cumulative voting rights.


 

35

Each shareholder is entitled to receive the dividends as may be declared by our board of directors out of funds legally available for dividends and, in the event of liquidation, to share pro rata in any distribution of our assets after payment of liabilities. Our board of directors is not obligated to declare a dividend. Any future dividends will be subject to the discretion of our board of directors and will depend upon, among other things, future earnings, the operating and financial condition of our company, its capital requirements, general business conditions and other pertinent factors. It is not anticipated that dividends will be paid in the foreseeable future.

There are no provisions in our Articles of Incorporation or our Bylaws that would delay, defer or prevent a change in control of our company.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our Articles of Incorporation state that no director or officer shall be personally liable to our company or any of its stockholders for damages for breach of fiduciary duty as a director or officer involving any act or omission or any such director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer (i) for acts or omissions which involve intentional misconduct, fraud or a knowing violation of the law, or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of this Article by the shareholders of our company shall be prospective only, and shall not adversely affect any limitations on the personal liability of a director or officer of our company for acts or omissions prior to such repeal or modification.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, executive officers and controlling persons of our company under Nevada law or otherwise, our company has been advised that the opinion of the Securities and Exchange Commission is that such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

We have had no disagreements with DMCL Chartered Accountants LLP, our independent registered public accounting firm, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure during our most recently completed fiscal year. Please refer to Item 4.01 below for a discussion of the change in our independent registered public accounting firm.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Item 9.01 Financial Statements and Exhibits.

Item 3.02 Unregistered Sales of Equity Securities.

On the closing of the Amalgamation Agreement on February 27, 2014, we issued 60,000,000 units to 17 former shareholders of Eco Endeavors who were non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 , as amended.  Each unit consisted of one common share of our company and one share purchase warrant, each warrant entitling the holder to acquire an additional common share at the exercise price of US$0.05 for a period of 5 years.

On connection with the closing of the Amalgamation Agreement on February 27, 2014, we completed a non-brokered private placement, pursuant to which we issued an aggregate of 20,000,000 units shares at a price of US$0.05 per unit for gross proceeds of US$1,000,000. The shares were issued to 2   non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 , as amended. Each unit consisted of one common share of our company and one share purchase warrant, each warrant entitling the holder to acquire an additional common share at the exercise price of US$0.05 for a period of 5 years.


 

36

On the closing of the Amalgamation Agreement on February 27, 2014, we granted 1,700,000 stock options to 4 non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 , as amended.  Each stock option is exercisable at a price of US$0.01 per share until expiry on the date that is 5 years from the closing of the Amalgamation Agreement. All stock options vested on the date of grant. The common shares underlying the stock options are subject to an escrow agreement whereby, 25% may be released on the closing of the Amalgamation Agreement, and 25% may be released in subsequent six month periods. Each warrant is exercisable into one common share at the exercise price of US$0.05 per share for a period of five years from the closing of the Amalgamation Agreement.

On the closing of the Amalgamation Agreement on February 27, 2014, we issued 9,233,860 common shares to Robert Abenante, a director and officer of our company pursuant to the terms of a consulting agreement dated February 27, 2014.  The common shares were issued to Mr. Abenante as a non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 , as amended.

Prior to its amalgamation with Ourco, Eco Endeavors, issued the following securities from inception to the date of this Current Report on Form 8-K:

Date Issued Type Amount Price Number of
Purchasers
April 28, 2011 Common shares 2,500,000 Cdn$0.02 (for services) 1(1)
June 2, 2011 Common shares 3,000,000 Cdn$0.02 6(1)
September 1, 2011 Common shares 1,000,000 Cdn$0.10 1(1)
October 31, 2011 Common shares 1,492,062 Cdn$0.25 5(1)
April 28, 2012 Common shares 2,500,000 Cdn$0.02 (for services) 1(1)
March 31, 2013 Common shares 5,400,000 Cdn$0.02 (for services) 6(1)
February 27, 2014 Common shares 100,310,000 US$0.02 (for debt) 1(1)

(1) Issued to a non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 , as amended.

Item 4.01 Changes in Registrant’s Certifying Accountant.

In connection with the closing of the Amalgamation Agreement on February 27, 2014, we changed our independent registered public accounting firm from DMCL Chartered Accountants LLP (“ DMCL ”) to Morgan LLP Chartered Accountants (“ Morgan ”).  The appointment of Morgan was approved by our board of directors.

The report of DMCL on our financial statements dated September 5, 2013 for the two most recent fiscal years ended June 30, 2013 and 2012 did not contain an adverse opinion or disclaimer of opinion, or qualification or modification as to uncertainty, audit scope, or accounting principles, except that DMCL’s report contained an explanatory paragraph in respect to the substantial doubt as to our ability to continue as a going concern.

In connection with the audit of our financial statements for the two most recent fiscal years ended March 31, 2013 and 2012 and in the subsequent interim period through the date of the change of accountants on February 27, 2014, there were no disagreements, resolved or not, with DMCL on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of DMCL would have caused them to make reference to the subject matter of the disagreements in connection with their report on the financial statements for such years.


 

37

During the two most recent fiscal years ended June 30, 2013 and 2012, and in the subsequent interim period through the date of the change of accountants on February 27, 2014, there were no reportable events as described in Item 304(a)(1)(v) of Regulation S-K.

We provided DMCL with a copy of this Current Report on Form 8-K prior to its filing with the Securities and Exchange Commission, and requested that they furnish us with a letter addressed to the Securities and Exchange Commission stating whether they agree with the statements made in this Current Report on Form 8-K, and if not, stating the aspects with which they do not agree. The letter from DMCL dated March 5, 2014 is filed as Exhibit 16.1 to this Current Report on Form 8-K.

During the two most recent fiscal years ended March 31, 2013 and 2012, and the subsequent interim period through the date of appointment of Morgan on February 27, 2014, we have not, nor has any person on our behalf, consulted with Morgan regarding either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, nor has Morgan provided to us a written report or oral advice regarding such principles or audit opinion on any matter that was the subject of a disagreement as set forth in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as set forth in Item 304(a)(1)(v) of Regulation S-K with our former independent registered public accounting firm.

Item 5.01 Changes in Control of Registrant.

The information contained in Item 2.01 above related to the change in control of the registrant is responsive to this Item 5.01 and is incorporated herein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The information contained in Item 2.01 above related to resignations and appointments of the registrant’s officers and directors and the compensation payable thereto is responsive to this Item 5.02 and is incorporated herein by reference.

Item 5.03 Amendments to Articles of Incorporation of Bylaws; Change in Fiscal Year.

As we have determined to treat the acquisition of Eco Endeavors as a reverse merger and recapitalization, with Eco Endeavors as the accounting acquirer, the transaction has resulted in a deemed change of our year end. As a result, our fiscal year end has changed to March 31st.

Item 5.06 Change in Shell Company Status.

Management has determined that, as a result of the transaction described in Item 2.01 of this Current Report, our company has ceased to be a shell company as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 , as amended .

The disclosure under Item 2.01 of this Current Report on Form 8-K is responsive to this Item and is hereby incorporated by reference.

Item 9.01 Financial Statements and Exhibits

Financial Statements Filed as Part of this Current Report

1. Audited consolidated annual financial statements as at and for the year ended March 31, 2013 and period from incorporation on April 28, 2011 to March 31, 2012:

 
  • Independent Auditor’s Report of Registered Public Accounting Firm, Morgan LLP Chartered Accountants, dated January 17, 2014;

 
  • Consolidated Statements of Financial Position as at March 31, 2013 and 2012;


 

38

 
  • Consolidated Statements of Comprehensive Loss for the year ended March 31, 2013 and period ended March 31, 2012;

 
  • Consolidated Statement of Changes in (Deficiency) Equity;

 
  • Consolidated Statement of Cash Flows for the year ended March 31, 2013 and period ended March 31, 2012; and

 
  • Notes to Consolidated Financial Statements.

2. Unaudited consolidated interim financial statements as at and for the nine months ended December 31, 2013 and 2012:

 
  • Consolidated Statements of Financial Position as at December 31, 2013 and 2012;

 
  • Consolidated Statements of Comprehensive Loss for the nine months ended December 31, 2013 and 2012;

 
  • Consolidated Statement of Changes in (Deficiency) Equity;

 
  • Consolidated Statement of Cash Flows for the nine months ended December 31, 2013 and 2012; and

 
  • Notes to Consolidated Financial Statements.

3. Unaudited Pro Forma Consolidated Financial Statements as at December 31, 2013 and for the year ended March 31, 2013, and the nine months ended December 31, 2013:

 
  • Pro Forma Consolidated Balance Sheet as at December 31, 2013;

 
  • Pro Forma Consolidated Statement of Operations for the year ended March 31, 2013;

 
  • Pro Forma Consolidated Statement of Operations for the nine months ended December 31, 2013; and

 
  • Notes to Unaudited Pro Forma Financial Statements.


 

39

Exhibits

Exhibit
Number
Description
(3) (i) Articles of Incorporation; and (ii) Bylaws
3.1 (1) Articles of Incorporation of Registrant
3.2 (1) Bylaws of the Registrant
3.3 (1) Articles of Incorporation of Nava Resources Canada, Inc.
3.4 (1) Certificate of Amendment to Articles of Incorporation of Registrant
3.5 (2) Company’s amended Articles of Incorporation which reflects its name change
(10) Material Contracts
10.1 (2) Share Purchase Agreement with Quivira Gold Ltd.. and Waratah Investments Ltd.
10.2 (2) Amalgamation Agreement with Eco Endeavors, Ourco, Kenderesh, our company and Kenderes Biogaz
10.3 (3) Amalgamation Amending Agreement dated February 3, 2014
10.4* Assignment Agreement dated April 2012 between Kenderesh Endeavors Corp. and K&H Bank Zrt.
10.5* Purchase Option Agreement dated 2012 between Kenderesh Endeavors Corp. and K&H Bank Zrt.
10.6* Royalty Deed dated April 1, 2012 between International Eco Endeavors Corp. and Palladio
10.7* Consulting Services Agreement dated February 27, 2014 between our company and Emerald Power Consulting, Inc.
10.8* Consulting Agreement dated February 27, 2014 between our company and Robert Abenante
10.9* Royalty Agreement dated February 27, 2014 between Kenderes Biogaz Termelo Korlatolt Fele Lossegu Tarsasag and Waratah Investments Limited
10.10* Escrow Agreement dated February 27, 2014 between our company, Robert Abenante and the escrow agent
10.11* Form of Escrow Agreement dated February 27, 2014 between our company, the escrow agent, and each of Robert Ironside, Cedric Wilson, Kimberly Gillett and Marco Parente
16 Letter Regarding Change in Certifying Accountant
16.1* Letter from DMCL LLP Chartered Accountants dated March 5, 2014
(21) Subsidiaries
21.1* List of Subsidiaries
99 Additional Exhibits
99.1* 2009 Stock Option Plan
99.2* Audited consolidated annual financial statements as at and for the year ended March 31, 2013 and period from incorporation on April 28, 2011 to March 31, 2012
99.3* Unaudited consolidated interim financial statements as at and for the nine months ended December 31, 2013 and 2012
99.4* Unaudited Pro Forma Consolidated Financial Statements as at December 31, 2013 and for the year ended March 31, 2013, and the nine months ended December 31, 2013

*              Filed herewith
(1) Incorporated by reference to the registration statement on Form S-1, as filed by our company with the Securities and Exchange Commission on May 1, 2008.
(2) Incorporated by reference to the annual report on Form 10-K, as filed by our company with the Securities and Exchange Commission on September 17, 2013.
(3) Incorporated by reference to the current report on Form 8-K, as filed by our company with the Securities and Exchange Commission on February 24, 2014.


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended , the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

BLOX, INC.

/s/ Robert Abenante                                           
Name: Robert Abenante
Title: President and CEO

March 5, 2014





























 











 








 




CONSULTING SERVICES AGREEMENT
(Independent Contractor)

                This CONSULTING SERVICES AGREEMENT (the “Agreement”) is entered into as of February 27, 2014 by and between Emerald Power Consulting Inc. with principal address at 600 – 666 Burrard Street, Vancouver, BC V6C 3P6 (herein referred to as the “Consultant”), and Blox, Inc., a Nevada corporation (the “Company”).

                In consideration of the mutual promises set forth herein, the sufficiency of which is hereby acknowledged by each of the parties hereto, the parties hereby agree as follows:

1.         Consulting Services .  The Consultant hereby agrees to provide and perform for the benefit of the Company certain corporate advisory, corporate finance, strategic planning and related advisory services (each, a “Service” and collectively, the “Services”), as may be requested by the Company from time to time, and the Company hereby engages the Consultant to provide and perform the same. The Consultant acknowledges and agrees that it will provide a significant amount of time and attention on the affairs and business of the Company in connection with the provision of the Services, however, this does not prevent the Consultant from providing other services to other companies.

2.         Remuneration.   For the Services performed and received in accordance with Section 1, and subject to all applicable regulatory requirements, the Company will pay US$10,000.00 plus applicable taxes per month to the Consultant.

3.         Expenses.   The Consultant will incur expenses from time to time to on behalf of the Company, which are to be approved by the Company and reimbursed in a timely manner.

4.         Term of Agreement .  The term of this Agreement shall commence as of the date first set forth above, and continue for a period of one year (the “Initial Term”), provided, however, that this Agreement will automatically extend for successive one year periods unless the Consultant provides written notice to the Company that the Agreement should not extend. Notwithstanding the foregoing, the Company may terminate this Agreement by providing 60 days’ written notice to the Consultant after the Initial Term.

5 .          Independent Contractor Status .  The relationship of the Consultant to the Company is that of an independent contractor, and nothing herein shall be construed or deemed as creating any other relationship.  Without limiting the foregoing, the relationship between the parties hereto shall not be deemed to be that of an employer-employee, joint venture, or partnership.  As an independent contractor, the Consultant shall have the sole responsibility for paying taxes, workers compensation, employee benefits (if any), and all similar obligations, and shall be charged with performing the Services in the way that the Consultant deems the most feasible or desirable.

6.         Confidential Information and Work for Hire .  The Consultant and the Company hereby acknowledge and agree that in connection with the performance of the Services set forth herein, the Consultant shall be provided with or shall otherwise be exposed to or receive certain confidential and/or proprietary information of the Company or of third parties and may develop certain products, services, methods, know-how, procedures, formulae, processes, specifications, and information of a similar nature that relate to the Services rendered hereunder.  The Consultant therefore agrees to maintain and preserve the secrecy and confidentiality of any and all proprietary and business secret or confidential information and data.  In the course of performing the Services hereunder, the Consultant may develop certain processes, formulations, inventions, data, reports, records, information, prototypes, know-how, designs, drawings, schematics, manuals, ideas, or other products or materials, including ideas that may be protectable under intellectual property laws (all of the foregoing collectively referred to herein as “Work Product”).  The Consultant acknowledges that all Work Product created by it during the term of this Agreement or which relates to the Services performed hereunder shall be the property of the Company, and the Consultant hereby agrees to take all actions requested by the Company in order to vest ownership of the Work Product in them.  Should the Company seek intellectual property protection for any Work Product, the Consultant agrees to execute any documents and take any actions reasonably requested by them to effectuate the same, all at no additional cost.

1


 

7.         Audit and Records .  The Consultant shall keep accurate records and books of account showing all charges, disbursements, and expenses made or incurred by the Consultant in the performance of the Services.  The Company shall have the right, upon reasonable notice, to audit at any time up to one year after payment of its final invoice, the direct costs, expenses, and disbursements made with respect to the performance of the Services.

8.         Title to Materials and Equipment .  All materials and equipment furnished by the Company are to be and remain the sole property of the Company and are to be returned within thirty (30) days of the expiration or earlier termination of this Agreement, or within ten (10) days after written demand, whichever first occurs.

9.         Assignability .  This Agreement shall be binding upon and inure to the benefit of the parties, their legal representatives, successors, and assigns.  This Agreement may not be assigned, transferred, conveyed, or encumbered, whether voluntarily or by operation of law, by the Consultant without the prior written consent of the Company (which may be granted or withheld in its sole and absolute judgment).

10.      Notice.   All notices, demands, and other communications provided for hereunder shall, unless otherwise stated herein, be in writing and mailed (by certified mail, return receipt requested), sent, or delivered (including by way of overnight courier service), (i) if to the Consultant, to:

  Emerald Power Consulting Inc.
Attention: President
600 – 666 Burrard Street
Vancouver, BC V6C 3P6
Email: rabenante@gmail.com

  or (ii) if to the Company, to:

  Blox, Inc.
Attention: Chairman
600 – 666 Burrard Street
Vancouver, BC V6C 2X8
Tel: 1 604 688 3899
Fax: 1 604 688 2419
Email: rrenne@bloxinc.com

or, as to each party, to such other person and/or at such other address or number as shall be designated by such party in a written notice to the other party.  All such notices, demands, and communications shall be effective when sent; provided, however, that if sent by facsimile transmission, notices, demands, and other communications shall be confirmed by same day certified mail, return receipt requested.

11.          Amendments, Etc .  No modification, amendment, or waiver of any provision of this Agreement shall be effective unless the same shall be in writing and signed by each of the parties hereto.  Any waiver of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which given.

12.          Entire Agreement .  This Agreement constitutes the entire understanding and agreement between the parties and supersedes all previous understandings, agreements, communications, and representations, whether written or oral, concerning the treatment of information and other matters to which this Agreement relates.

13.          No Waiver; Remedies .  No failure on the part of any party hereto to exercise, and no delay in exercising, any right, power, or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

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14.          Severability .  Any provision of this Agreement which is prohibited, unenforceable, or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability, or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability, or legality of such provision in any other jurisdiction.

15.          Governing Law .  This Agreement shall be governed by, and construed in accordance with, the laws of the province of British Columbia.  Each party hereby consents to the laying of venue for any action under this contract with the court of competent jurisdiction in British Columbia, and, for such purposes, each of the parties hereby consents to the exclusive jurisdiction of such court.

16.          Headings .  The headings contained in this Agreement are for convenience only and shall not affect the construction or interpretation of any provisions of this Agreement.

17.          Counterparts .  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument.  One or more counterparts of this Agreement may be delivered via fax or electronic means with the intention that they shall have the same effect as an original executed counterpart hereof.

18.          Currency .  All monetary amounts set out herein are stated in US dollars.

[Signature page to follow]

3


 

IN WITNESS WHEREOF, the parties have executed this Consulting Agreement as of the date first set forth above.

 

Emerald Power Consulting Inc.

By:  “Robert Abenante”_____________________________

Name: Robert Abenante_____________________________

Blox, Inc.

By:  “Ronald Renne”_______________________________

Name: “Ronald Renne” _____________________________





INDEPENDENT CONSULTANT AGREEMENT

This Agreement is effective February 27, 2014.

BETWEEN:

  BLOX, INC., a corporation incorporated under the laws of the State of Nevada

  (the “ Company ”)

AND:

  Robert Abenante , an individual having an address of 600 – 666 Burrard Street, Vancouver, British Columbia V6C 3P6

  (the “ Consultant ”)

WHEREAS:

A. The Company is engaged in the business of sourcing, developing, and operating various mining projects worldwide with a focus on improving the sustainable qualities of mining operations;

B. The Consultant has considerable expertise in providing senior advisory services to companies similar to the Company; and

C. The Company wishes to obtain and the Consultant wish to provide certain consulting services to the Company on the terms and conditions contained in this Agreement.

