ROCKETFUEL BLOCKCHAIN, INC. - Quarter Report: 2017 March (Form 10-Q)

B4MC GOLD MINES, INC.

TABLE OF CONTENTS

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The accompanying notes are an integral part of these condensed financial statements.

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The accompanying notes are an integral part of these condensed financial statements.

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The accompanying notes are an integral part of these condensed financial statements.

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B4MC GOLD MINES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2017

(UNAUDITED)

1.

Business

Business

We were organized under the laws of the State of Delaware, on April 2, 1987, as BK Ventures. In June 2000, we reincorporated under the laws of the State of Nevada and pursuant to an amendment to our articles of incorporation in October 2013, we changed our name to B4MC Gold Mines, Inc. We are engaged in efforts to identify an operating company to acquire or merge with through an equity-based exchange transaction that would likely result in a change in control. As our planned principal operations have not yet commenced, our activities are subject to significant risks and uncertainties, including the need to obtain additional financing. On July 15, 2015, we filed an amendment to our articles of incorporation with the Secretary of State of the State of Nevada providing for a one-for-fifty reverse split of the outstanding shares of our common stock effective August 21, 2015. The authorized shares of our common stock were not adjusted as a result the reverse stock split. All shares described below reflect the effect of the one-for-fifty reverse split that was effective on August 21, 2015.

Change-in-Control Transaction

On May 12, 2015, we sold 4,979,593 newly issued shares of our common stock, par value $0.001 per share, to PacificWave Partners Limited, a Gibraltar Company (“PacificWave”), at a price of $0.05 per share, representing aggregate gross proceeds of approximately $249,000. Of this amount, $225,000 was paid to certain creditors and claimants of the Company in exchange for releases of such outstanding claims, and the remaining approximate $24,000 was placed in escrow and was subject to release pending the fulfillment of certain conditions.

Simultaneous with the purchase of the above described shares of our common stock, PacificWave purchased from Elwood Shepard, our then principal shareholder, 520,476 shares of our outstanding shares of common stock, representing 75.9% of the outstanding shares prior to the issuance of the newly issued shares. The purchase price of such shares was approximately $26,000, which amount was deposited in escrow and will be disbursed in the same manner and under the same conditions as the amount deposited into escrow from the purchase price of our newly issued common shares.

At the closing of the purchase of the above described shares, PacificWave contributed $175,000 in cash to our capital, which was recorded as a credit to additional paid-in capital.

At the closing of the transaction on May 12, 2015, PacificWave transferred 1,000,000 of our common shares acquired as described herein to three non-U.S. resident accredited investors at a price of $0.50 per share, or $500,000 in the aggregate. These funds were utilized to effectuate the change-in-control transaction. We were not a party to any of these transactions.

At the closing on May 12, 2015, PacificWave transferred 2,698,334 shares to certain persons and entities providing services in connection with the transaction as follows: (i) 466,667 shares, constituting 8.2% of the outstanding shares, to Allan Kronborg, a citizen of Denmark; (ii) a total of 966,667 shares, constituting 17.1% of the outstanding shares, split among PacificWave Partners Europe sarl, PacificWave Partners UK Europe Ltd., Richway Finance Ltd. and Anarholl Ltd., all of which are entities affiliated with Henrik Oerbekker, a citizen of Denmark; and (iii) a total of 1,265,000 shares, constituting 22.3% of the outstanding shares, to nine non-U.S. resident persons and entities.

Effective May 12, 2015, Elwood Shepard, our then sole officer and director, resigned, and Bennett J. Yankowitz was appointed as our sole Director, President, Secretary and Treasurer. In conjunction with the aforementioned transactions with PacificWave, on May 12, 2015, Mr. Yankowitz purchased from PacificWave 800,000 shares of common stock for an aggregate purchase price of $40,000, or $0.05 per share, reflecting approximately 14.1% of our outstanding shares of common stock at that time. We were not a party to this transaction. Mr. Yankowitz did not have any interest in or contract with Pacific Wave. PacificWave and Mr. Yankowitz did not have any relationship with us prior to the aforementioned change-in-control transaction. On May 15, 2015, Mr. Yankowitz sold 10,000 shares at a price of $0.50 per share $5,000 to an unaffiliated purchaser.

At the conclusion of all of these transactions, PacificWave and its Managing Director and sole owner, Henrik Rouf, were the beneficial owners of an aggregate of 1,001,666 shares of our common stock, which constituted 17.7% of the outstanding shares of common stock.

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B4MC GOLD MINES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2017

(UNAUDITED)

2.