NOW THEREFORE IN CONSIDERATION of the mutual promises contained in this Agreement, the parties agree as follows:

1. Services to be Provided

1.1 Effective February 27, 2014 (the “Start Date”), the Consultant will provide services to the Company in the position of Chief Executive Officer (the “CEO”) and will perform the duties normally performed by the chief executive officer of a company (the “Services”). 

1.2 The Consultant will provide the Services out of the Company’s offices located in Vancouver, British Columbia.

1.3 The Consultant will report to the board of directors of the Company (the “Board”) and will keep the Company informed of all matters concerning the Services as requested by the Company from time to time. 

1.4 The Consultant will perform the Services to the level of competence and skill reasonably expected from persons with skills and experience similar to that of the Consultant.

1.5 During the term of this Agreement, the Consultant will:



  (a) well and faithfully serve the Company and use the Consultant’s best efforts to promote the best interests of the Company;

  (b) devote such working time and attention to the business of the Company as is required to fulfil the Consultant’s role as CEO of the Company; and

  (c) comply with the Company’s policies and procedures, as may be amended from time to time.

1.6 Fiduciary Duty

  The Consultant acknowledges that in performing the Services pursuant to this Agreement, the Consultant will occupy a position of high fiduciary trust and confidence and that the Consultant will develop and acquire wide experience and knowledge with respect to all aspects of the manner in which the Company’s business is conducted. Without limiting the generality of the foregoing, the Consultant agrees to observe the highest standards of loyalty, good faith and avoidance of conflicts of duty and self-interest, in performing the Services. It is the intent and agreement of the parties that the Consultant will use such knowledge and experience solely and exclusively in furtherance of the business interests of the Company.

2. Remuneration

2.1 Fees & Taxes

  In consideration of the Consultant performing the Services in accordance with this Agreement, the Company will issue the Consultant such number of securities (the “Securities”) as is equal to:

  (a) 9,233,860 shares of common stock of the Company (each, a “Share”) and warrants (the “Warrants”) to purchase an additional 8,000,000 Shares at a price of US$0.05 per share for a period of five years from the Start Date and, concurrently with the execution of this Agreement, the Consultant and Company will enter into an escrow agreement such that these Shares, including any Shares issued pursuant to the Warrants, will be held in escrow with Clark Wilson LLP as escrow agent with 25% released upon the Start Date, 25% released on the date that is six months from the Start Date, 25% released on the date that is 12 months from the Start Date and the remaining 25% released on the date that is 18 months from the Start Date (provided the Consultant maintains the position of CEO or an equivalent position with the Company or an affiliate thereof on a going forward basis and if not, such remaining Shares that are subject to escrow will be returned to treasury for cancellation without consideration in accordance with NRS 78.211); and

  (b) 10% of the total number of Shares and securities of the Company that are otherwise exercisable or convertible into Shares that are issued in connection with the acquisition by the Company of Quivira Gold Ltd. from the shareholders thereof (the “Quivira Transaction”) on a fully-diluted basis which issuance will occur on the closing date of the Quivira Transaction (the “Quivira Closing Date”) and the Consultant and the Company will enter into an escrow agreement on or before the Quivira Closing Date such that the Shares, including any Shares issued upon the exercise of other securities, will be held in escrow with Clark Wilson LLP as escrow agent with 25% released upon the Quivira Closing Date, 25% released on the date that is six months from the Quivira Closing Date, 25% released on the date that is 12 months from the Quivira Closing Date and the remaining 25% released on the date that is 18 months from the Quivira Closing Date (provided the Consultant maintains the position of CEO or an equivalent position with the Company or an affiliate thereof on a going forward basis and if not, such remaining Shares that are subject to escrow will be returned to treasury for cancellation without consideration in accordance with NRS 78.211).


2.2 Expenses. 

  The Company will reimburse the Consultant at the end of each month, for all expenses properly and reasonably incurred by the Consultant for the purpose of performing the Services in accordance with the terms of this Agreement. Such expenses will be reimbursed monthly upon the Consultant providing the Company with an itemized invoice together with original receipts.

2.3 Securities Law

  (a) The issuance of the Securities to the Consultant will be made in reliance on an exemption from the prospectus filing requirements contained in section 2.5 of National Instrument 45-106 and the exemption from the registration requirements contained in Regulation S promulgated under the Securities Act of 1933, as amended (the “1933 Act”).  The Company reserves the right to request from the Consultant any additional certificates or representations required to establish an exemption from applicable securities legislation prior to the issuance of any Securities.

  (b) The certificates representing the Securities to be issued to the Consultant will be affixed with the following legends describing such restrictions:

  THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.

  THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY IN OR FROM A JURISDICTION OF CANADA UNLESS THE CONDITIONS OF SECTION 13 OF MULTILATERAL INSTRUMENT 51-105 ISSUERS QUOTED IN THE U.S. OVER-THE-COUNTER MARKETS ARE MET.

  (c) The Consultant represents and warrants that at the time of entry into this Agreement and on the date of the issuance of any Securities that:

  (i) (in addition to resale restrictions imposed under U.S. securities laws, there are additional restrictions on the Consultant’s ability to resell any of the Securities in Canada under  applicable provincial securities laws and Multilateral Instrument 51-105 – Issuers Quoted in the U.S. Over the Counter Markets of the Canadian Securities Administrators;


  (ii) the Consultant understands and agrees none of the Securities have been or will be registered under the 1933 Act, or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S under the 1933 Act (“Regulation S”), except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with applicable state and foreign securities laws;

  (iii) the Consultant is not a U.S. Person (as such term is defined in Regulation S of the 1933 Act) and is not acquiring the Note for the account or benefit of, directly or indirectly, any U.S. Person;

  (iv) the Consultant is outside the United States when receiving and executing this Agreement;

  (v) the Consultant understands and agrees that offers and sales of any of the Securities prior to the expiration of the period specified in Regulation S (such period hereinafter referred to as the “Distribution Compliance Period”) shall only be made in compliance with the safe harbor provisions set forth in Regulation S, pursuant to the registration provisions of the 1933 Act or an exemption therefrom, and that all offers and sales after the Distribution Compliance Period shall be made only in compliance with the registration provisions of the 1933 Act or an exemption therefrom and in each case only in accordance with applicable state and provincial securities laws;

  (vi) the Consultant acknowledges that it has not acquired the Securities as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S under the 1933 Act) in the United States in respect of any of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of any of the Securities; provided, however, that the Consultant may sell or otherwise dispose of any of the Securities pursuant to registration of any of the Securities pursuant to the 1933 Act and any applicable securities laws or under an exemption from such registration requirements and as otherwise provided herein; and

  (vii) hedging transactions involving the Securities may not be conducted unless such transactions are in compliance with the provisions of the 1933 Act and in each case only in accordance with applicable securities laws.



3. Term and Termination

  This Agreement will continue indefinitely unless terminated by the Consultant or the Company by giving at least thirty (30) days written notice to the other party.

4. Confidentiality and Ownership of Intellectual Property

4.1 Confidential Information

  (a) “Confidential Information” means information, whether or not originated by the Consultant, that relates to the business or affairs of the Company, its affiliates, clients or suppliers and is confidential or proprietary to, about or created by the Company, its affiliates, clients, or suppliers.

  (b) All Confidential Information, whether developed by the Consultant at any time while the Consultant was providing the Services to the Company, or by others employed or engaged by or associated with the Company or its affiliates or clients, is the exclusive and confidential property of the Company or its affiliates or clients, as the case may be, and will at all times be regarded, treated and protected as such.

  (c) At all times during and subsequent to the term of this Agreement, the Consultant will not disclose Confidential Information to any person (other than as necessary to carry out the Services or other duties on behalf of the Company) without first obtaining the Company’s consent, and the Consultant will take all reasonable precautions to prevent inadvertent disclosure of any Confidential Information.

  (d) At all times during and subsequent to this Agreement, the Consultant will not use, copy, transfer or destroy any Confidential Information (other than as necessary to perform the Services), without first obtaining the Company’s consent and the Consultant will take all reasonable precautions to prevent inadvertent use, copying, transfer or destruction of any Confidential Information.  This prohibition includes, but is not limited to, licensing or otherwise exploiting, directly or indirectly, any products or services that embody or are derived from Confidential Information or exercising judgment or performing analysis based upon knowledge of Confidential Information.

4.2   Intellectual Property

  (a) The Consultant will do all things that may be reasonably necessary or desirable in order to give full effect to the foregoing.  If the Consultant’s cooperation is required in order for the Company to obtain or enforce legal protection of the Developments, the Consultant will provide that cooperation so long as the Company pays to the Consultant as the case may be, reasonable compensation for the Consultant’s time at a rate to be agreed between the Consultant and the Company.

5. Independent Consultant Relationship

5.1 The parties acknowledge and agree that the Consultant is an independent consultant and that:


  (a) the Consultant is not an agent, employee, partner, or joint venturer of the Company; and

  (b) the Consultant has control over the timing and hours of the provision and performance of the Services.

5.2  The Consultant is not precluded from acting in any other capacity for any other person, firm or company provided that it does not conflict with the Consultant’s duties to the Company as set out in this Agreement. 

5.3 The Company will not contribute to the Canada Pension Plan or employment insurance, or withhold federal and provincial taxes, or provide any other contributions or benefits to the Consultant, which might be expected in an employer-employee relationship.

5.4 The Consultant represents and warrants that the Consultant has the right to provide the Services required under this Agreement without violation of any obligations owed to others and that all advice, information, and documents given by the Consultant to the Company under this Agreement, may be used fully and freely by the Company, unless otherwise so designated orally or in writing by the Consultant at the time of communication of such information.

6. General

6.1 This Agreement cancels and supersedes any existing agreement or other arrangement between the parties, and contains the entire agreement and obligation between the parties with respect to its subject matter. No amendment to this Agreement will be valid or effective unless in writing and signed by all the parties.

6.2 Any notice given or required to be given under this Agreement will be in writing and signed by or on behalf of the party giving it.  Such notice may be served personally and in either case may be sent by priority post to the addresses of the parties noted on page one of this Agreement, or by fax, email or other electronic transmission.  Any notice served personally will be deemed served immediately, and if mailed by priority post will be deemed served seventy two (72) hours after the time of posting, and if by electronic transmission, upon successful transmission.

6.3 If any provision contained in this Agreement is determined to be void or unenforceable for any reason, in whole or in part, it is deemed not to affect or impair the validity of any other provision contained herein and the remaining provisions will remain in full force and effect to the fullest extent permissible by law.

6.4 This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and each party submits to the exclusive jurisdiction of the courts of competent jurisdiction in the Province of British Columbia.

6.5 This Agreement will be to the benefit of and be binding on the respective heirs, executors, administrators, successors and permitted assigns of each of the parties.

INTENDING TO BE LEGALLY BOUND, the parties have signed this Consulting Agreement as of the day and year first written above.


BLOX, INC.

Per:        “Ronald Renne”                               
               Authorized Signatory

SIGNED by  Robert Abenante in the presence of:

“signed”                                                                           
Signature
                                                                                            
Print Name
                                                                                            
Address
                                                                                            

                                                                                            
Occupation
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)
)
)
)
)
)
)
)
)
)
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“Robert Abenante”
Robert Abenante




ROYALTY AGREEMENT

This Deed is dated for reference as of the 27 day of February, 2014,

BETWEEN:

  WARATAH INVESTMENTS LIMITED , a Ghanaian corporation with an address at 15 Odum Street North Dzorwulu Accra, Ghana

  (“ WIL ”)

AND:

  KENDERES BIOGAZ TERMELO KORLATOLT FELELOSSEGU TARASAG , a Hungarian corporation with an address at 5331 Kenderes, 0308/2, Hungary

  (“ Kenderes ”)

WHEREAS:

A. Waratah Capital Limited (“ WCL ”) previously entered into a royalty deed (the “ Previous Deed ”) with International Eco Endeavors Corp. (“ Eco ”) dated June 1, 2012;

B. Kenderes is an indirect wholly-owned subsidiary of Eco;

C. WIL and WCL are affiliate corporations by virtue of the fact that they are controlled by the same sole shareholder;

D. Kenderes has entered an amalgamation agreement dated June 13, 2013, as amended (the “ Amalgamation Agreement ”), with Blox, Inc. (formerly known as Nava Resources, Inc.), Ourco Capital Ltd., Kenderesh Endeavors Corp. and Eco whereby, it is a closing condition to the transactions contemplated by the Amalgamation Agreement that the parties terminate the Previous Deed and enter into this Deed;

E. WCL and Eco have entered into an agreement to terminate the Previous Deed; and

F. In consideration for the termination of the Previous Deed, for the amounts advanced to date by WIL to ECO, and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by the parties), Kenderes has agreed to grant the royalty as provided for in this Deed.


- 2 -

NOW THEREFORE THIS DEED WITNESSES :

ARTICLE 1 – INTERPRETATION

1.1 Defined Terms

For the purposes of this Deed the following terms shall have the following meanings:

(a) Kenderes Biogaz Plant ” means the biogas plant located in Budapest, Hungary owned and operated by Kenderes;

(b) Revenue ” means top line revenue, which for the avoidance of any doubt, shall be interpreted in accordance with International Financial Reporting Standards; and

(c) Royalty ” means 3% of all Revenue generated from the Kenderes Biogaz Plant determined and calculated on a quarterly basis throughout each and every financial year and 1.5% of all other Revenue generated from all other assets of Kenderes Biogaz other than the Kenderes Biogaz Plant.

ARTICLE 2- ROYALTY

2.1 The Royalty

(a) Kenderes agrees to pay WIL the Royalty in perpetuity.

(b) The Royalty shall be payable within 15 days of each financial year in such manner and to such account as WIL shall nominate in writing to Kenderes.

2.2 Disputes

(a) If WIL shall have any dispute as to the calculation of the Royalty, the matter shall first be referred to the President of each of the parties who shall have 14 days to resolve the matter but should they not be able to resolve the dispute in this time then the dispute shall be referred by Kenderes to an independent appointed accountant who shall determine the calculation.

2.3 Subsidiaries

For the avoidance of doubt, in calculating the Royalty and for the purpose of the Royalty, Kenderes shall include in its revenues all revenues receivable by its wholly-owned subsidiaries.

ARTICLE 3 - GENERAL PROVISIONS

3.1 Severability

If any provision of this agreement is determined to be invalid or unenforceable by a court of competent jurisdiction from which no further appeal lies or is taken, that provision shall be deemed to be severed herefrom, and the remaining provisions of this agreement shall not be affected thereby and shall remain valid and enforceable.


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3.2 Notices

Any notice or other writing required or permitted to be given hereunder or for the purposes hereof to the WIL or Kenderes shall be sufficiently given if delivered personally, or if sent by prepaid courier or if transmitted by facsimile to such party to the addresses or fax numbers indicated at the beginning of this agreement, or at such other address or addresses as the party to whom such notice or other writing is to be given shall have last notified the party giving the same in the manner provided in this section. Any notice or other writing delivered personally or by prepaid courier to the party to whom it is addressed as hereinbefore provided shall be deemed to have been given and received on the day it is so delivered at such address, provided that if such day is not a Business Day, then such notice or other writing shall be deemed to have been given and received on the next Business Day following such day. Any notice or other writing transmitted by facsimile or other form of recorded communication shall be deemed to be given and received on the first Business Day after its transmission.

3.3 Counterparts

This agreement may be executed in several counterparts, including by facsimile or portable document format (“.pdf”), each of which when executed shall be deemed to be an original and such counterparts together shall be but one and the same instrument.

3.4 Further Acts

Each of the parties to this agreement shall at the request of any other party, and at the expense of the WIL, execute and deliver any further documents and do all acts and things as that party may reasonably require in order to carry out the true intent and meaning of this agreement.

[Signature page to follow]



IN WITNESS WHEREOF the parties have signed, sealed and delivered this Royalty Agreement as of the date first written above.


KENDERES BIOGAZ TERMELO
KORLATOLT FELELOSSEGU
TARASAG
WARATAH INVESTMENTS LIMITED


Per:  “signed”                                            Per:   “Nicholas Taylor”                             
  Authorized Signatory   Authorized Signatory
       
      Nicholas Taylor




ESCROW AGREEMENT

THIS made as of the 27 day of February, 2014.

AMONG:

  BLOX, INC., a corporation incorporated under the laws of the State of Nevada

  (the “ Company ”)

AND:

  ROBERT ABENANTE, an individual having an address of 600 – 666 Burrard Street, BC V6C 3P6

  (the “ Consultant ”)

AND:

  CLARK WILSON LLP , of 900 – 885 West Georgia Street, Vancouver, BC V6C 3H1

  (the “ Escrow Agent ”)

WHEREAS:

A.    The Company has entered into a Consulting Agreement (the “ Consulting Agreement ”) with the Consultant, whereby the Consultant has agreed to provide certain services in consideration for, among other things, the issuance of:

  (a) 9,233,860 shares of common stock in the capital of the Company (the “ Initial Share ”) and warrants (the “ Warrants ”) to purchase up to 8,000,000 shares (the “ Warrant Shares ”), and

  (b) up to 10% of the total number of shares of common stock in the capital of the Company (the “ Quivira Shares ”) and securities of the Company (the “ Quivira Securities ”) that are otherwise exercisable or convertible into shares (the “ Quivira Securities Shares ”) that are issued in connection with the acquisition by the Company of Quivira Gold Ltd. from the shareholder thereof (the “ Quivira Transaction ”) on a fully-diluted basis which issuance will occur on the closing date of the Quivira Transaction (the “ Quivira Closing Date ”);

B.                                         Pursuant to the terms of the Consulting Agreement, the Company and the Consultant have agreed that the Initial Shares, the Warrant Shares, and any Quivira Shares or Quivira Securities Shares issuable to the Consultant  (the “ Escrowed Securities ”) are to be held in escrow pursuant to the terms of this Agreement;


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C.                                         The Company and the Consultant wish to appoint the Escrow Agent to accept, hold and deliver the Escrowed Securities pursuant to the terms of this Agreement; and

D.                                        The Company and the Consultant have agreed that the Escrowed Securities will be held by the Escrow Agent and released only in accordance with the terms of this Agreement.

THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties covenant and agree as follows:

1. INTERPRETATION

1.1 In this Agreement:

  (a) the headings have been inserted for convenience of reference only and in no way define, limit, or enlarge the scope or meaning of the provisions of this Agreement;

  (b) all references to any party, whether a party to this Agreement or not, will be read with such changes in number and gender as the context or reference requires; and

  (c) when the context hereof makes it possible, the word “person” includes in its meaning any firm and any body corporate or politic.

2. DEPOSIT INTO ESCROW

2.1 The Company and the Consultant will undertake all acts to deliver the Escrowed Securities and the requisite number of stock power of attorneys to reflect the number of share certificates deposited, signature guaranteed as required by the transfer agent of the Company (the “PAs”) to the Escrow Agent.  The Escrow Agent will hold the Escrowed Securities and the PAs in escrow subject to the terms and conditions of this Agreement.

2.2 The Consultant and the Company agree that any Warrant Shares issued upon the exercise of the Warrants that have not been released from escrow will be delivered to the Escrow Agent.

2.3 The Consultant and the Company agree that any Quivira Securities Shares issued upon the exercise of the Quivira Securities that have not been released from escrow will be delivered to the Escrow Agent.

3. ESCROW PROVISIONS

3.1 The Company and the Consultant hereby direct the Escrow Agent to retain the Escrowed Securities and the PAs and not to cause anything to be done to release the same from escrow except in accordance with this Agreement.  The Escrow Agent accepts its responsibilities hereunder and agrees to perform them in accordance with the terms hereof.


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3.2 Unless prohibited by an order of a court of competent jurisdiction and subject to Section 3.4, the Escrow Agent will release from escrow and deliver to the Consultant the number of Initial Shares and Warrant Shares as equal to:

  (a) 25% of the Initial Shares and Warrant Shares, if any, on the Start Date (as defined in the Consulting Agreement);

  (b) 25% of the Initial Shares and Warrant Shares, if any, on the date that is six months from the Start Date;

  (c) 25% of the Initial Shares and Warrant Shares, if any, on the date that is 12 months from the Start Date; and

  (d) 25% of the Initial Shares and Warrant Shares, if any, on the date that is 18 months from the Start Date.

3.3 Unless prohibited by an order of a court of competent jurisdiction and subject to Section 3.4, the Escrow Agent will release from escrow and deliver to the Consultant the number of Quivira Shares and Quivira Securities Shares as equal to:

  (a) 25% of the Quivira Shares and Quivira Securities Shares, if any, on the Quivira Closing Date;

  (b) 25% of the Quivira Shares and Quivira Securities Shares, if any, on the date that is six months from the Quivira Closing Date;

  (c) 25% of the Quivira Shares and Quivira Securities Shares, if any, on the date that is 12 months from the Quivira Closing Date; and

  (d) 25% of the Quivira Shares and Quivira Securities Shares, if any, on the date that is 18 months from the Quivira Closing Date.

3.4 In the event that the Company informs the Escrow Agent that the Consultant does not hold the position of Chief Executive Officer of the Company, or another executive officer position or director with the Company or an affiliate of the Company, then:

  (a) all Escrowed Securities and the PAs not released from escrow shall be delivered by the Escrow Agent to the Company and upon receipt thereof, the Company shall promptly return such shares to treasury for cancellation without consideration in accordance with NRS 78.211; and

  (b) all Warrants or Quivira Securities shall be terminated and the Consultant may not exercise the Warrants or Quivira Securities.

3.5 The Escrow Agent will release any remaining PAs to the Consultant when all of the Escrowed Securities have been released.


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4. ESCROW AGENT

4.1 In exercising the rights, duties and obligations prescribed or confirmed by this Agreement, the Escrow Agent will act honestly and in good faith and will exercise that degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

4.2 The Company and the Consultant agree from time to time and at all times hereafter well and truly to save, defend and keep harmless and fully indemnify the Escrow Agent, its successors and assigns from and against all loss, costs, charges, suits, demands, claims, damages and expenses which the Escrow Agent, its successors or assigns may at any time or times hereafter bear, sustain, suffer or be put unto for or by reason or on account of its acting pursuant to this Agreement or anything in any manner relating thereto or by reason of the Escrow Agent’s compliance in good faith with the terms hereof.

4.3 In case proceedings should hereafter be taken in any court respecting the Escrowed Securities, the Escrow Agent will not be obliged to defend any such action or submit its rights to the court until it has been indemnified by other good and sufficient security in addition to the indemnity given in section 4.2 against its costs of such proceedings.

4.4 The Escrow Agent will have no responsibility in respect of loss of the Escrowed Securities except the duty to exercise such care in the safekeeping thereof as it would exercise if the Escrowed Securities belonged to the Escrow Agent.  The Escrow Agent may act on the advice of counsel but will not be responsible for acting or failing to act on the advice of counsel.

4.5 The Escrow Agent will not be bound in any way by any contract between the other parties hereto whether or not it has notice thereof or of its terms and conditions and the only duty, liability and responsibility of the Escrow Agent will be to hold the Escrowed Securities and the PAs as herein directed and to pay and deliver the same to such persons and other such conditions as are herein set forth.  The Escrow Agent will not be required to pass upon the sufficiency of any of the Escrowed Securities to ascertain whether or not the person or persons who have executed, signed or otherwise issued or authenticated the said documents have authority to so execute, sign or authorize, issue or authenticate the said documents or any of them, or that they are the same persons named therein or otherwise to pass upon any requirement of such instruments that may be essential for their validity, but it shall be sufficient for all purposes under this Agreement insofar as the Escrow Agent is concerned that the said documents are deposited with it as herein specified by the parties executing this Agreement with the Escrow Agent.

4.6 In the event that the Escrowed Securities are attached, garnished or levied upon under any court order, or if the delivery of such property is stayed or enjoined by any court order or if any court order, judgment or decree is made or entered affecting such property or affecting any act by the Escrow Agent, the Escrow Agent may, in its sole discretion, obey and comply with all writs, orders, judgments or decrees so entered or issued, whether with or without jurisdiction, notwithstanding any provision of this Agreement to the contrary.  If the Escrow Agent obeys and complies with any such writs, orders, judgments or decrees, it will not be liable to any of the parties hereto or to any other person, form or corporation by reason of such compliance, notwithstanding that such writs, orders, judgments or decrees may be subsequently reversed, modified, annulled, set aside or vacated.


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4.7 Except as herein otherwise provided, the Escrow Agent is authorized and directed to disregard in its sole discretion any and all notices and warnings which may be given to it by any of the parties hereto or by any other person, firm, association or corporation.  It will, however, at its sole discretion, obey the order, judgment or decree of any court of competent jurisdiction, and it is hereby authorized to comply with and obey such orders, judgments or decrees and in case of such compliance, it shall not be liable by reason thereof to any of the parties hereto or to any other person, firm, association or corporation, even if thereafter any such order, judgment or decree may be reversed, modified, annulled, set aside or vacated.

4.8 If the Escrow Agent receives any valid court order contrary to the instructions contained in this Agreement, the Escrow Agent may continue to hold the Escrowed Securities and the PAs until the lawful determination of the issue between the parties hereto.

4.9 If written notice of protest is made by the Company or the Consultant to the Escrow Agent to any action contemplated by the Escrow Agent under this Agreement, and such notice sets out reasons for such protest, the Escrow Agent may at its sole discretion continue to hold the Escrowed Securities and the PAs until the right to the documents is legally determined by a court of competent jurisdiction or otherwise.

4.10 The Escrow Agent may resign as Escrow Agent by giving not less than five (5) days’ notice thereof to the Company and the Consultant.  The Company and the Consultant may terminate the Escrow Agent by giving not less than five (5) days’ notice to the Escrow Agent.  The resignation or termination of the Escrow Agent will be effective and the Escrow Agent will cease to be bound by this Agreement on the date that is five (5) days after the date of receipt of the termination notice given hereunder or on such other date as the Escrow Agent, the Company and the Consultant may agree upon.  All indemnities granted to the Escrow Agent herein will survive the termination of this Agreement or the termination or resignation of the Escrow Agent.  In the event of termination or resignation of the Escrow Agent for any reason, the Escrow Agent shall, within that five (5) days’ notice period deliver the Escrowed Securities and the PA to the new escrow agent to be named by the Company and the Consultant.

4.11 Notwithstanding anything herein to the contrary, the Escrow Agent may act upon any written instructions given jointly by the Company and the Consultant.

4.12 Notwithstanding anything to the contrary contained herein, in the event of any dispute arising between the Company and the Consultant, this Agreement or any matters arising thereto, the Escrow Agent may in its sole discretion deliver and interplead the Escrowed Securities and the PAs into court and such delivery and interpleading will be an effective discharge to the Escrow Agent.

5. F EES

5.1 The Company will pay all of the compensation of the Escrow Agent and will reimburse the Escrow Agent for any and all reasonable expenses, disbursements and advances made by the Escrow Agent in the performance of its duties hereunder, including reasonable fees, expenses and disbursements incurred by its counsel.


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6.

GENERAL

6.1 Except as herein otherwise provided, no subsequent alteration, amendment, change, or addition to this Agreement will be binding upon the parties hereto unless reduced to writing and signed by the parties.

6.2 This Agreement will enure to the benefit of and be binding upon the parties and their respective heirs, executors, administrators and successors.

6.3 The parties will execute and deliver all such further documents, do or cause to be done all such further acts and things, and give all such further assurances as may be necessary to give full effect to the provisions and intent of this Agreement.

6.4 This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and applicable federal laws related thereto.

6.5 Any notice required or permitted to be given under this Agreement will be in writing and may be given by delivering, sending by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy, or sending by prepaid registered mail, the notice to the following address:

  (a) If to the Company:

  Blox, Inc.
600 – 666 Burrard Street
Vancouver, BC V6C 3P6

  Attention: President
Telephone: 1 604 688 3899
Facsimile: 1 604 688 3896

  (b) If to the Consultant:

  Robert Abenante
600 – 666 Burrard Street
Vancouver, BC V6C 3P6

  Attention: Robert Abenante
Telephone: 1 604 688 3899
Facsimile: 1 604 688 3896


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  (c) If to the Escrow Agent:

  Clark Wilson LLP
Barristers and Solicitors
900 – 885 West Georgia Street
Vancouver, British Columbia
Canada V6C 3H1

  Fax: (604) 687-6314

  Attention: Cam McTavish

(or to such other address as any party may specify by notice in writing to another party).  Any notice delivered or sent by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy on a business day will be deemed conclusively to have been effectively given on the day the notice was delivered, or the electronic communication was successfully transmitted, as the case may be.  Any notice sent by prepaid registered mail will be deemed conclusively to have been effectively given on the third business day after posting; but if at the time of posting or between the time of posting and the third business day thereafter there is a strike, lockout, or other labour disturbance affecting postal service, then the notice will not be effectively given until actually delivered.

6.6 Time is of the essence of this Agreement.

6.7 It is understood and agreed by the parties to this Agreement that the only duties and obligations of the Escrow Agent are those specifically stated herein and no other.

6.8 This Agreement may be executed in one or more counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.  This Agreement may be executed by delivery of executed signature pages by fax and such fax execution will be effective for all purposes.

[ Signature page to follow]



IN WITNESS WHEREOF the parties have caused this Escrow Agreement to be executed as of the day and year first written above.

BLOX, INC.

Per: “Ronald Renne”          
Name: Ronald Renne
Title:   President and CEO

SIGNED by ROBERT ABENANTE in the presence of:

“signed”                                                                           
Signature
                                                                                            
Print Name
                                                                                            
Address
                                                                                            

                                                                                            
Occupation
)
)
)
)
)
)
)
)
)
)
)
)
)
“Robert Abenante”
Robert Abenante

CLARK WILSON LLP

Per: “Signed”        
Partner




ESCROW AGREEMENT

THIS made as of the 27 day of February, 2014.

AMONG:

  BLOX, INC., a corporation incorporated under the laws of the State of Nevada

  (the “ Company ”)

AND:

  Robert Ironside, an individual having an address of 600 – 666 Burrard Street, Vancouver, BC V6C 3P6

  (“ Ironside ”)

AND:

  Marco Parente, an individual having an address of 600 – 666 Burrard Street, Vancouver, BC V6C 3P6

  (“ Parente ”)

AND:

  Cedric Wilson, an individual having an address of 600 – 666 Burrard Street, Vancouver, BC V6C 3P6

  (“ Wilson ”)

AND:

  Kimberly Gillett, an individual having an address of 600 – 666 Burrard Street, Vancouver, BC V6C 3P6

  (“ Gillett ”)

AND:

  CLARK WILSON LLP , of 900 – 885 West Georgia Street, Vancouver, BC V6C 3H1

  (the “ Escrow Agent ”)


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WHEREAS:

A.                The Company has entered into a stock option agreement with each of Ironside, Parente, Wilson, and Gillett (collectively, the “ Optionees ”), whereby the Optionees have been granted the following options (the “ Options ”) to purchase common shares of the Company (the “ Escrowed Securities ”):

Name of Optionee Number of
Options
Date of Grant Expiry Date Exercise
Price
Robert Ironside 500,000 February 27, 2014 February 27, 2019 US$0.01
Cedric Wilson 500,000 February 27, 2014 February 27, 2019 US$0.01
Kim Gillett 500,000 February 27, 2014 February 27, 2019 US$0.01
Marco Parente 200,000 February 27, 2014 February 27, 2019 US$0.01

B.                 The Company and the Optionees have agreed that any Escrowed Securities issued upon exercise are to be held in escrow pursuant to the terms of this Agreement;

C.                 The Company and the Optionees wish to appoint the Escrow Agent to accept, hold and deliver the Escrowed Securities pursuant to the terms of this Agreement; and

D.                                        The Company and the Optionees have agreed that the Escrowed Securities will be held by the Escrow Agent and released only in accordance with the terms of this Agreement.

THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties covenant and agree as follows:

1. INTERPRETATION

1.1 In this Agreement:

  (a) the headings have been inserted for convenience of reference only and in no way define, limit, or enlarge the scope or meaning of the provisions of this Agreement;

  (b) all references to any party, whether a party to this Agreement or not, will be read with such changes in number and gender as the context or reference requires; and

  (c) when the context hereof makes it possible, the word “person” includes in its meaning any firm and any body corporate or politic.

2. DEPOSIT INTO ESCROW

2.1                                      Following exercise of the Options, each of the Optionees and the Company will promptly undertake all acts to deliver the Escrowed Securities and the requisite number of stock power of attorneys to reflect the number of share certificates deposited, signature guaranteed as required by the transfer agent of the Company (the “ PAs ”) to the Escrow Agent.  The Escrow Agent will hold the Escrowed Securities and the PAs in escrow subject to the terms and conditions of this Agreement.


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2.2                                      The Optionees and the Company agree that any Escrowed Securities issued upon the exercise of the Options that have not been released from escrow will be delivered to the Escrow Agent.

3. ESCROW PROVISIONS

3.1                                      The Company and the Optionees hereby direct the Escrow Agent to retain the Escrowed Securities and the PAs and not to cause anything to be done to release the same from escrow except in accordance with this Agreement.  The Escrow Agent accepts its responsibilities hereunder and agrees to perform them in accordance with the terms hereof.

3.2                                      Unless prohibited by an order of a court of competent jurisdiction and subject to Section 3.3, the Escrow Agent will release from escrow and deliver to the Optionees the number of Escrowed Shares, as applicable for each of the Optionees, as equal to:

  (a) 25% of the Escrowed Securities, if any, on the date of grant of the Options (the “ Date of Grant ”);

  (b) 25% of the Escrowed Securities, if any, on the date that is six months from the Date of Grant;

  (c) 25% of the Escrowed Securities, if any, on the date that is 12 months from the Date of Grant; and

  (d) 25% of the Escrowed Securities, if any, on the date that is 18 months from the Date of Grant.

3.3                                      In the event that the Company informs the Escrow Agent that the Optionee does not hold their respective position with the Company, or another equivalent position with the Company or an affiliate of the Company, then all Escrowed Securities and the PAs not released from escrow shall be delivered by the Escrow Agent to the Company. Upon receipt thereof, the Company shall promptly return such shares to treasury for cancellation without consideration in accordance with NRS 78.211.

3.4                                      The Escrow Agent will release any remaining PAs to the Optionees when all of the Escrowed Securities have been released.

4. ESCROW AGENT

4.1                                      In exercising the rights, duties and obligations prescribed or confirmed by this Agreement, the Escrow Agent will act honestly and in good faith and will exercise that degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.


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4.2                                      The Company and the Optionees agree from time to time and at all times hereafter well and truly to save, defend and keep harmless and fully indemnify the Escrow Agent, its successors and assigns from and against all loss, costs, charges, suits, demands, claims, damages and expenses which the Escrow Agent, its successors or assigns may at any time or times hereafter bear, sustain, suffer or be put unto for or by reason or on account of its acting pursuant to this Agreement or anything in any manner relating thereto or by reason of the Escrow Agent’s compliance in good faith with the terms hereof.

4.3                                      In case proceedings should hereafter be taken in any court respecting the Escrowed Securities, the Escrow Agent will not be obliged to defend any such action or submit its rights to the court until it has been indemnified by other good and sufficient security in addition to the indemnity given in section 4.2 against its costs of such proceedings.

4.4                                      The Escrow Agent will have no responsibility in respect of loss of the Escrowed Securities except the duty to exercise such care in the safekeeping thereof as it would exercise if the Escrowed Securities belonged to the Escrow Agent.  The Escrow Agent may act on the advice of counsel but will not be responsible for acting or failing to act on the advice of counsel.

4.5                                      The Escrow Agent will not be bound in any way by any contract between the other parties hereto whether or not it has notice thereof or of its terms and conditions and the only duty, liability and responsibility of the Escrow Agent will be to hold the Escrowed Securities and the PAs as herein directed and to pay and deliver the same to such persons and other such conditions as are herein set forth.  The Escrow Agent will not be required to pass upon the sufficiency of any of the Escrowed Securities to ascertain whether or not the person or persons who have executed, signed or otherwise issued or authenticated the said documents have authority to so execute, sign or authorize, issue or authenticate the said documents or any of them, or that they are the same persons named therein or otherwise to pass upon any requirement of such instruments that may be essential for their validity, but it shall be sufficient for all purposes under this Agreement insofar as the Escrow Agent is concerned that the said documents are deposited with it as herein specified by the parties executing this Agreement with the Escrow Agent.

4.6                                      In the event that the Escrowed Securities are attached, garnished or levied upon under any court order, or if the delivery of such property is stayed or enjoined by any court order or if any court order, judgment or decree is made or entered affecting such property or affecting any act by the Escrow Agent, the Escrow Agent may, in its sole discretion, obey and comply with all writs, orders, judgments or decrees so entered or issued, whether with or without jurisdiction, notwithstanding any provision of this Agreement to the contrary.  If the Escrow Agent obeys and complies with any such writs, orders, judgments or decrees, it will not be liable to any of the parties hereto or to any other person, form or corporation by reason of such compliance, notwithstanding that such writs, orders, judgments or decrees may be subsequently reversed, modified, annulled, set aside or vacated.

4.7                                      Except as herein otherwise provided, the Escrow Agent is authorized and directed to disregard in its sole discretion any and all notices and warnings which may be given to it by any of the parties hereto or by any other person, firm, association or corporation.  It will, however, at its sole discretion, obey the order, judgment or decree of any court of competent jurisdiction, and it is hereby authorized to comply with and obey such orders, judgments or decrees and in case of such compliance, it shall not be liable by reason thereof to any of the parties hereto or to any other person, firm, association or corporation, even if thereafter any such order, judgment or decree may be reversed, modified, annulled, set aside or vacated.


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4.8                                      If the Escrow Agent receives any valid court order contrary to the instructions contained in this Agreement, the Escrow Agent may continue to hold the Escrowed Securities and the PAs until the lawful determination of the issue between the parties hereto.

4.9                                      If written notice of protest is made by the Company or the Optionees to the Escrow Agent to any action contemplated by the Escrow Agent under this Agreement, and such notice sets out reasons for such protest, the Escrow Agent may at its sole discretion continue to hold the Escrowed Securities and the PAs until the right to the documents is legally determined by a court of competent jurisdiction or otherwise.

4.10                                  The Escrow Agent may resign as Escrow Agent by giving not less than five (5) days’ notice thereof to the Company and the Optionees.  The Company and the Optionees may terminate the Escrow Agent by giving not less than five (5) days’ notice to the Escrow Agent.  The resignation or termination of the Escrow Agent will be effective and the Escrow Agent will cease to be bound by this Agreement on the date that is five (5) days after the date of receipt of the termination notice given hereunder or on such other date as the Escrow Agent, the Company and the Optionees may agree upon.  All indemnities granted to the Escrow Agent herein will survive the termination of this Agreement or the termination or resignation of the Escrow Agent.  In the event of termination or resignation of the Escrow Agent for any reason, the Escrow Agent shall, within that five (5) days’ notice period deliver the Escrowed Securities and the PA to the new escrow agent to be named by the Company and the Optionees.