Interim Financial Statements and Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments, which are evaluated on an ongoing basis, and that affect the amounts reported in our unaudited condensed financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of expenses that are not readily apparent from other sources. Actual results could differ from those estimates and judgments. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments (consisting only of normal recurring adjustments), which we consider necessary, for a fair presentation of those financial statements. The results of operations and cash flows for the three months ended March 31, 2017 may not necessarily be indicative of results that may be expected for any succeeding quarter or for the entire fiscal year. The information contained in this quarterly report on Form 10-Q should be read in conjunction with our audited financial statements included in our annual report on Form 10-K as of and for the year ended December 31, 2016 as filed with the Securities and Exchange Commission (the “SEC”).

Our significant accounting policies are described in Note 3 to the financial statements included in Item 8 of our annual report on Form 10-K as of December 31, 2016. There were no material changes to our significant accounting policies during the interim period ended March 31, 2017.

3.

Going Concern

Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At March 31, 2017, we did not have any business operations. We have experienced recurring operating losses and negative operating cash flows, and have financed our recent working capital requirements primarily through the issuance of debt and equity securities, as well as borrowings from related parties. As of March 31, 2017, our working capital deficiency was approximately $68,000 and our accumulated deficit was approximately $2,731,000. As a result, management believes that there is substantial doubt about our ability to continue as a going concern.

Management is seeking to identify an operating company and engage in a merger or business combination of some kind, or acquire assets or shares of an entity actively engaged in a business that generates sustained revenues. We are considering several potential acquisitions and is investigating various candidates to determine whether they would have the potential to add value to us for the benefit of our stockholders.

We do not intend to restrict our consideration to any particular business or industry segment, and we may consider, among other businesses, finance, brokerage, insurance, transportation, communications, services, natural resources, manufacturing or technology. Because we have limited resources, the scope and number of suitable candidates to merge with is relatively limited. Because we may participate in a business opportunity with a newly formed firm, a firm that is in the development stage, or a firm that is entering a new phase of growth, we may incur further risk due to the inability of the target’s management to have proven its abilities or effectiveness, or the lack of an established market for the target’s products or services, or the inability to reach profitability in the next few years.

Any business combination or transaction will likely result in a significant issuance of shares and substantial dilution to our present stockholders. As it is expected that the closing of such a transaction will result in a change in control, such transaction is expected to be accounted for as a reverse merger, with the operating company being considered the legal acquiree and accounting acquirer, and we would be considered the legal acquirer and the accounting acquiree. As a result, at and subsequent to closing of any such transaction, the financial statements of the operating company would become our financial statements for all periods presented.

4.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on our accounting and reporting. We believe that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the

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B4MC GOLD MINES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2017

(UNAUDITED)

future either will not have an impact on our accounting or reporting or that such impact will not be material to our financial position, results of operations and cash flows when implemented.

5.

Related Party Transactions

During the three months ended March 31, 2017 and 2016, our chief executive officer advanced us approximately $0 and $1,000, respectively. Additionally, during the three months ended March 31, 2017, we repaid $2,000 of advances payable to our principal stockholder.

As of March 31, 2017 and December 31, 2016, we recorded advances payable to our chief executive officer and our principal stockholder, in the aggregate, of approximately $3,000 and $5,000, respectively, as advances payable to related parties.

6.

Income Taxes

We are required to file federal and state income tax returns in the United States. The preparation of these tax returns requires us to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by us. In consultation with our tax advisors, we base our tax returns on interpretations that are believed to be reasonable under the circumstances. The tax returns, however, are subject to routine reviews by the various federal and state taxing authorities in the jurisdictions in which we file tax returns. As part of these reviews, a taxing authority may disagree with respect to the income tax positions taken by us (“uncertain tax positions”) and, therefore, may require us to pay additional taxes. As required under applicable accounting rules, we accrue an amount for our estimate of additional income tax liability, including interest and penalties, which we could incur as a result of the ultimate or effective resolution of the uncertain tax positions. We account for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. We have estimated our provision for income taxes in accordance with the Tax Act and guidance available as of the date of this filing but have kept the full valuation allowance.

On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The deferred tax expense recorded in connection with the remeasurement of deferred tax assets is a provisional amount and a reasonable estimate at December 31, 2017 based upon the best information currently available. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 when the analysis is complete. The accounting is expected to be complete when the 2017 U.S. corporate income tax return is filed in 2018.

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B4MC GOLD MINES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2017

(UNAUDITED)

7.