4.11                                  Notwithstanding anything herein to the contrary, the Escrow Agent may act upon any written instructions given jointly by the Company and the Optionees.

4.12                                  Notwithstanding anything to the contrary contained herein, in the event of any dispute arising between the Company and the Optionees, this Agreement or any matters arising thereto, the Escrow Agent may in its sole discretion deliver and interplead the Escrowed Securities and the PA into court and such delivery and interpleading will be an effective discharge to the Escrow Agent.

5. FEES

5.1                                      The Company will pay all of the compensation of the Escrow Agent and will reimburse the Escrow Agent for any and all reasonable expenses, disbursements and advances made by the Escrow Agent in the performance of its duties hereunder, including reasonable fees, expenses and disbursements incurred by its counsel.

6. GENERAL

6.1                                      Except as herein otherwise provided, no subsequent alteration, amendment, change, or addition to this Agreement will be binding upon the parties hereto unless reduced to writing and signed by the parties.


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6.2                                      This Agreement will enure to the benefit of and be binding upon the parties and their respective heirs, executors, administrators and successors.

6.3                                      The parties will execute and deliver all such further documents, do or cause to be done all such further acts and things, and give all such further assurances as may be necessary to give full effect to the provisions and intent of this Agreement.

6.4                                      This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and applicable federal laws related thereto.

6.5                                      Any notice required or permitted to be given under this Agreement will be in writing and may be given by delivering, sending by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy, or sending by prepaid registered mail, the notice to the following address:

  (a) If to the Company:

  Blox, Inc.
600 - 666 Burrard Street
Vancouver, BC V6C 3P6

  Attention: President
Telephone: 1 604 688 3899
Facsimile: 1 604 688 3896

  (b) If to the Optionees, to their address indicated on the first page of this Agreement:

  (c) If to the Escrow Agent:

  Clark Wilson LLP
Barristers and Solicitors
900 – 885 West Georgia Street
Vancouver, British Columbia
Canada V6C 3H1

Fax: (604) 687-6314

Attention: Cam McTavish

(or to such other address as any party may specify by notice in writing to another party).  Any notice delivered or sent by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy on a business day will be deemed conclusively to have been effectively given on the day the notice was delivered, or the electronic communication was successfully transmitted, as the case may be.  Any notice sent by prepaid registered mail will be deemed conclusively to have been effectively given on the third business day after posting; but if at the time of posting or between the time of posting and the third business day thereafter there is a strike, lockout, or other labour disturbance affecting postal service, then the notice will not be effectively given until actually delivered.


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6.6                                      Time is of the essence of this Agreement.

6.7                                      It is understood and agreed by the parties to this Agreement that the only duties and obligations of the Escrow Agent are those specifically stated herein and no other.

6.8                                      This Agreement may be executed in one or more counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.  This Agreement may be executed by delivery of executed signature pages by fax and such fax execution will be effective for all purposes.

[Signature page to follow]



IN WITNESS WHEREOF the parties have caused this Escrow Agreement to be executed as of the day and year first written above.

BLOX, INC.

Per:

“Ronald Renne”         
Name: Ronald Renne
Title:   President and CEO

SIGNED by ROBERT IRONSIDE in the presence of:

“signed”                                                                           
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“Robert Ironside”
ROBERT IRONSIDE

SIGNED by MARCO PARENTE in the presence of:

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“Marco Parente”
MARCO PARENTE



SIGNED by KIMBERLY GILLETT in the presence of:

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“Kimberly Gillett”
KIMBERLY GILLETT

SIGNED by CEDRIC WILSON in the presence of:

“signed”                                                                           
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“Cedric Wilson”
CEDRIC WILSON

CLARK WILSON LLP

Per:
“Signed”         
Partner




March 5, 2014

Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549

Commissioners:

We have read the statements made by Blox, Inc., which were filed with the Securities and Exchange Commission, pursuant to Item 4.01 of Form 8-K, as part of the Form 8-K of Blox, Inc. dated March 5, 2014. We agree with the statements concerning our Firm in Item 4.01 of such Form 8-K.   

Yours truly,  

/s/ DMCL

Dale Matheson Carr-Hilton LaBonte LLP




Exhibit 21.1

Wholly Owned Subsidiaries of
Blox, Inc.




BLOX, INC.

2014 STOCK OPTION PLAN

                                This 2014 Stock Option Plan (this “Plan” ) provides for the grant of options to acquire shares of common stock (each, a “Share” ), par value of US$0.00001 per Share, of Blox, Inc., a Nevada corporation (the  “Company” ).  For the purposes of Eligible Employees (as defined below) who are subject to income tax in the United States, stock options granted under this Plan that qualify under Section 422 of the United States Internal Revenue Code of 1986 , as amended (the “Code” ), are referred to in this Plan as “Incentive Stock Options” .  Incentive Stock Options, stock options that do not qualify under Section 422 of the Code ( “Non-Qualified Stock Options” ) and stock options granted to non-United States residents under this Plan are referred to collectively as “Options” .

1. PURPOSE

1.1 The purpose of this Plan is to:

  (a) retain the services of valued key employees, directors, officers and consultants of the Company, and such other persons as the Plan Administrator shall select in accordance with Section 3 below;

  (b) to provide equity incentives to such persons and to encourage such persons to acquire a greater proprietary interest in the Company, thereby strengthening their incentive to achieve the objectives of the shareholders of the Company;

  (c) to serve as an inducement in the retention of Company personnel.

1.2                                        This Plan shall at all times be subject to all legal requirements relating to the administration of stock option plans, if any, under applicable United States federal and state securities laws, Canadian provincial securities laws, the Code, the Income Tax Act (Canada), the rules of any applicable stock exchange or stock quotation system, and the rules of any foreign jurisdiction applicable to Options granted to residents therein (collectively, the “Applicable Laws”).

2. ADMINISTRATION

2.1                                        This Plan shall be administered initially by the board of directors of the Company (the “ Board ”), except that the Board may, in its discretion, establish a committee composed of two (2) or more members of the Board to administer this Plan, which committee (the “ Committee ”) may be an executive, compensation or other committee, including a separate committee especially created for this purpose. The Board or, if applicable, the Committee is referred to herein as the “ Plan Administrator ”.

2.2                                        If and so long as the Common Stock is registered under Section 12(b) or 12(g) of the United States Securities Exchange Act of 1934 , as amended (the “ Exchange Act ”), the Board shall consider in selecting the Plan Administrator and the membership of any Committee, with respect to any persons subject or likely to become subject to Section 16 of the Exchange Act, the provisions regarding (a) “outside directors” as contemplated by Section 162(m) of the Code, and (b) “Non-Employee Directors” as contemplated by Rule 16b‑3 under the Exchange Act.

2.3                                        The Committee shall have the powers and authority vested in the Board hereunder (including the power and authority to interpret any provision of this Plan or the terms of any Option).  The members of any such Committee shall serve at the pleasure of the Board.  A majority of the members of the Committee shall constitute a quorum, and all actions of the Committee shall be taken by a majority of the members present.  Any action may be taken by a written instrument signed by all of the members of the Committee and any action so taken shall be fully effective as if it had been taken at a meeting of the members of the Committee.


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2.4                                        The Board may at any time amend, suspend or terminate this Plan, subject to such shareholder approval as may be required by Applicable Laws, including the rules of an applicable stock exchange or other national market system, provided that:

  (a) no Options may be granted during any suspension of this Plan or after termination of this Plan; and

  (b) any amendment, suspension or termination of this Plan will not affect Options already granted, and such Options will remain in full force and effect as if this Plan had not been amended, suspended or terminated, unless mutually agreed otherwise between the Optionee (as defined below) and the Plan Administrator, which agreement will have to be in writing and signed by the Optionee and the Company.

2.5                                        Subject to the provisions of this Plan, and with a view to effecting its purpose, the Plan Administrator shall have sole authority, in its absolute discretion, to:

  (a) construe and interpret this Plan;

  (b) define the terms used in this Plan;

  (c) prescribe, amend and rescind the rules and regulations relating to this Plan;

  (d) correct any defect, supply any omission or reconcile any inconsistency in this Plan;

  (e) grant Options under this Plan;

  (f) determine the individuals to whom Options shall be granted under this Plan and whether the Option is an Incentive Stock Option or a Non-Qualified Stock Option, or otherwise;

  (g) determine the time or times at which Options shall be granted under this Plan;

  (h) determine the number of Shares subject to each Option, the exercise price of each Option, the duration of each Option and the times at which each Option shall become exercisable;

  (i) determine all other terms and conditions of the Options; and

  (j) make all other determinations and interpretations necessary and advisable for the administration of this Plan.

2.6                                        All decisions, determinations and interpretations made by the Plan Administrator shall be binding and conclusive on all participants in this Plan and on their legal representatives, heirs and beneficiaries, subject to any contrary determination by the Board.

3. ELIGIBILITY

3.1                                        Incentive Stock Options may be granted to any individual who, at the time the Option is granted, is an employee of the Company or any Related Company (as defined below) and is subject to income tax in the United States (each, an “ Eligible Employee ”), provided that any grant of Incentive Stock Options will be conditional upon compliance with all applicable federal and state securities laws.

3.2                                        Non-Qualified Stock Options may be granted to Eligible Employees and to such other persons who are not Eligible Employees as the Plan Administrator shall select, subject to any Applicable Laws, provided that any grant of Options to an Optionee (as defined herein) who is a U.S. Person will be conditional upon compliance with all applicable federal and state securities laws.


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3.3                                        Optionees who are U.S. Persons may be required to provide additional documentation to the Company prior to any grant of Options becoming effective.

3.4                                        Options may be granted in substitution for outstanding options of another company in connection with the merger, consolidation, acquisition of property or stock or other reorganization between such other company and the Company or any subsidiary of the Company.  Options also may be granted in exchange for outstanding Options. 

3.5                                        Any person to whom an Option is granted under this Plan is referred to as an “ Optionee ”.  Any person who is the owner of an Option is referred to as a “ Holder ”.

3.6                                        As used in this Plan, the term “ Related Company ” shall mean any company (other than the Company) that is a “Parent Company” of the Company or “Subsidiary Company” of the Company, as those terms are defined in Sections 424(e) and 424(f), respectively, of the Code (or any successor provisions) and the regulations thereunder (as amended from time to time).

4. STOCK

4.1                                        The Plan Administrator is authorized to grant Options to acquire up to a total of 10,000,000 Shares of the Company’s authorized but unissued or reacquired common stock. The number of Shares with respect to which Options may be granted hereunder is subject to adjustment as set forth in Section 5.1(n) hereof.  In the event that any outstanding Option expires or is terminated for any reason, the Shares allocable to the unexercised portion of such Option may again be subject to an Option granted to the same Optionee or to a different person eligible under Section 3 of this Plan; provided however, that any cancelled Options will be counted against the maximum number of Shares with respect to which Options may be granted to any particular person as set forth in Section 5.1(a)(ii) hereof.

5. TERMS AND CONDITIONS OF OPTIONS

5.1                                        Each Option granted under this Plan shall be evidenced by a written agreement approved by the Plan Administrator (each, an “ Agreement ”).  Agreements may contain such provisions, not inconsistent with this Plan, as the Plan Administrator in its discretion may deem advisable.  All Options also shall comply with the following requirements:

  (a) Type of Option

  For Optionees that are subject to income tax in the United States, each Agreement shall state whether the Option is intended to be an Incentive Stock Option or a Non-Qualified Stock Option, provided that:

  (i) in the absence of action to the contrary by the Plan Administrator in connection with the grant of an Option, all Options shall be Non-Qualified Stock Options;

  (ii) the aggregate fair market value (determined at the Date of Grant, as defined below) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an Optionee subject to income tax in the United States during any calendar year (granted under this Plan and all other stock option plans of the Company, a Related Company or a predecessor company) shall not exceed US$100,000, or such other limit as may be prescribed by the Code as it may be amended from time to time (the “ Annual Limit ”); and

  (iii) any portion of an Option which exceeds the Annual Limit shall not be void but rather shall be a Non-Qualified Stock Option.


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  (b) Number of Shares

  Each Agreement shall state the number of Shares to which it pertains. The number of Options to be granted to any Optionee will be determined by the Plan Administrator at the time of grant.

  (c) Date of Grant

  Each Agreement shall state the date the Plan Administrator has deemed to be the effective date of the grant of the Option for purposes of this Plan (the “ Date of Grant ”).

  (d) Option Price

  Each Agreement shall state the price per Share at which an Option is exercisable. The Plan Administrator shall act in good faith to establish the exercise price of each Option in accordance with Applicable Laws at the time the Option is granted, provided that:

  (i) the per Share exercise price for an Incentive Stock Option or any Option granted to a “covered employee” as such term is defined for purposes of Section 162(m) of the Code (a “ Covered Employee ”) shall not be less than the fair market value per Share at the Date of Grant as determined by the Plan Administrator in good faith;

  (ii) with respect to Incentive Stock Options granted to greater-than-ten percent (>10%) shareholders of the Company (as determined with reference to Section 424(d) of the Code), the exercise price per Share shall not be less than one hundred ten percent (110%) of the fair market value per Share at the Date of Grant as determined by the Plan Administrator in good faith; and

  (iii) Options granted in substitution for outstanding options of another company in connection with the merger, consolidation, acquisition of property or stock, or other reorganization involving such other company and the Company or any subsidiary of the Company may be granted with an exercise price equal to the exercise price for the substituted option of the other company, subject to any adjustment consistent with the terms of the transaction pursuant to which the substitution is to occur.

  (e) Duration of Options

  At the time of the grant of an Option, the Plan Administrator shall designate, subject to Section5.1(h) below, the expiration date of the Option, which date shall not be later than ten (10) years from the Date of Grant, provided that the expiration date of any Incentive Stock Option granted to a greater-than-ten percent (>10%) shareholder of the Company (as determined with reference to Section424(d) of the Code) shall not be later than five (5) years from the Date of Grant.

  (f) Vesting Schedule

  (i) No Option shall be exercisable until it has vested.  The vesting schedule for each Option shall be specified by the Plan Administrator at the time of grant of the Option.

  (ii) The Plan Administrator may specify a vesting schedule for all or any portion of an Option based on the achievement of performance objectives established in advance of the commencement by the Optionee of services related to the achievement of the performance objectives.  Performance objectives may be expressed in terms of one or more of the following:  return on equity, return on assets, Share price, market share, sales, earnings per Share, costs, net earnings, net worth, inventories, cash and cash equivalents, gross margin or the Company’s performance relative to its internal business plan, or such other terms as determined and directed by the Board.  Performance objectives may be in respect of the performance of the Company as a whole (whether on a consolidated or unconsolidated basis), a Related Company, or a subdivision, operating unit, product or product line of either of the foregoing.  Performance objectives may be absolute or relative and may be expressed in terms of a progression or a range.  An Option that is exercisable (in full or in part) upon the achievement of one or more performance objectives may be exercised only following written notice to the Optionee and the Company by the Plan Administrator that the performance objective has been achieved.


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  (g) Acceleration of Vesting

The vesting of any Option may be accelerated by the Plan Administrator at such times and in such amounts as it shall determine in its sole discretion.  The vesting of Options also shall be accelerated under the circumstances described in Section 5.1(n) below.

  (h) Term of Option

  (i) Options that have vested as specified by the Plan Administrator or in accordance with this Plan, shall terminate and cease to be exercisable, to the extent not previously exercised, immediately upon the occurrence of the first of the following events, unless otherwise provided for in the Agreement:

  A. the expiration of the Option, as designated by the Plan Administrator in accordance with Section 5.1(e) above;

  B. the date of an Optionee’s resignation or termination of employment or contractual relationship with the Company or any Related Company for cause (as determined in the sole discretion of the Plan Administrator);

  C. the expiration of three (3) months from the date of an Optionee’s termination of employment or contractual relationship with the Company or any Related Company for any reason whatsoever other than resignation, cause, death or Disability (as defined below); or

  D. the expiration of one year (1) from termination of an Optionee’s employment or contractual relationship by reason of death or Disability (as defined below).

  (ii) Upon the death of an Optionee, any vested Options held by the Optionee shall be exercisable only by the person or persons to whom such Optionee’s rights under such Option shall pass by the Optionee’s will or by the laws of descent and distribution of the Optionee’s domicile at the time of death and only until such Options terminate as provided above.

  (iii) For purposes of this Plan, unless otherwise defined in an Agreement, “ Disability ” shall mean medically determinable physical or mental impairment which has lasted or can be expected to last for a continuous period of not less than six (6) months or that can be expected to result in death.  The Plan Administrator shall determine whether an Optionee has incurred a Disability on the basis of medical evidence acceptable to the Plan Administrator.  Upon making a determination of Disability, the Plan Administrator shall, for purposes of this Plan, determine the date of an Optionee’s termination of employment or contractual relationship.

  (iv) Unless accelerated in accordance with Section 5.1(g) above, unvested Options shall terminate immediately upon the Optionee resigning from, or the Company terminating, the Optionee’s employment or contractual relationship with the Company or any Related Company for any reason whatsoever, including death or Disability.


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  (v) For purposes of this Plan, transfer of employment between or among the Company and/or any Related Company shall not be deemed to constitute a termination of employment with the Company or any Related Company.  For purposes of this Plan, employment shall be deemed to continue while the Optionee is on military leave, sick leave or other bona fide leave of absence (as determined by the Plan Administrator). The foregoing notwithstanding, employment shall not be deemed to continue beyond the first ninety (90) days of such leave, unless the Optionee’s re-employment rights are guaranteed by statute or by contract.

  (i) Exercise of Options

  (i) Options shall be exercisable, in full or in part, at any time after vesting, until termination.  If less than all of the Shares included in the vested portion of any Option are purchased, the remainder may be purchased at any subsequent time prior to the expiration of the Option term.  No portion of any Option for less than 1,000 Shares (as adjusted pursuant to Section 5.1(n) below) may be exercised, provided that if the vested portion of any Option is less than 1,000 Shares, it may be exercised with respect to all Shares for which it is vested.  Only whole Shares may be issued pursuant to an Option, and to the extent that an Option covers less than one Share, it is unexercisable.

  (ii) Options or portions thereof may be exercised by a Holder giving written notice to the Company, which notice shall specify the number of Shares to be purchased, and be accompanied by payment in the amount of the aggregate exercise price for the Shares so purchased, which payment shall be in the form specified in Section 5.1(j) below. The Company shall not be obligated to issue, transfer or deliver a certificate representing any Shares to the Holder of any Option until provision has been made by the Holder, to the satisfaction of the Company, for the payment of the aggregate exercise price for all Shares for which the Option shall have been exercised and for satisfaction of any tax withholding obligations associated with such exercise.

  (iii) During the lifetime of an Optionee, Options are exercisable only by the Optionee or, in the case of a Non-Qualified Stock Option, transferee who takes title to such Option in the manner permitted by Section 5.1(l) hereof.

  (j) Payment upon Exercise of Option

  Upon the exercise of any Option, the aggregate exercise price shall be paid to the Company in cash, by wire transfer or, if the funds are drawn from a Canadian bank, by certified cheque. In addition, if pre-approved in writing by the Plan Administrator, who may arbitrarily withhold consent, the Holder may pay for all or any portion of the aggregate exercise price by complying with one or more of the following alternatives:

  (i) by delivering to the Company Shares previously held by such Holder, or by the Company withholding Shares otherwise deliverable pursuant to exercise of the Option, which Shares received or withheld shall have a fair market value at the date of exercise (as determined by the Plan Administrator) equal to the aggregate exercise price to be paid by the Optionee upon such exercise; or

  (ii) by complying with any other payment mechanism approved by the Plan Administrator at the time of exercise.

  (k) No Rights as a Shareholder

  A Holder shall have no rights as a shareholder with respect to any Shares covered by an Option until such Holder becomes a record holder of such Shares, irrespective of whether such Holder has given notice of exercise. Subject to the provisions of Section5.1(n) hereof, no rights shall accrue to a Holder and no adjustments shall be made on account of dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights declared on, or created in, the Shares for which the record date is prior to the date the Holder becomes a record holder of the Shares covered by the Option, irrespective of whether such Holder has given notice of exercise.


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  (l) Transfer of Option

  (i) Options granted under this Plan and the rights and privileges conferred by this Plan may not be transferred, assigned, pledged or hypothecated in any manner (whether by operation of law or otherwise) other than by will or by applicable laws of descent and distribution or pursuant to a qualified domestic relations order, and shall not be subject to execution, attachment or similar process; provided that, subject to Applicable Laws:

  A. for Non-Qualified Stock Options or Options granted to non-US residents, any Agreement may provide, or be amended to provide, that an Option to which it relates is transferable without payment of consideration to immediate family members of the Optionee or to trusts or partnerships or limited liability companies established exclusively for the benefit of the Optionee and the Optionee’s immediate family members; or

  B. for Incentive Stock Options, the Optionee’s heirs or administrators may exercise any portion of an Optionee’s vested and outstanding Options within one year of the Optionee’s death.

  (ii) Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any Option or of any right or privilege conferred by this Plan contrary to the provisions hereof, or upon the sale, levy or any attachment or similar process upon the rights and privileges conferred by this Plan, such Option shall thereupon terminate and become null and void.

  (m) Securities Regulation and Tax Withholding

  (i) No Option shall be granted and no Shares shall be issued with respect to the exercise of any Options unless the grant of such Options, the exercise of such Options and the issuance and delivery of such Shares shall comply with all Applicable Laws, and such issuance shall be further subject to the approval of counsel for the Company with respect to such compliance, including the availability of an exemption from prospectus and registration requirements of all Applicable Laws for the issuance of such Options or Shares. The inability of the Company to obtain from any regulatory body the authority deemed by the Company to be necessary for the lawful grant and issuance of any Options or Shares under this Plan, or the unavailability of an exemption from prospectus or registration requirements for the grant and issuance of any Options or Shares under this Plan, as determined by the Plan Administrator in its sole discretion, shall relieve the Company of any liability with respect to the non-issuance or sale of such Options or Shares.

  (ii) As a condition to the exercise of any Option, the Plan Administrator may require the Holder to make certain representations and warranties in writing at the time of such exercise. At the option of the Plan Administrator, a stop-transfer order against such Shares may be placed on the stock books and records of the Company, and a legend indicating that the Shares may not be pledged, sold or otherwise transferred unless an opinion of counsel is provided stating that such transfer is not in violation of any Applicable Laws may be stamped on the certificates representing such Shares in order to assure an exemption from registration.  The Plan Administrator also may require such other documentation as may from time to time be necessary to comply with federal, provincial or state securities laws. THE COMPANY HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR THE SHARES ISSUABLE UPON THE EXERCISE OF OPTIONS.


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  (iii) The Holder shall pay to the Company by cash, by wire transfer or, if the funds are drawn from a Canadian bank, by certified cheque, promptly upon exercise of an Option or, if later, the date that the amount of such obligations becomes determinable, all applicable federal, state, provincial, local and foreign withholding taxes that the Plan Administrator, in its discretion, determines to result upon exercise of an Option or from a transfer or other disposition of Shares acquired upon exercise of an Option or otherwise related to an Option or Shares acquired in connection with an Option.  Upon approval of the Plan Administrator, a Holder may satisfy such obligation by complying with one or more of the following alternatives selected by the Plan Administrator:

  A. by delivering to the Company Shares previously held by such Holder or by the Company withholding Shares otherwise deliverable pursuant to the exercise of the Option, which Shares received or withheld shall have a fair market value at the date of exercise (as determined by the Plan Administrator) equal to any withholding tax obligations arising as a result of such exercise, transfer or other disposition; or

  B. by complying with any other payment mechanism approved by the Plan Administrator from time to time.

  (iv) The grant of Options and entering into any Agreement with respect to Options or the issuance, transfer or delivery of certificates representing Shares pursuant to the exercise of Options may be delayed, at the discretion of the Plan Administrator, until the Plan Administrator is satisfied that the applicable requirements of the federal, provincial and state securities laws and the withholding provisions under Applicable Laws have been met and that the Holder has paid or otherwise satisfied any withholding tax obligation as described in Section 5.1(m)(iii) above.

  (n) Stock Dividend or Reorganization

  (i) If: (1) the Company shall at any time be involved in a transaction described in Section 424(a) of the Code (or any successor provision) or any “corporate transaction” described in the regulations thereunder; (2) the Company shall declare a dividend payable in, or shall subdivide, reclassify, reorganize, or combine, its Common Stock; or (3) any other event with substantially the same effect shall occur, the Plan Administrator shall, subject to Applicable Laws, with respect to each outstanding Option, proportionately adjust the number of Shares subject to such Option and/or the exercise price per Share so as to preserve the rights of the Holder after the event as substantially proportionate to the rights of the Holder prior to such event, and to the extent that such action shall include an increase or decrease in the number of Shares subject to outstanding Options, the number of Shares available under Section 4 of this Plan and the exercise price for such Options shall automatically be increased or decreased, as the case may be, proportionately, without further action on the part of the Plan Administrator, the Company, the Company’s shareholders, or any Holder, so as to preserve the proportional rights of the Holder.

  (ii) In the event that the presently authorized capital stock of the Company is changed into the same number of Shares with a different par value, or without par value, the stock resulting from any such change shall be deemed to be Common Stock within the meaning of this Plan, and each Option shall apply to the same number of Shares of such new stock as it applied to old Shares immediately prior to such change.


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  (iii) If the Company shall at any time declare an extraordinary dividend with respect to the Common Stock, whether payable in cash or other property, the Plan Administrator may, subject to applicable law, in the exercise of its sole discretion and with respect to each outstanding Option, proportionately adjust the number of Shares subject to such Option and/or adjust the exercise price per Share so as to preserve the rights of the Holder after the event as substantially proportionate to the rights of the Holder prior to such event, and to the extent that such action shall include an increase or decrease in the number of Shares subject to outstanding Options, the number of Shares available under Section 4 of this Plan shall automatically be increased or decreased, as the case may be, proportionately, without further action on the part of the Plan Administrator, the Company, the Company’s shareholders, or any Holder.

  (iv) The foregoing adjustments to the Option terms or the number of Shares subject to Options shall be made by the Plan Administrator, or by any successor administrator of this Plan, or by the applicable terms of any assumption or substitution document.

  (v) The grant of an Option shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge, consolidate or dissolve, to liquidate, or to sell or transfer all or any part of its business or assets.

6. EFFECTIVE DATE; SHAREHOLDER APPROVAL

6.1                                        Incentive Stock Options may be granted by the Plan Administrator from time to time on or after the date on which this Plan is adopted (the “Effective Date”) through the day immediately preceding the tenth anniversary of the Effective Date. 

6.2                                        All other Options may be granted by the Plan Administrator on or after the Effective Date and until this Plan is terminated by the Board in its sole discretion. 

6.3                                        Termination of this Plan shall not terminate any Option granted prior to such termination. 

6.4                                        If required by Applicable Laws, the approval of shareholders of the Company shall be obtained for any reduction in the exercise price of any Option. 

6.5                                        Any Incentive Stock Options granted by the Plan Administrator prior to the approval of this Plan by the shareholders of the Company shall be granted subject to ratification of this Plan by the shareholders of the Company within twelve (12) months after the Effective Date.  If such shareholder ratification is sought and not obtained, all Incentive Stock Options granted prior thereto and thereafter shall be considered Non-Qualified Stock Options and any Options granted to Covered Employees will not be eligible for the exclusion set forth in Section 162(m) of the Code with respect to the deductibility by the Company of certain compensation. 

7. NO OBLIGATIONS TO EXERCISE OPTION

7.1                                        The grant of an Option shall impose no obligation upon an Optionee to exercise such Option.

8.    NO RIGHT TO OPTIONS OR TO EMPLOYMENT

8.1                                        Whether or not any Options are to be granted under this Plan shall be exclusively within the discretion of the Plan Administrator, and nothing contained in this Plan shall be construed as giving any person any right to participate under this Plan. 

8.2                                        The grant of an Option shall in no way constitute any form of agreement or understanding binding on the Company or any Related Company, express or implied, that the Company or any Related Company will employ or contract with an Optionee for any length of time, nor shall it interfere in any way with the Company’s or, where applicable, a Related Company’s right to terminate an Optionee’s employment at any time, which right is hereby reserved.


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9. INDEMNIFICATION OF PLAN ADMINISTRATOR

9.1                                        In addition to all other rights of indemnification they may have as members of the Board, members of the Plan Administrator shall be indemnified by the Company for all reasonable expenses and liabilities of any type or nature, including attorneys’ fees, incurred in connection with any action, suit or proceeding to which they or any of them are a party by reason of, or in connection with, this Plan or any Option granted under this Plan, and against all amounts paid by them in settlement thereof (provided that such settlement is approved by independent legal counsel selected by the Company), except to the extent that such expenses relate to matters for which it is adjudged that such Plan Administrator member is liable for willful misconduct; provided, that within fifteen (15) days after the institution of any such action, suit or proceeding, the Plan Administrator member involved therein shall, in writing, notify the Company of such action, suit or proceeding, so that the Company may have the opportunity to make appropriate arrangements to prosecute or defend the same.

10. AMENDMENT OF PLAN

10.1                                    The Plan Administrator may, subject to Applicable Laws, at any time, modify, amend or terminate this Plan or modify or amend Options granted under this Plan, including, without limitation, such modifications or amendments as are necessary to maintain compliance with Applicable Laws, provided that:

  (a) no amendment with respect to any outstanding Option which has the effect of reducing the benefits afforded to the Holder thereof shall be made without the consent of such Holder;

  (b) the events triggering acceleration of vesting of any outstanding Option may be modified, expanded or eliminated without the consent of the Holder thereof;

  (c) the Plan Administrator may make the effectiveness of any such amendment conditional on the receipt of shareholder approval at such time and in such manner as the Plan Administrator may consider necessary for the Company to comply with, or to avail the Company and/or the Optionees of the benefits of, any Applicable Laws, including any securities, tax, market listing or other administrative or regulatory requirement; and

  (d) the Plan Administrator may not increase the number of Shares available for issuance on the exercise of Incentive Stock Options without the approval of the shareholders of the Company.

10.2                                    Without limiting the generality of Section 10.1 hereof, the Plan Administrator may modify grants to persons who are eligible to receive Options under this Plan who are foreign nationals or employed outside Canada and the United States to recognize differences in local law, tax policy or custom.

Effective Date: February 27, 2014




International Eco Endeavors Corp.
Consolidated Financial Statements

Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)



INDEPENDENT AUDITOR'S REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM

To the Directors and Shareholders of
International Eco Endeavors Corp.

Report on the consolidated financial statements

We have audited the accompanying consolidated financial statements of International Eco Endeavors Corp. and its subsidiaries which comprise the consolidated statements of financial position as at March 31, 2013 and 2012, and the consolidated statements of comprehensive loss, changes in (deficiency) equity and cash flows for the year ended March 31, 2013 and for the period from date of incorporation on April 28, 2011 to March 31, 2012, and a summary of significant accounting policies and other explanatory information. 

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.  We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.  The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.  In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. 

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of International Eco Endeavors Corp. and its subsidiaries as at March 31, 2013 and 2012, and its financial performance and its cash flows for the year ended March 31, 2013 and  for the period from date of incorporation on April 28, 2011 to March 31, 2012 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Vancouver, Canada “Morgan LLP”
January 17, 2014 Chartered Accountants

2



International Eco Endeavors Corp .
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)

    March 31, 2013     March 31, 2012  
             
ASSETS            
             
Current Assets            
      Cash $ 22,640   $ 58,493  
      Accounts receivable   91,087     3,833  
      Prepaid asset   11,222     -  
Total Current Assets   124,949     62,326  
             
Acquisition Deposit (Note 5)   -     100,070  
Property, Plant and Equipment (Note 6)   1,072,491     -  
             
Total Assets $ 1,197,440   $ 162,396  
             
LIABILITIES            
             
Current Liabilities            
      Accounts payable (Note 12) $ 226,863   $ 1,353  
      Royalty payments payable (Note 13)   50,153     -  
      Loans payable (Note 12)   159,864     -  
      Interest payable   132,511     -  
Total Current Liabilities   569,391     1,353  
             
Long Term Debt (Note 9)   1,547,228     -  
             
Total Liabilities   2,116,619     1,353  
             
(DEFICIENCY) EQUITY            
             
Share Capital (Note 10)   741,017     653,000  
Accumulated Other Comprehensive Loss   (265,385 )   -  
Deficit   (1,394,811 )   (491,957 )
Total (Deficiency) Equity   (919,179 )   161,043  
             
Total Liabilities and (Deficiency) Equity $ 1,197,440   $ 162,396  

These consolidated financial statements are authorized for issue by the Board of Directors on January 17, 2014.

These consolidated financial statements are signed on the Company’s behalf by:

“Robert Abenante”   “Marco Parente”
CEO   CFO

See accompanying notes to the consolidated financial statements.

3


International Eco Endeavors Corp .
Consolidated Statements of Comprehensive Loss
(Expressed in Canadian Dollars)

    Year Ended
March 31, 2013
    Period Ended
March 31, 2012
 
             
Revenue    $ 903,120   $ -  
     Royalties     (27,094 )   -  
Net Revenue      876,026     -  
             
             
Cost of Sales               
     Cost of raw materials     698,761     -  
     Direct labour     64,111     -  
     Amortization     245,579     -  
     Other     12,674     -  
    1,021,125     -  
             
Gross loss      145,099     -  
             
Operating Expenses               
     Consulting and professional fees (Note 13)     70,853     48,558  
     Foreign exchange     4,439     -  
     Interest expense     132,511     -  
     Office and administration     140,745     54,494  
     Other expense     (103,016 )   -  
     Plant acquisition costs (Note 7)     445,653     227,155  
     Salaries     12,730     -  
     Shares issued for services (Note 10)     50,000     158,000  
     Website development     3,840     3,750  
Total Operating Expenses      757,755     491,957  
             
Net Loss for the Year      (902,854 )   (491,957 )
             
Other Comprehensive Loss               
     Unrealized loss on translation of foreign operations    (265,385 )   -  
             
Comprehensive Loss for the Year   $ (1,168,239 ) $ (491,957 )
             
Net Loss Per Common Share   (0.06 )   (0.05 )
             
Weighted Average Number of Shares Outstanding – Basic and diluted   15,700,281     10,751,454  

See accompanying notes to the consolidated financial statements.

4



International Eco Endeavors Corp .
Consolidated Statement of Changes in (Deficiency) Equity
(Expressed in Canadian Dollars)

    Number of
Shares
    Share
Capital
    Accumulated
Other

Comprehensive

Loss
    Deficit     Total
Equity
(Deficiency)
 
                               
April 28, 2011   -   $ -   $ -   $ -   $ -  
                               
Issuance of common shares   5,340,000     495,000     -     -     495,000  
Shares issued for services   7,900,000     158,000     -     -     158,000  
Comprehensive loss   -           -     (491,957 )   (491,957 )
                               
March 31, 2012   13,240,000     653,000     -     (491,957 )   161,043  
                               
Issuance of common shares   152,062     38,017     -     -     38,017  
Shares issued for services   2,500,000     50,000     -     -     50,000  
Comprehensive loss   -     -     (265,385 )   (902,854 )   (1,168,239 )
                               
March 31, 2013   15,892,062   $ 741,017   $ (265,385 ) $ (1,394,811 ) $ (919,179 )

See accompanying notes to the consolidated financial statements.

5



International Eco Endeavors Corp .
Consolidated Statement of Cash Flows
(Expressed in Canadian Dollars)

    Year Ended
March 31, 2013
    Period Ended
March 31,
2012
 
             
OPERATING ACTIVITIES              
     Net loss for the period  $ (902,854 ) $ (491,957 )
     Non-cash adjustments:             
          Amortization    245,579     -  
          Shares issued for services    50,000     158,000  
          Unrealized foreign exchange on translation of foreign operations    (265,385 )   -  
     Changes in non-cash working capital             
          Accounts receivable    (87,254 )   (2,480 )
          Prepaid    (11,222 )   -  
          Accounts payable    (65,110 )   -  
          Royalty payments payable    50,153     -  
          Loans payable    159,864     -  
          Interest payable    132,511     -  
    (693,718 )   (336,437 )
             
INVESTING ACTIVITIES              
     Acquisition of power plant    (894,960 )   (100,070 )
     Acquisition of equipment    (35,354 )   -  
     Cash acquired on acquisition    2,934     -  
    (927,380 )   (100,070 )
             
  FINANCING ACTIVITIES            
     Proceeds from long-term debt    1,547,228     -  
     Shares issued for cash    38,017     495,000  
    1,585,245     495,000  
             
(Decrease) Increase in Cash     (35,853 )   58,493  
             
Cash, Beginning of Period     58,493     -  
             
Cash, End of Period   $ 22,640   $ 58,493  

Supplemental disclosure with respect to cash flows (Note 14)

See accompanying notes to the consolidated financial statements.

6


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

1. Description of Business

  International Eco Endeavors Corp. (the “Company”) was incorporated under the laws of the Province of British Columbia, Canada on April 28, 2011. 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.

2. Basis of Presentation

  (a) Statement of Compliance

  These consolidated financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

  (b) Basis of Presentation

  The consolidated financial statements of the Company as at and for the year ended March 31, 2013, and the period ended March 31, 2012 comprise the Company and its subsidiaries. These consolidated financial statements are prepared on the historical cost basis except for financial instruments that have been measured at fair value. These consolidated financial statements have also been prepared using the accrual basis of accounting, except for cash flow information. In the opinion of management, all adjustments (including normal recurring ones), considered necessary for fair value have been included.

  (c) Presentation and Functional Currencies

  The Company’s presentation and functional currency is the Canadian Dollar. The functional currency of its Hungarian subsidiary is the Hungarian Forint.

  (d) Significant Accounting Judgments and Estimates

  The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the period. Actual outcomes could differ from these estimates. Revisions to accounting estimates are recognized in the period in which the estimate is revised ad may affect both the period of revision and future periods.

7


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

2. Basis of Presentation (Continued)

  (d) Significant Accounting Judgments and Estimates (Continued)

  In applying the Company's accounting policies, management has made certain judgments that may have a significant effect on the consolidated financial statements. Such judgments include the determination of the functional currencies and use of the going concern assumption.

  i) Determination of functional currencies

  In determining the Company's functional currency, it periodically reviews its primary and secondary indicators as stipulated under IAS 21 "The Effects of Changes in Foreign Exchange Rates" to assess the primary economic environment in which the entity operates in determining the Company's functional currencies. The Company analyzes the currency that mainly influences labor, material and other costs of providing goods or services which is often the currency in which such costs are denominated and settled. The Company also analyzes secondary indicators such as the currency in which funds from financing activities such as equity issuances are generated and the funding dependency of the parent company whose predominant transactional currency is the Canadian dollar. Determining the Company's predominant economic environment requires significant judgment.

  ii) Going Concern

  These financial statements have been prepared in accordance with IFRS on a going concern basis, which assumes the realization of assets and discharge of liabilities in the normal course of business within the foreseeable future. Management uses judgment to assess the Company’s ability to continue as a going concern and the existence of conditions that cast doubt upon the going concern assumption. It is management’s assessment that the going concern assumption is appropriate.

  The consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based in future occurrences.

  iii) Use life of equipment

  Each significant component of an item of equipment is depreciated over its estimated useful life. Estimated useful lives are determined based on current facts and past experience, and take into consideration the anticipated physical life of the asset, existing long-term sales agreements and contracts, current and forecasted demand, the potential technological obsolescence, and regulations.

8


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

3. Significant Accounting Policies

  (a) Basis of Consolidation

  Subsidiaries are entities controlled by the Company. Control exists when International Eco Endeavors Corp. (“Eco”) is able to govern the financial and operating activities of those entities to generate returns for the Company. Inter-company transactions, balances, and unrealized gains and losses on transactions between different entities within the Company are eliminated. Significant subsidiaries include Kenderesh Endeavors Corp. (“Kenderesh”) and Kenderes Biogaz Terminal KFT. (“BioGas”) which are wholly owned.

  (b) Foreign Currency Accounting

    i) Foreign currency transactions

  Transactions in foreign currencies are translated to the respective functional currencies of the Corporation’s entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical costs in a foreign currency are translated using the exchange rate at the date of transaction. Foreign currency differences arising on retranslation are recognized in profit or loss, except for differences arising on the translation of available-for-sale financial instruments, which are recognized in other comprehensive income.

  ii) Foreign operations

  The assets and liabilities of foreign operations are translated to Canadian dollars at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Canadian dollars at exchange rates at the dates of the transactions. Foreign currency differences are recognized in other comprehensive income. When a foreign operation is disposed of, the relevant amount in the accumulated other comprehensive income is transferred to profit or loss as part of the gain or loss on disposal.

  (c) Cash and Cash Equivalents

  Cash includes cash deposited at banks and highly liquid investments with original maturities of three months or less when purchased. The Company did not have any cash equivalents at March 31, 2013 and 2012.

9


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

3. Significant Accounting Policies (Continued)

  (d) Financial Instruments

  Financial assets

  All financial assets are initially recorded at fair value and classified upon inception into one of the following four categories: held to maturity, available for sale, loans and receivables or at fair value through profit or loss (“FVTPL”).

  Financial assets classified as FVTPL are measured at fair value with unrealized gains and losses recognized through earnings. The Company’s cash and amounts receivable are classified as FVTPL.

  Financial assets classified as loans and receivables and held to maturity assets are measured at amortized cost. Financial assets classified as available for sale are measured at fair value with unrealized gains and losses recognized in other comprehensive income and loss except for losses in value that are considered other than temporary which are recognized in earnings.

  Transactions costs associated with FVTPL financial assets are expensed as incurred, while transaction costs associated with all other financial assets are included in the initial carrying amount of the asset.

  A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

  An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows, discounted at the original effective interest rate.

  Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

  An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost, this reversal is recognized in profit or loss.

  Financial liabilities

  All financial liabilities are initially recorded at fair value and classified upon inception as FVTPL or other financial liabilities.

10


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

3. Significant Accounting Policies (Continued)

  (d) Financial Instruments (Continued)

  Financial liabilities (Continued)

  Financial liabilities classified as other financial liabilities are initially recognized at fair value less directly attributable transaction costs. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. The effective interest rate method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. The Company’s liabilities are classified as other financial liabilities.

  Financial liabilities classified as FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Derivatives, including separated embedded derivatives are also classified as held for trading and recognized at fair value with changes in fair value with changes in fair value recognized in earnings unless they are designated as effective hedging instruments. Fair value changes on financial liabilities classified as FVTPL are recognized in earnings. The Company is not exposed to any derivative instruments and foreign exchange hedges in place at this time.

  (e) Property, Plant, and Equipment

  Property, plant, and equipment are carried at cost less accumulated depreciation and impairment losses, if any. Depreciation is provided at rates and methods designed to write off cost of the assets over their estimated useful lives as follows:

  Plant 3%
  Equipment 25%
  Furniture, fixtures and other 20%

  Management reviews the depreciation method, useful lives and residual values annually and accounts for any changes in estimates on a prospective basis.

  Where an item of plant and equipment comprises major components with different useful lives, the components are accounted for as separate items of production facility, and depreciated separately.

  (f) Revenue Recognition

  Revenue from the sale of electricity is recognized when the significant risks and rewards of ownership of, and the continuing managerial involvement with, the product have been transferred to the buyer, the amount of revenue and the costs incurred or to be incurred with respect to the sale can be measured reliably, and the economic benefits associated with the sale will flow to the Company. Revenue is measured at the fair value consideration received or receivable.

11


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

3. Significant Accounting Policies (Continued)

  (g) Impairment of Non-Financial Assets

  Impairment tests on intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs to sell, the asset is written down accordingly.

  Where it is possible to estimate the recoverable amounts of an individual asset, the impairment test is carried out on the asset’s cash generating unit, which is the lowest group of assets in which the asset belongs for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets.

  Where an indicator of impairment exists, an estimate of the recoverable amount is made. Determining the recoverable amount requires the use of estimates and assumptions such as long term commodity prices, discount rates, future capital requirements, exploration potential and operational performance. Changes in circumstances may affect these estimates and the recoverable amounts.

  An impairment loss is recognized in profit or loss, except to the extent they reverse gains previously recognized in other comprehensive income or loss.

  (h) Decommissioning Liabilities

  A legal or constructive obligation to incur restoration, rehabilitation and environmental costs may arise when environmental disturbance is caused by the operation of an alternative energy plant. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized to the carrying amount of the asset, as soon as the obligation to incur such costs arises. A pre-tax discount rate that reflects the time value of money and the risks specific to the liability are used to calculate the net present value of the expected future cash flows. These costs are charged to the statement of loss over the economic life of the related asset, through depreciation expense using relevant amortization method. The related liability is progressively increased each period as the effect of discounting unwinds, creating an expense recognized in the statement of loss. The liability is assessed at each reporting date for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation.

  The Company has no material restoration, rehabilitation and environmental costs as the disturbance to date is minimal.

12


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

3. Significant Accounting Policies (Continued)

  (i) Income Taxes

  Income tax expense comprises current and deferred tax. Current and deferred tax are recognized in net income to the extent that they relate to items recognized in equity.

  Current tax is expected tax payable or receivable on the taxable income or loss for the period, using the tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect to previous periods.

  The Company recognized deferred income tax in respect the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred income tax is measured at tax rates expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting period.

  A deferred income tax asset is recognized for unused tax losses, tax credits, and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred income tax assets are reviewed at each reporting date ad are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

  (j) Loss per Share

  Basic net income (loss) per share is calculated by dividing the net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is calculated by dividing the net income (loss) available to common shareholders by the weighted average number of common shares during the period using the treasury stock method. Under this method, proceeds from the potential exercise of stock options are assumed to be used to purchase the Company’s common shares. When there is a net loss, the exercise of stock options would result in a calculated diluted net loss per share that is anti-dilutive.

4. Accounting Standards Issued But Not Yet Adopted

  Certain new accounting standards, amendments to standards and interpretations have been issued, effective for annual periods beginning on or after January 1, 2013. These standards have been assessed to not have a significant impact on the Company’s financial statements:

13


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

4. Accounting Standards Issued But Not Yet Adopted (Continued)

 
  • IFRS 10 Consolidated Financial Statements;
  • IFRS 11 Joint Arrangements;
  • IFRS 12 Disclosure of Interests in Other Entities;
  • IFRS 13 Fair Value Measurement;
  • IAS 27 (Amendment) Separate Financial Statements;
  • IAS 28 (Amendment) Investments in Associates and Joint Ventures; and
  • IFRS 9, Financial instruments
  • IFRS 13 Fair Value Measurement
  • IAS 1 Presentation of Financial Statements

  The Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective and determined that the following may have an impact on its financial statements.

  IFRS 10, Consolidated Financial Statements, introduces a new single control model and single consolidation model built on a revised definition of control and criteria for assessment of consolidation. The new Standard requires an entity to consolidate an investee when it has power over the investee, is exposed, or has rights, to variable returns from its involvements with the investee and has the ability to affect those returns through its power over the investee. Under existing IFRS, consolidation is required when an entity has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. IFRS 10 replaces SIC-12, Consolidation – Special Purpose Entities, and parts of IAS 27, Consolidated and Separate Financial Statements. IFRS 10 is not expected to have a material impact on amounts recorded in the consolidated financial statements of Eco.

  IFRS 11, Joint Arrangements, redefines joint operations and joint ventures with a focus on the rights and obligations of an arrangement, rather than its legal form. The new Standard requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using the equity method of accounting, whereas for a joint operation the venturer will recognize its share of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or equity account for interest in joint ventures. IFRS 11 supersedes IAS 31, Interests in Joint Ventures, and SIC-13, Jointly Controlled Entities – Non-monetary Contributions by Venturers. IFRS 11 is not expected to have a material impact on amounts recorded in the consolidated financial statements of Eco.

  IFRS 12, Disclosure of Interests in Other Entities, establishes disclosure requirements for interests in other entities, such as subsidiaries, joint arrangements, associates, and unconsolidated structured entities. The Standard carries forward existing disclosures and also introduces significant additional disclosures that address the nature of, and risks associated with, an entity’s interests in other entities. IFRS 12 is not expected to have a material impact on amounts recorded in the consolidated financial statements of Eco.

14


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

4. Accounting Standards Issued But Not Yet Adopted (Continued)

  There have been amendments to existing standards, including IAS 27 (2011), Separate Financial Statements, and IAS 28 (2011), Investments in Associates and Joint Ventures. IAS 27 (2011) addresses accounting for subsidiaries, jointly controlled entities and associates in non-consolidated financial statements. IAS 28 (2011) sets out the equity accounting for joint ventures, as well as associates, once the assessment of the arrangement has been made under IFRS 11. The amendments to IAS 27 and IAS 28 are not expected to have a material impact on amounts recorded in the consolidated financial statements of the Company.

  IFRS 9, Financial Instruments, addresses classification and measurement of financial assets and financial liabilities, and is effective January 1, 2015, with earlier adoption permitted. The Standard replaces the multiple category and measurement models in IAS 39, Financial Instruments – Recognition and Measurement. The new Standard limits the number of categories for classification of financial assets to two: amortized cost and fair value through profit or loss. The requirements for financial liabilities are largely in line with IAS 39. IFRS 9 also replaces the models for measuring equity instruments. Equity instruments are either recognized at fair value through profit or loss or at fair value through other comprehensive income. The ability to recognize unquoted equity instruments at cost under IAS 39 is eliminated. IFRS 9 is not expected to have a material impact on amounts recorded in the consolidated financial statements of Eco.

  IFRS 13, Fair Value Measurement, is a comprehensive standard for fair value measurement and disclosure for use across all IFRS standards. The new standard clarifies that fair value is the price that would be received on sale of an asset, or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. Under existing IFRS, guidance on measuring and disclosing fair value is dispersed among the specific standards requiring fair value measurements and does not always reflect a clear measurement basis or consistent disclosures. IFRS 13 is not expected to have a material impact on amounts recorded in the consolidated financial statements of the Company.

  IAS 1, Presentation of Financial Statements, has been amended to require entities to separate items presented in other comprehensive income (“OCI”) into two groups, based on whether or not items may be recycled to net income in the future. Entities that choose to present OCI items before tax will be required to show the amount of tax related to the two groups separately. The amendment is effective for annual periods beginning on or after July 1, 2012, with earlier application permitted. IAS 1 is not expected to have a material impact on amounts recorded in the consolidated financial statements of Eco.

15


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

5. Acquisition Deposit

  In 2012, the Company engaged in various sourcing and due diligence practices in order to build a portfolio of renewable energy assets to develop and operate. In the fourth quarter of 2012, the Company obtained rights associated with Kenderes Biogas Power Plant operating in Hungary in exchange for a deposit of $100,070. During the first quarter of 2013, the Company exercised its rights and acquired the power plant and net working capital for an acquisition cost of $445,663. The Company operated the Kenderes Biogas Power Plant during fiscal 2013.

6. Property, Plant, and Equipment

      Land     Building     Machinery     Total  
                           
  Cost                        
  Balance at April 1, 2012 $ -   $ -   $ -   $ -  
  Acquisition   4,907     499,366     778,442     1,282,715  
  Additions   -     -     35,355     35,355  
  Balance at March 31, 2013   4,907     499,366     813,797     1,318,070  
                           
  Accumulated Depreciation                        
  Balance at April 1, 2012   -     -     -     -  
  Depreciation for the year   -     110,572     135,007     245,579  
  Balance at March 31, 2013   -     110,572     135,007     245,579  
                           
  Carrying amounts                        
  As at March 31, 2013 $ 4,907   $ 388,794   $ 678,790   $ 1,072,491  

16


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

7. Business Acquisition

  On April 1, 2013, the Company completed the acquisition of Biogaz for cash consideration of $995,030. The acquisition has been accounted for as an acquisition of a business in accordance with IFRS 3 Business Combinations.

  The following summarizes the recognized amounts of assets acquired and liabilities assumed at the acquisition date:

  Purchase Price:      
         
  Cash $ 995,030  
    $ 995,030  
         
  Purchase Price Allocation:      
         
  Cash $ 2,934  
  Property, Plant, and Equipment   1,282,715  
  Accounts payable   (290,619 )
  Total Consideration $ 995,030  

  The Company incurred acquisition-related costs of $445,653, principally relating to external legal fees and due diligence costs. These amounts have been expensed in the Company’s consolidated statement of comprehensive loss for the year ended March 31, 2013.

8. Income Taxes

  The Company is subject to income taxes on its unconsolidated financial statements in Canada and Hungary. The consolidated provision for income taxes varies from the amount that would be computed from applying the combined statutory income tax rates to the net loss before taxes were approximately as follows:

      2013     2012  
  Combined statutory rate   25%     26%  
               
  Expected income tax recovery $ (226,000 ) $ (127,000 )
  Non-deductible differences and other   114,000     57,000  
  Effect of changes in tax rate   (6,000 )   -  
  Deferred tax assets not recognized   118,000     70,000  
  Income tax provision $ -   $ -  

17


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

8. Income Taxes ( Continued)

  The significant components of the Company’s future income tax assets were approximately as follows:

      2013     2012  
               
  Property and equipment $ 23,000   $ 4,000  
  Losses available for future periods   165,000     66,000  
  Tax assets not recognized   (188,000 )   (70,000 )
  Net deferred income tax asset $ -   $ -  

  The Company has Canadian and Hungarian non-capital losses of approximately $805,000 which may be carried forward and applied against taxable income in future years. These losses expire as follows:

      Canada     Hungary  
  2032   265,000     -  
  2033   370,000     170,000  
      635,000     170,000  

9. Long-Term Debt

  The Company issued a convertible financial instrument pursuant to a total borrowing facility of $2,000,000 Canadian dollars at an interest rate of 12% per annum to a single note holder. The convertible financial instrument is due on the 60 th day after the Company becomes a public entity or closes a debt, equity or convertible financing. The debenture is convertible at a rate of $0.25 per share if the Company becomes a public entity. As the event is currently undeterminable at this time, the conversion feature has been assessed to have no fair value. The debt is secured by the first charge of the Company’s personal property. The Company pays the note holder a royalty of 3% of revenues in exchange for financial support and advisory services (Note 13).

10. Share Capital

  Authorized:

  Unlimited common shares, no par value

  Issued and fully paid:

      Number of Shares     Amount  
  Balance at April 28, 2011   -     -  
  Common shares issued for cash    5,340,000     495,000  
  Common shares issued for services   7,900,000     158,000  
  Common shares at March 31, 2012   13,240,000     653,000  

18


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

10. Share Capital  (Continued)

      Number of Shares     Amount  
  Balance at April 1, 2012   13,240,000     653,000  
  Common shares issued for cash    152,062     38,016  
  Common shares issued for services   2,500,000     50,000  
  Common shares at March 31, 2013   15,892,062     741,016  

  During the periods ended March 31, 2013 and 2012, the Company issued 2,500,000 shares and 7,900,000 shares respectively at $0.02 per share in payment of the fair value of the services received which included 2,500,000 (March 31, 2013) and 3,800,000 (March 31, 2012) issued to directors and officers related to the Company.

11. Financial Risk and Capital Management

  The Company’s activities expose it to a variety of financial risks including credit risk, liquidity risk and market risk.

  Credit Risk

  Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents. The Company deposits its cash and cash equivalents with high credit quality major Canadian financial institutions as determined by ratings agencies. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the maximum exposure to credit risk. The cash balance at March 31, 2013 was $22,640.

  Liquidity Risk

  Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments associated with financial instruments. The Company attempts to manage liquidity risk by maintaining sufficient cash balances. Liquidity requirements are managed based on expected cash flows to ensure that there is sufficient capital in order to meet short-term obligations. As of March 31, 2013, the Company had a cash balance of $22,640 to settle current liabilities of $296,000.

  Market Risks

  Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates and commodity and equity prices.

  (a) Interest rate risk

  Changes in market interest rates do not have a significant impact on Eco’s operations due to the short term nature of the respective financial assets and obligations.

19


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

11. Financial Risk and Capital Management (Continued)

  (b) Foreign currency risk

  The Company is exposed to foreign exchange risk primarily related to the Hungarian Forint, as Eco’s Alternative Energy Portfolio balance is denominated in forints.

  (c) Foreign currency risk

  Changes in commodity and equity prices do not have a significant impact on Eco’s operations.

  Concentration Risk

  The Company’s economic dependence on one customer to generate revenue presents a concentration risk. The company generates 99% (2012 – Nil) of its revenue from the sale of bio gas to one entity. The Company maintains a strong working relationship with this entity and constantly monitors is relationship to ensure collectability.

  Capital Management

  The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support sourcing and developing renewable energy assets. The Board of Directors have not established quantitative capital structure criteria, but will review on a regular basis the capital structure of the Company to ensure its appropriateness based on the stage of development of the business.

  The Company’s objectives when managing capital are:

 
  • To maintain and safeguard its accumulated capital in order to provide an adequate return to shareholders by maintaining a sufficient level of funds, to support continued evaluation and maintenance of the Company’s existing portfolio, and to acquire, explore, and develop additional renewable energy opportunities;

 
  • To obtain the necessary financing to grow the Company’s renewable energy portfolio;

 
  • Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

  In order to facilitate the management of capital and development of the Company’s renewable energy projects, the Company prepares annual expenditure budgets, which are updated as necessary and are reviewed and approved by the Company’s Board of Directors. In addition, the Company may issue new equity when applicable. The Company’s investment policy is to hold cash in interest bearing accounts at high credit quality financial institutions to maximize liquidity. In order to maximize ongoing efforts, the Company does not pay dividends. The Company expects to continue to raise funds, from time to time, to continue meeting its capital management objectives. The Company is not subject to externally imposed capital requirements.

20


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

  11. Financial Risk and Capital Management (Continued)

  The Company’s financial instruments consist of cash and cash equivalents, amounts receivable, and, accounts payable and accrued liabilities.

  The carrying value of accounts payable and accrued liabilities approximated their fair value because of the short-term nature of these instruments.

  Financial instruments measured at fair value on the statement of financial position are summarized into the following fair value hierarchy levels:

  Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

  Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

  Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

  Fair Value As at March 31, 2013, the Company’s financial instruments are comprised of cash and amounts receivable. The fair value of cash and amounts receivable, approximate their carrying value due to their short- term maturity. Financial instruments measured at fair value on the balance sheet are summarized in levels of fair value hierarchy as follows:

      2013     2012  
  Cash $ 22,640   $ 58,493  
  Amounts Receivable $ 67,713   $ 2,481  
  Accounts Payable and accrued liabilities $ 296,000   $ -  

12. 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 year the Company reimbursed office and administrative expenses to Emerald amounting to $102,270 (2012- $115,987). As at March 31, 2013, $43 (2012-$nil) was included in accounts payable to Emerald. As at March 31, 2013, $nil (2012 $1,740) was included in accounts receivable from Emerald.

  At March 31, 2013, the Company was indebted to arm’s length parties in the amount of $159,864 (March 31, 2012 - $Nil). The loans payable are unsecured, non-interest bearing and have no fixed repayment terms.

21


International Eco Endeavors Corp.
Notes to Consolidated Financial Statements
Year ended March 31, 2013 and period from incorporation April 28, 2011 to March 31, 2012
(Expressed in Canadian Dollars)

13. Royalty Payments

  The Company is required to make royalty payments of 3% of revenues to the long-term note holder (Note 9). These royalties are calculated on a quarterly basis. As of March 31, 2013 $27,094 is owed to the note holder (March 31, 2012 - $Nil).

  In addition, 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. $23,059 of royalties are included in consulting and professional fees (March 31, 2012 - $Nil). As of March 31, 2013 $23,059 is owed to the corporation (March 31, 2012 - $Nil).

14. Supplemental Disclosure With Respect to Cash Flow

      YEAR ENDED
MARCH 31, 2013
    PERIOD ENDED
MARCH 31, 2012
 
               
  Cash paid for income taxes $ -   $ -  
  Cash paid for interest $ -   $ -  

  There were no material non-cash investing and financing transactions for the Year ended March 31, 2013.

22




International Eco Endeavors Corp.
Condensed Consolidated Interim Financial Statements
(Unaudited)

As at and for the nine months ended December 31, 2013 and as at and for the year ended March 31, 2013

(All amounts are expressed in Canadian dollars unless otherwise specified)

1



International Eco Endeavors Corp .

Condensed Consolidated Interim Statements of Financial Position
(Unaudited)
(Expressed in Canadian Dollars)                                                                         

    December 31
2013
(Unaudited)
 
March 31
2013
(Audited)
 
             
Assets:            
Current Assets:            
      Cash $ 28,852   $ 22,640  
      Accounts receivable   125,482     91,087  
      Prepaid expenses (Note 4)   112,120     11,222  
Total Current Assets   266,454     124,949  
             
Property, plant and equipment (Note 7)   882,527     1,072,491  
Total Assets $ 1,148,981   $ 1,197,440  
             
Liabilities and Deficiency            
Current Liabilities            
      Accounts payable and accrued liabilities (Note 8) $ 152,081   $ 226,863  
      Royalty payments payable (Note 9)   71,375     50,153  
      Loans payable (Note 8)   567,058     159,864  
      Interest payable   281,953     132,511  
Total Current Liabilities   1,072,467     569,391  
             
Long-term debt (Note 5)   1,789,687     1,547,228  
Total Liabilities   2,862,154     2,116,619  
             
Deficiency :            
      Share capital (Note 6)   741,017     741,017  
      Accumulated other comprehensive loss   (51,936 )   (265,385 )
      Deficit   (2,402,254 )   (1,394,811 )
Total Deficiency   (1,713,173 )   (919,179 )
             
Total Liabilities and Deficiency $ 1,148,981   $ 1,197,440  

See accompanying notes to the condensed interim consolidated financial statements.

These consolidated interim financial statements are authorized for issue by the Board of Directors on February 24, 2014.

These condensed consolidated interim financial statements are signed on the Company’s behalf by:

“Rob Abenante”   “Marco Parente”
President and CEO   CFO

2


International Eco Endeavors Corp .
Condensed Consolidated Interim Statement of Comprehensive Loss
(Unaudited)
(Expressed in Canadian Dollars)

    9 Months Ended
December 31
2013
       9 Month Ended
December 31
2012
 
             
Revenue     $ 707,420   $ 764,160  
     Royalties   (21,223 )   -  
Net Revenue       686,197     764,160  
             
Cost of Sales                
     Cost of raw materials   785,949     227,117  
     Direct labour   46,933     292,007  
     Amortization   192,450     64,890  
     Other   21,773     69,642  
    1,047,105     653,656  
             
Gross margin       (360,908 )   110,503  
             
Operating Expenses                
     Consulting and professional fees   17,245     391,100  
     Legal fees   -     15,532  
     Interest expense   149,441     -  
     Office and administration   93,538     116,162  
     Disposal Costs   347,877     -  
     Travel   26,537     38,069  
     Salaries and benefits   10,322     -  
     Shares issued for services   -     50,000  
     Website development   1,575     3,711  
Total Operating Expenses       646,535     614,574  
             
Net Loss For the Period       1,007,443     504,071  
             
Other Comprehensive Income                
     Unrealized gain on translation of foreign operations   213,449     -  
             
Comprehensive Loss for the Period    $ 793,994   $ 504,071  
             
Net Loss Per Common Share     (0.05 )   (0.03 )
             
Weighted Average Number of Shares Outstanding – Basic and diluted (Note 6)    15,982,062     15,700,281  

See accompanying notes to the condensed consolidated interim financial statements.

3



International Eco Endeavors Corp .
Condensed Consolidated Interim of Changes in (Deficiency) Equity
(Unaudited)
(Expressed in Canadian Dollars)

    Number of
 hares
    Share
Capital
    Accumulated
Other
Comprehensive
Loss
    Deficit     Total
Equity
(Deficiency)
 
                               
March 31, 2012   13,240,000   $ 653,000   $ -   $ (491,957 ) $ 161,043  
                               
Issuance of common shares   152,062     38,017     -     -     38,017  
Share-based compensation   2,500,000     50,000     -     -     50,000  
Comprehensive loss   -     -     (265,385 )   (902,854 )   (1,168,239 )
                               
March 31, 2013   15,892,062     741,017     (265,385 )   (1,394,811 )   (919,179 )
                               
Comprehensive income (loss)   -     -     213,449     (1,007,443 )   (793,994 )
                               
December 31, 2013   15,892,062   $ 741,017   $ (51,936 ) $ (2,402,254 ) $ (1,713,173 )

See accompanying notes to the condensed consolidated interim financial statements.

4



International Eco Endeavors Corp .
Condensed Consolidated Interim Statement of Cash Flows
(Unaudited)
(Expressed in Canadian Dollars)

    9 Months Ended
December 31
2013
    Year Ended
March 31
2013
 
             
Operating Activities              
     Net loss for the period  $ (1,007,443 ) $ (902,854 )
     Add items not involving cash:             
          Loss on disposal of equipment
          Amortiza`tion 
  15,187
192,450
    245,579  
          Stock-based compensation    -     50,000  
          Unrealized foreign exchange on translation of foreign operations    213,448     (265,385 )
     Changes in non-cash working capital             
          Accounts receivable    (34,395 )   (87,254 )
          Prepaid expenses    (100,898 )   (11,222 )
          Accounts payable and accrued liabilities    (74,780 )   (65,110 )
          Royalty payments payable    21,222     50,153  
          Loans payable    407,194     159,864  
          Interest payable    149,442     132,511  
    (218,573 )   (693,718 )
             
Investing Activities              
     Acquisition of power plant    -     (894,960 )
     Acquisition of capital assets    (17,674 )   (35,354 )
     Cash acquired on acquisition    -     2,934  
    (17,674 )   (927,380 )
             
  Financing Activities            
     Proceeds from long-term debt    242,459     1,547,228  
     Shares issued for cash net of issuance costs    -     38,017  
    242,459     1,585,245  
             
Increase (Decrease) in Cash and Cash Equivalents     6,212     (35,853 )
             
Cash and Cash Equivalents, Beginning of Year     22,640     58,493  
             
Cash and Cash Equivalents, End of Year   $ 28,852   $ 22,640  

Supplemental disclosure with respect to cash flows (Note 10)

See accompanying notes to the condensed consolidated interim financial statements.

5


International Eco Endeavors Corp.
Notes to Condensed Consolidated Interim Statements
As at and for the nine months ended December 31, 2013 and as at and for the year ended March 31, 2013
(Unaudited - Expressed in Canadian Dollars)

1. Description of Business

  International Eco Endeavors Corp. (the “Company”) was incorporated under the laws of the Province of British Columbia, Canada on April 28, 2011. 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.

2. Basis of Preparation     

  (a) Statement of Compliance

  These condensed interim financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”) applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. The condensed interim financial statements should be read in conjunction with the annual audited financial statements for the year ended March 31, 2013, which have been prepared in accordance with IFRS as issued by the IASB.

  (b) Basis of Presentation

  These financial statements have been prepared on a historical cost basis except for financial instruments that have been measured at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information. The prior period cash flow comparative information has not been prepared on a basis consistent with the most recent interim financial information, as it was impracticable to obtain the information.

  (c) Presentation and Functional Currency

  The Company’s presentation and functional currency is the Canadian Dollar. The functional currency of its Hungarian subsidiary is the Hungarian Forint.

  (d) Critical Accounting Judgments and Estimates

  The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the period. Actual outcomes could differ from these estimates. Revisions to accounting estimates are recognized in the period in which the estimate is revised ad may affect both the period of revision and future periods.

  In applying the Company's accounting policies, management has made certain judgments that may have a significant effect on the consolidated financial statements. Such judgments include the determination of the functional currencies and use of the going concern assumption.

6


International Eco Endeavors Corp.
Notes to Condensed Consolidated Interim Statements
As at and for the nine months ended December 31, 2013 and as at and for the year ended March 31, 2013
(Unaudited - Expressed in Canadian Dollars)

2. Basis of Preparation (Continued)

  (d) Critical Accounting Judgments and Estimates (Continued)

  i) Determination of functional currencies

  In determining the Company's functional currency, it periodically reviews its primary and secondary indicators as stipulated under IAS 21 "The Effects of Changes in Foreign Exchange Rates" to assess the primary economic environment in which the entity operates in determining the Company's functional currencies. The Company analyzes the currency that mainly influences labor, material and other costs of providing goods or services which is often the currency in which such costs are denominated and settled. The Company also analyzes secondary indicators such as the currency in which funds from financing activities such as equity issuances are generated and the funding dependency of the parent company whose predominant transactional currency is the Canadian dollar. Determining the Company's predominant economic environment requires significant judgment.

  ii) Going Concern

  These financial statements have been prepared in accordance with IFRS on a going concern basis, which assumes the realization of assets and discharge of liabilities in the normal course of business within the foreseeable future. Management uses judgment to assess the Company’s ability to continue as a going concern and the existence of conditions that cast doubt upon the going concern assumption. It is management’s assessment that the going concern assumption is appropriate.

  The consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based in future occurrences.

  iii) Useful life of equipment

  Each significant component of an item of equipment is depreciated over its estimated useful life. Estimated useful lives are determined based on current facts and past experience, and take into consideration the anticipated physical life of the asset, existing long-term sales agreements and contracts, current and forecasted demand, the potential technological obsolescence, and regulations.

7


International Eco Endeavors Corp.
Notes to Condensed Consolidated Interim Statements
As at and for the nine months ended December 31, 2013 and as at and for the year ended March 31, 2013
(Unaudited - Expressed in Canadian Dollars)

3. Significant Accounting Policies          

  The accounting policies applied by the Company in these condensed consolidated interim financial statements are the same as those applied by the Company in its consolidated financial statements as at and for the year ended March 31, 2013, except as stated below.

  On January 1, 2013, the Company adopted new standards with respect to consolidations (IFRS 10), joint arrangements (IFRS 11), disclosure of interests in other entities (IFRS 12), fair value measurements (IFRS 13) and amendments to financial instruments disclosures (IFRS 7). The adoption of these standards had no impact on the amounts recorded in the consolidated financial statements as at December 31, 2013 or on the comparative periods.

4. Prepaid Expenses

  During the period ended December 31, 2013, the Company prepaid $112,120 as a deposit on the long term supply of raw materials, and grinding services. The contract is set to expire on September 30, 2014.

5. Long-Term Debt

  The Company issued a convertible financial instrument pursuant to a total borrowing facility of $2,000,000 Canadian dollars at an interest rate of 12% per annum to a single note holder. The convertible financial instrument is due on the 60 th day after the Company becomes a public entity or closes a debt, equity or convertible financing. The debenture is convertible at a rate of $0.25 per share if the Company becomes a public entity. As the event is currently undeterminable at this time, the conversion feature has been assessed to have no fair value. The debt is secured by the first charge of the Company’s personal property. The Company pays the note holder a royalty of 3% of revenues in exchange for financial support and advisory services

6. Share Capital

  Authorized:

  Unlimited common shares, no par value

8


International Eco Endeavors Corp.
Notes to Condensed Consolidated Interim Statements
As at and for the nine months ended December 31, 2013 and as at and for the year ended March 31, 2013
(Unaudited - Expressed in Canadian Dollars)

6. Share Capital (Continued)

  Earnings Per Share:

  Basic net income (loss) per share is calculated by dividing the net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period.

      December 31
2013
    March 31
2013
 
  Weighted average number of common shares   15,982,062     15,700,281  

7. Property, Plant, and Equipment

      Land     Building     Machinery     Total  
                           
  Cost                          
  Balance at April 1, 2013$   4,907   $ 499,366   $ 813,796   $ 1,318,069  
  Additions    -     -     17,674     17,674  
  Dispositions    -     -     (65,287 )   (65,287 )
  Balance at December 31, 2013    4,907     499,366     766,183     1,270,456  
                           
  Accumulated Depreciation                          
  Balance at April 1, 2013    -     110,572     135,007     245,579  
  Depreciation for the period    -     48,199     144,251     192,450  
  Accumulated depreciation on disposed assets   -     -     (50,145 )   (50,145 )
  Balance at December 31, 2013    -     158,771     229,113     387,884  
                           
  Carrying amounts                          
  As at December 31, 2013$   4,907   $ 340,595   $ 537,070   $ 882,572  

8. 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. The Company completed transactions with, Emerald Power Consulting Inc. (“Emerald”), which has a common director and officer with the Company. During the nine month period the Company reimbursed office and administrative expenses to Emerald amounting to $45,699 (Year ended March 31, 2013 - $102,270). As at December 31, 2013, $43 (March 31, 2013 - $43) was included in accounts payable to Emerald. In addition as at December 31, 2013, an officer and director of the Company had advanced $84,189 to the Company which is included in loans payable.

9


International Eco Endeavors Corp.
Notes to Condensed Consolidated Interim Statements
As at and for the nine months ended December 31, 2013 and as at and for the year ended March 31, 2013
(Unaudited - Expressed in Canadian Dollars)

8. Related Parties and Loans Payable (Continued)

  Loans payable of $567,058 (March 31, 2013 - $159,864) is comprised of advances from arm’s length parties in the amount of $482,239 and the related party amount reported above. The loans payable are unsecured, non-interest bearing and have no fixed repayment terms.

9. Royalty Payments

  The Company is required to make royalty payments of 3% of revenues to the long-term note holder. These royalties are calculated on a quarterly basis. As of December 31, 2013 $48,316 is owed to the note holder (March 31, 2013 - $27,094).

  In addition, 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. As of December 31, 2013 $23,059 is owed to the Corporation (March 31, 2013 - $23,059).

10. Supplemental Disclosure With Respect to Cash Flow

      9 MONTHS ENDED
DECEMBER 31, 2013
    YEAR ENDED
MARCH 31, 2013
 
               
  Cash paid for income taxes $ -   $ -  
  Cash paid for interest $ -   $ -  

  There were no material non-cash investing and financing transactions for the 9 months ended December 31, 2013.

10




BLOX, INC.

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 NINE MONTHS ENDED DECEMBER 31, 2013
AND YEAR ENDED MARCH 31, 2013
(Unaudited)
(Expressed in United States Dollars)


 

BLOX, INC.

PRO FORMA CONSOLIDATEd FINANCIAL STATEMENTS

NINE MONTHS ENDED december 31, 2013
AND YEAR ENDED march 31, 2013
(Unaudited)
(Expressed in United States Dollars)

Table of Contents

PRO FORMA CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 2013.
3
PRO FORMA CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
NINE MONTHS ENDED DECEMBER 31, 2013.
4
PRO FORMA CONSOLIDATED BALANCE SHEET
AS AT MARCH 31, 2013.
5
PRO FORMA CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
NINE MONTHS ENDED DECEMBER 31, 2013 AND YEAR ENDED MARCH 31, 2013.
6
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED DECEMBER 31, 2013 AND YEAR ENDED MARCH 31, 2013.
7

2


 

  BLOX, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET

AS AT DECEMBER 31, 2013
(Unaudited)
(Expressed in United States Dollars)

          INTERNATIONAL ECO ENDEAVORS             BLOX INC.  
    BLOX INC.     CORP.     PRO FORMA       PRO FORMA  
          (NOTE 4)     ADJUSTMENTS   NOTE   CONSOLIDATED  
                           
ASSETS                          
Current                          
Cash $ 9,530   $ 27,126   $ 1,000,000   3 $ 1,036,656  
Prepaid expense   4,655     105,416     -       110,071  
Accounts receivable   -     117,979     -       117,979  
                           
Total current assets   14,185     250,521     1,000,000       1,264,706  
          ,                
Property, Plant, and Equipment   512     829,754     -       830,266  
                           
Total assets $ 14,697   $ 829,754   $ 1,000,000     $ 2,094,972  
                           
LIABILITIES                          
Current                          
Accounts payable and accrued liabilities $ 35,791   $ 664,384   $ -     $ 700,175  
Interest payable   -     265,092     (265,092 ) 2   -  
Royalty payments payable   -     47,154     -       47,154  
                           
Total current liabilities   35,791     976,630     (265,092 )     747,329  
                           
Long term debt   60,290     1,682,669     (1,682,669 ) 2   60,290  
Total liabilities   96,081     2,659,299     (1,947,761 )     807,619  
                           
                           
EQUITY                          
Share capital   123     696,706     5,250,932   3   5,947,761  
Additional paid in capital   237,431     -     (237,431 ) 3   -  
Accumulated translation   -     (48,830 )   -       (48,830 )
Retained earnings   (318,938 )   (2,226,900 )   (2,065,740 )     (4,611,578 )
Shareholders’ equity                          
Total liabilities and shareholders’ equity $ 14,697   $ 1,080,275   $ 1,000,000     $ 2,094,972  

The accompanying notes are an integral part of the pro forma consolidated financial statements.

3


 

BLOX, INC.

PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

NINE MONTHS ENDED DECEMBER 31, 2013
(Unaudited)
(Expressed in United States Dollars)

          INTERNATIONAL ECO ENDEAVORS             BLOX, INC.  
    BLOX, INC.     CORP.     PRO FORMA       PRO FORMA  
          (NOTE 4)     ADJUSTMENTS   NOTE   CONSOLIDATED  
                           
Revenue $ -   $ 706,502   $ -     $ 706,502  
                           
Operating Expenses                          
Cost of raw materials $ -   $ 784,929   $ -     $ 784,929  
Direct Labour   -     46,872     -       46,872  
Amortization   -     192,200     -       192,200  
Other expenses   -     21,745     -       21,745  
                           
Gross Margin   -     (339,244 )   -       (339,244 )
                           
Other expenses                          
Amortization   138     -     -       138  
Exploration costs   4,278     -     -       4,278  
Legal fees and professional fees   15,663     17,223     -       32,886  
Office and administration   2,510     92,229     -       94,739  
Travel   -     26,503     -       26,503  
Salaries   -     10,309     -       10,309  
Website development   -     1,573     -       1,573  
Interest expense   -     149,247     -       149,247  
Disposal costs   -     347,425     -       347,425  
Impairment of Goodwill   -     -     2,339,617   2   2,631,264  
Loss before income taxes   22,859     983,752     2,339,617       3,637,605  
Deferred income tax recovery   -     1,187     -       1,187  
                           
Net loss for the period   22,589     984,939     2,339,617       3,638,792  
                           
                           
Loss per share – basic and diluted $ (0.01 ) $ -   $ -     $ (0.01 )
Weighted average number of shares outstanding     12,338,604     15,892,062     -       28,288,666  

The accompanying notes are an integral part of the pro forma consolidated financial statements.

4


 

BLOX, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET

AS AT MARCH 31, 2013
(Unaudited)
(Expressed in United States Dollars)

          INTERNATIONAL ECO ENDEAVORS             BLOX, INC.  
    BLOX, INC.     CORP.     PRO FORMA       PRO FORMA  
          (NOTE 4)     ADJUSTMENTS   NOTE   CONSOLIDATED  
                           
ASSETS                          
Current                          
Cash $ 8,976   $ 22,269   $ 1,000,000   3 $ 1,031,245  
Prepaid expense   5,921     11,038     -       16,959  
Accounts receivable   -     89,593     -       89,593  
                           
Total current assets   14,897     122,900     1,000,000       1,137,797  
                           
Property, Plant, and Equipment   732     1,054,902     -       1,055,634  
                           
Total assets $ 15,629   $ 1,177,802   $ 1,000,000     $ 2,193,431  
                           
LIABILITIES                          
Current                          
Accounts payable and accrued liabilities $ 5,063   $ 368,090   $ -     $ 373,153  
Interest payable   -     130,338     (130,338 ) 2   -  
Royalty payments payable   -     49,330     -       49,330  
                           
Total current liabilities   5,063     547,758     (130,338 )     422,483  
                           
Long term debt   20,000     1,521,853     (1,521,853 ) 2   20,000  
Total liabilities   25,063     2,069,611     (1,652,191 )     442,483  
                           
                           
EQUITY                          
Share capital   123     728,863     5,652,068   3   6,381,055  
Additional paid in capital   237,431     -     (237,431 ) 3   -  
Accumulated translation   -     (261,032 )   -       (261,032 )
Retained earnings   (246,988 )   (1,359,640 )   (2,762,446 )     (4,369,074 )
Shareholders’ equity                          
Total liabilities and shareholders’ equity $ 15,629   $ 1,117,802   $ 1,000,000     $ 2,193,431  

The accompanying notes are an integral part of the pro forma consolidated financial statements.

5


 

BLOX, INC.

PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

YEAR ENDED MARCH 31, 2013
(Unaudited)
(Expressed in United States Dollars)

          INTERNATIONAL ECO ENDEAVORS             BLOX, INC.  
    BLOX, INC.     CORP.     PRO FORMA       PRO FORMA  
          (NOTE 4)     ADJUSTMENTS   NOTE   CONSOLIDATED  
                           
Revenue $ -   $ 901,947   $ -     $ 901,947  
                           
Operating Expenses                          
Cost of raw materials $ -   $ 697,854   $ -     $ 697,854  
Direct Labour   -     64,026     -       64,026  
Amortization   -     245,261     -       245,261  
Other expenses   -     12,658     -       12,658  
                           
Gross Margin   -     (117,852 )   -       (117,852 )
                           
Other expenses                          
Amortization   269     -     -       269  
Exploration costs   -     -     -       -  
Legal fees and professional fees   27,145     35,248     -       62,393  
Office and administration   999     139,334     -       140,333  
Travel   -     -     -       -  
Salaries   -     12,713     -       12,713  
Website development   -     3,835     -       3,835  
Interest expense   -     132,339     -       132,339  
Royalty expense   -     50,088     -       50,088  
Plant acquisition costs   -     445,074     -       445,074  
Foreign exchange   -     4,433     -       4,433  
Disposal costs   -     (102,882 )   -       (102,882 )
Share based compensation   638     49,935     -       50,573  
Impairment of Goodwill   -     -     2,631,264   2   2,631,264  
Loss before income taxes   29,051     897,970     2,631,264       3,156,638  
Deferred income tax recovery   -     1,228     -       1,228  
                           
Net loss for the period   29,051     889,198     2,631,264       3,157,867  
                           
                           
Loss per share – basic and diluted $ (0.01 ) $ -   $ -     $ (0.01 )
Weighted average number of shares outstanding     12,338,604     15,892,062     -       28,228,666  

The accompanying notes are an integral part of the pro forma consolidated financial statements.

6


 

 BLOX, INC.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 NINE MONTHS ENDED DECEMBER 31, 2013
AND YEAR ENDED MARCH 31, 2013
 (Unaudited)
(Expressed in United States Dollars)

1. BASIS OF PRESENTATION

  The accompanying pro forma consolidated balance sheet has been prepared for filing Form 8-K, with respect to the Company’s proposed reverse acquisition of 100% of the issued and outstanding share capital of International Eco Endeavors Corp (“Eco”).

  The accompanying pro forma consolidated balance sheet has been prepared by management in accordance with United States Generally Accepted Accounting Principles (“US GAAP”) from information derived from the financial statements of Blox, Inc. (“the Company”) and the financial statements of Eco together with the other information available to the Company as if the proposed acquisition had occurred as at December 31, 2013.

  The pro forma consolidated balance sheet is not necessarily indicative of the financial position which would have resulted if the acquisition had actually occurred.

  The pro forma consolidated balance sheet should be read in conjunction with the interim unaudited financial statements of the Company and Eco as at December 31, 2013 and the audited financial statements of Eco at March 31, 2013.

  The unaudited pro forma consolidated balance sheet as at December 31, 2013 and March 31, 2013 and the unaudited pro forma consolidated statement of comprehensive loss for the nine months ended December 31, 2013 and the year ended March 31, 2013 have been prepared, for illustrative purposes, to give effect to the proposed acquisition of the Company by Eco pursuant to the assumptions described in Note 2. These unaudited pro forma consolidated financial statements have been prepared based in US GAAP and have been compiled from the following historical information:

  a) Eco’s unaudited consolidated statement of financial position as at December 31, 2013 and the Company’s unaudited statement of comprehensive loss for the nine months then ended;

  b) The Company’s unaudited consolidated balance sheet as at December 31, 2013 and the Company’s unaudited statement of operations for the six months then ended;

  c) Eco’s audited consolidated statement of financial position as at March 31, 2013 and the Company’s audited statement of comprehensive loss for the year then ended; and

  d) The Company’s unaudited consolidated balance sheet as at March 31, 2013 and The Company’s unaudited statement of operations for the year ended June 30, 2013.

  The unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated statement of comprehensive loss as at December 31, 2013 and March 31, 2013 have been prepared as if the proposed acquisition had occurred on December 31, 2013.

  The unaudited pro forma consolidated financial statements are not intended to reflect the financial performance or the financial position of the Company, which would have actually resulted had the transactions been effected on dates indicated. Actual amounts recorded upon consummation of the agreement will likely differ from those recorded in the unaudited pro forma consolidated financial statement information. Similarly, the calculation and allocation of the purchase price has been prepared on a preliminary basis and is subject to change between the time such preliminary calculations were made and closing as a result of several factors which could include among others: changes in fair value

7


 

BLOX, INC.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 NINE MONTHS ENDED DECEMBER 31, 2013
AND YEAR ENDED MARCH 31, 2013
 (Unaudited)
(Expressed in United States Dollars)

1. BASIS OF PRESENTATION (Continued)

  of assets acquired and liabilities assumed and the market price of the related shares. Any potential synergies that may be realized and integration costs that may be incurred upon consummation of the transactions have been excluded from the unaudited pro forma consolidated financial statements. Further, the unaudited pro forma consolidated financial statements are not necessarily indicative of the financial performance that may be obtained in the future.

  The unaudited pro forma consolidated balance sheet should be read in conjunction with the description of the reverse acquisition on Form 8-K and the audited consolidated financial statements of Eco as at March 31, 2013 and the unaudited consolidated financial statements of the Company as at March 31, 2013 including the notes thereto. Eco’s unaudited interim consolidated financial statements for the nine months ended December 31, 2013 have been adjusted in Note 4 to reflect the conversion of International Financial Reporting Standards (“IFRS”) to US GAAP.

  In preparing the unaudited pro forma consolidated financial statements, a review was undertaken by management to identify accounting policy differences between Blox and Eco which could have a material impact. No significant differences apart from those relating to the policies on exploration costs and as noted and adjusted for in Note 4 have been identified at this time.

2. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS

  a) The unaudited pro forma consolidated statements of financial position give effect to the completion of Blox’s acquisition of Eco, as if the acquisition had occurred on December 31, 2013 and as at March 31, 2013.

  b) The business combination reflects the acquisition of a business.

  c) To reflect the reverse acquisition of Eco by issuing 60,000,000 units of Blox at a deemed value of $0.05 per share;

  d) Total consideration paid equals fair value of Company’s shares on the acquisition date in the amount of $3,000,000.  The consideration paid has been allocated to the acquired net assets based on their fair values at the date of acquisition.  The purchase price of the acquisition has been allocated as follows:

8


 

BLOX, INC.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 NINE MONTHS ENDED DECEMBER 31, 2013
AND YEAR ENDED MARCH 31, 2013
 (Unaudited)
(Expressed in United States Dollars)

2. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS (Continued)

      March 31, 2013     December 31, 2013  
  Shares issued   60,000,000     60,000,000  
  Price $ 0.05   $ 0.05  
  Consideration $ 3,000,000   $ 3,000,000  
  Net Assets acquired $ (1,579,025 ) $ (891,809 )
  Share conversion $ 1,947,761   $ 1,652,191  
  Total net assets $ 368,736   $ 760,383  
  Goodwill $ 2,631,264   $ 2,339,617  
  Goodwill impairment $ (2,631,264 ) $ (2,339,617 )
  Ending goodwill $ Nil   $ Nil  

  e) There is no tax effect recognized on the calculated amount allocated to goodwill as the Company does not expect probable future taxable profits available against which unused tax losses, tax credits or temporary differences can be utilized.  Deferred tax assets are reviewed at each reporting period date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized;

  f) Upon consolidation, the common shares of Eco have been eliminated.

  g) The Company issued 20,000,000 shares at $0.05 per share for total proceeds of $1,000,000.

  h) The Company issued 9,233,860 shares for consulting services.  These shares are released from escrow 25% on the date of the business combination and 25% every 6 months thereafter.

  i) The Company issued shares for converted debt.  The total debt including accrued interest totaled $2,006,320 and was converted at a deemed value of $0.02 per share.

  j) The Company issued shares for services.  These shares are released from escrow 25% on the date of the business combination and 25% every six months thereafter.

  k) The Company has recorded an impairment of goodwill as a result of a significant reduction in the net assets acquired through this reverse acquisition.

9


 

BLOX, INC.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 NINE MONTHS ENDED DECEMBER 31, 2013
AND YEAR ENDED MARCH 31, 2013
 (Unaudited)
(Expressed in United States Dollars)

3. SHARE CAPITAL

  Following is a schedule of continuity of the issued common share capital of the Company after giving effect to the pro forma transactions described in Note 2.

      Number of
shares
    Share
capital and
additional
paid-in
capital
    Number of
shares
    Share
capital and
additional
paid in
capital
 
                           
                           
  Issued:                        
  Recapitalization of share capital and additional paid in capital of Blox as at December 31, 2013   12,338,604     -     12,338,604     -  
  Share capital issued by Blox in the acquisition of Eco   60,000,000     3,000,000     60,000,000     3,000,000  
  Shares issued as a result of a financing completed at the closing of the acquisition   20,000,000     1,000,000     20,000,000     1,000,000  
  Shares issued for consulting services provided   9,233,860     -     2,733,465     -  
      101,572,464     5,652,191     101,572,464     5,947,761  
  Shares issued upon conversion of convertible debenture   100,310,000     1,652,191     100,310,000     1,947,761  
  Shares issued for consulting services provided   2,733,465     -     2,733,465     -  
      204,615,929     5,652,191     204,615,929     5,947,761  

10


 

BLOX, INC.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 NINE MONTHS ENDED DECEMBER 31, 2013
AND YEAR ENDED MARCH 31, 2013
 (Unaudited)
(Expressed in United States Dollars)

4. US GAAP CONVERSION

  Eco’s unaudited interim consolidated financial statements for the nine months ended December 31, 2013 and audited consolidated financial statements for the year ended March 31, 2013 have been adjusted to reflect the conversion of IFRS to US GAAP. The adjustments reflect: the translation from Canadian dollar to US Dollar amounts using the current rate method. The current exchange rate as at December 31, 2013 was 1 CDN Dollar to 1.06 US Dollar (March 31, 2013 – 1.00).

  As at December 31, 2013:

      INTERNATIONAL ECO ENDEAVORS CORP.  
                     
            IFRS        
            TO US GAAP        
      IFRS     ADJUSTMENTS     US GAAP  
  ASSETS                  
  Current                  
  Cash $ 27,126   $ -   $ 27,126  
  Prepaid expenses and deposits   105,416     -     105,416  
  Accounts receivable   117,979     -     117,979  
  Total current assets   250,521     -     250,521  
  Property, plant, and equipment   829,754     -     829,754  
  Total assets $ 1,080,275   $ -   $ 1,808,275  
                     
  LIABILITIES                  
  Current                  
  Accounts payable and accrued liabilities $ 664,384   $ -   $ 664,384  
  Interest payable   265,092     -     265,092  
  Royalty payments payable   47,154     -     47,154  
  Total current liabilities   976,630     -     976,630  
  Long term debt   1,682,669     -     1,682,669  
  Total liabilities $ 2,659,299   $ -   $ 2,659,299  
                     
  EQUITY                  
  Share capital   696,706     -     696,706  
  Accumulated translation   (48,830 )   -     (48,830 )
  Retained earnings   (2,226,900 )   -     (2,226,900 )
  Total shareholders’ equity   (1,579,024 )   -     (1,579,024 )
  Total liabilities and shareholders’ equity $ 1,080,275   $ -   $ 1,080,275  

11


 

BLOX, INC.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 NINE MONTHS ENDED DECEMBER 31, 2013
AND YEAR ENDED MARCH 31, 2013
 (Unaudited)
(Expressed in United States Dollars)

4. US GAAP CONVERSION (Continued)

  For the Nine Months Ended December 31, 2013:

      INTERNATIONAL ECO ENDEAVORS CORP.  
            IFRS        
            TO US GAAP        
      IFRS     ADJUSTMENTS     US GAAP    
                     
  Revenue   706,502           706,502  
                     
  Operating expenses                  
  Cost of raw materials $ 784,929   $ -   $ 784,929  
  Direct labour   46,872     -     46,872  
  Amortization   192,200     -     192,200  
  Other   21,745     -     21,745  
                     
  Gross Margin   (339,244 )   -     (339,244 )
                     
  Other expenses                  
  Amortization   -     -     -  
  Exploration costs   -     -     -  
  Legal fees and professional fees   17,223     -     17,223  
  Office and administration   92,229     -     92,229  
  Travel   26,503     -     26,503  
  Salaries   10,309     -     10,309  
  Website development   1,573     -     1,573  
  Interest expense   149,247     -     149,247  
  Disposal costs   347,425     -     347,425  
  Net loss before income taxes   983,752     -     983,752  
                     
  Income tax recovery   1,187     -     1,187  
  Net loss for the period   984,939     -     984,939  
                     
  Comprehensive loss for the period $ 984,929   $ -   $ 984,929  

12


 

BLOX, INC.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 NINE MONTHS ENDED DECEMBER 31, 2013
AND YEAR ENDED MARCH 31, 2013
 (Unaudited)
(Expressed in United States Dollars)

4. US GAAP CONVERSION (Continued)

  As at March 31, 2013:

      INTERNATIONAL ECO ENDEAVORS CORP.  
                     
            IFRS        
            TO US GAAP        
      IFRS     ADJUSTMENTS     US GAAP    
  ASSETS                  
  Current                  
  Cash $ 22,269   $ -   $ 22,269  
  Prepaid expenses and deposits   11,038     -     11,038  
  Accounts receivable   89,593     -     89,593  
  Total current assets   122,900     -     122,900  
  Property, plant, and equipment   1,054,902     -     1,054,902  
  Total assets $ 1,177,802   $ -   $ 1,177,802  
                     
  LIABILITIES                  
  Current                  
  Accounts payable and accrued liabilities $ 368,090   $ -   $ 368,090  
  Interest payable   130,338     -     130,338  
  Royalty payments payable   49,330     -     49,330  
  Total current liabilities   547,758     -     547,758  
  Long term debt   1,521,853     -     1,521,853  
  Total liabilities $ 2,069,611   $ -   $ 2,069,611  
                     
  EQUITY                  
  Share capital   728,863     -     728,863  
  Accumulated translation   (261,032 )   -     (261,032 )
  Retained earnings   (1,359,640 )   -     (1,359,640 )
  Total shareholders’ equity   (891,809 )   -     (891,809 )
  Total liabilities and shareholders’ equity $ 1,117,802   $ -   $ 1,117,802  

13


 

BLOX, INC.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 NINE MONTHS ENDED DECEMBER 31, 2013
AND YEAR ENDED MARCH 31, 2013
 (Unaudited)
(Expressed in United States Dollars)

4. US GAAP CONVERSION  (Continued)

  For the Year Ended March 31, 2013:

      INTERNATIONAL ECO ENDEAVORS CORP.  
            IFRS        
            TO US GAAP        
      IFRS     ADJUSTMENTS     US GAAP    
                     
  Revenue   901,947     -     907,947  
                     
                     
  Operating expenses                  
  Cost of raw materials $ 697,854   $ -   $ 697,854  
  Direct labour   64,026     -     64,026  
  Amortization   245,261     -     245,261  
  Other   12,658     -     12,658  
                     
  Gross Margin   (117,852 )   -     (117,852 )
                     
  Other expenses                  
  Legal fees and professional fees   35,248     -     35,248  
  Office and administration   139,334     -     139,334  
  Salaries   12,713     -     12,713  
  Website development   3,835     -     3,835  
  Interest expense   132,339     -     132,339  
  Royalty expense   50,088     -     50,088  
  Plant acquisition costs   445,074     -     445,074  
  Foreign exchange   4,433     -     4,433  
  Share based compensation   49,935     -     49,935  
  Disposal costs   (102,882 )   -     (102,882 )
  Net loss before income taxes   897,970     -     897,970  
                     
  Income tax recovery   1,228     -     1,228  
  Net loss for the period   889,198     -     889,198  
                     
  Comprehensive loss for the period $ 889,198   $ -   $ 889,198