Stockholders’ Deficit

Common Stock

We have authorized 750,000,000 shares of our common stock, $0.001 par value. On July 15, 2015, we filed an amendment to our Articles of Incorporation with the Secretary of State of the State of Nevada providing for a one-for-fifty reverse split of our outstanding shares of common stock effective August 21, 2015. The authorized shares of our common stock were not adjusted as a result the reverse stock split.

8.

Legal Proceedings

We are not the subject of any pending legal proceedings; and to the knowledge of management, no proceedings are presently contemplated against us by any federal, state or local governmental agency. Further, to the knowledge of management, no director or executive officer is party to any action in which any has an interest adverse to us.

9.

Subsequent Events

We evaluated all events or transactions that occurred after the balance sheet date through the date when we issued these financial statements and, other than the items described below, we did not have any material recognizable subsequent events during this period.

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain statements that are “forward-looking” within the meaning of the federal securities laws. These forward-looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, and are not guaranties of future performance. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended or using other similar expressions. We are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Quarterly Report on Form 10-Q. Important factors that could cause actual results to differ from our predictions include those discussed under “Risk Factors,” “Management’s Discussion and Analysis” and “Business.” Although we have sought to identify the most significant risks to our business, we cannot predict whether, or to what extent, any of such risks may be realized, nor can there be any assurance that we have identified all possible issues which we might face. For all of these reasons, the reader is cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date hereof. We assume no responsibility to update any forward-looking statements as a result of new information, future events, or otherwise except as required by law. We urge readers to review carefully the risk factors described in this Quarterly Report and in the other documents that we file with the Securities and Exchange Commission. You can read these documents at www.sec.gov.

Plan of Operation

B4MC Gold Mines, Inc., a Nevada corporation, has been engaged in efforts to identify an operating company which we can acquire or into which we can merge through an equity-based exchange transaction that would likely result in a change in control with respect to us. As our planned principal operations have not yet commenced, our activities are subject to significant risks and uncertainties, including the need to obtain additional financing.

We do not have now, nor do we anticipate having, capital with which to provide the owners of business opportunities with any significant cash or other assets. However, management believes we will be able to offer owners of acquisition candidates the opportunity to acquire a controlling ownership interest in a publicly registered company without incurring the cost and time required to conduct an initial public offering. The owners of the acquisition candidate will, however, incur significant legal and accounting costs in connection with the acquisition of a business opportunity, including, but not limited to, the costs of preparing Current Reports on Form 8-K, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and various agreements and related reports and documents in connection with the consummation of a transaction as contemplated herein.

Our unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the three months ended March 31, 2017, we net income of approximately $9,000, had positive cash flows from operations of approximately $13,000 and had a working capital deficit of approximately $68,000. Net of the effect of other income from a single transaction commitment fee, we would have reported a net loss of approximately $41,000 and negative cash flows of approximately $37,000. We have financed our recent working capital requirements primarily through the issuance of equity securities. As a result, management believes there is substantial doubt about our ability to continue as a going concern.

Critical Accounting Policies

Our significant accounting policies are described in Note 3 to the financial statements included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2016. Our discussion and analysis of our financial condition and results of operations are based upon these financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on an on-going basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. In the past, actual results have not been materially different from our estimates. However, results may differ from these estimates under

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different assumptions or conditions.

Results of Operations

For the Three Months Ended March 31, 2017 vs. March 31, 2016

Revenues

We had no revenue generating operations during the three months ended March 31, 2017 and 2016.

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2017 were approximately $41,000 as compared with approximately $14,000 for the prior year period, an increase of approximately $27,000. The increase is primarily a result of increased professional costs.

Other Income

Other income for the three months ended March 31, 2017 was $50,000 as compared with $0 for the prior year period, an increase of $50,000. Other income for the three months ended March 31, 2017 was a result of the recording of a transaction commitment fee received on a proposed transaction that was never consummated.

Liquidity and Capital Resources

As of March 31, 2017, we had cash of approximately $11,000. This represents an increase of approximately $11,000 as compared to a cash balance of approximately $0 as of December 31, 2016.

During the three months ended March 31, 2017, we had net cash of approximately $13,000 provided by operating activities as compared with net cash of $11,000 used in operating activities for the prior year period. Our net cash provided by operating activities during the three months ended March 31, 2017 consisted of our net income of approximately $9,000 and increase in accounts payable and accrued expenses of approximately $4,000. Our net cash used in operating activities during the three months ended March 31, 2016 consisted of our net loss of approximately $14,000, which was offset by an increase in accounts payable and accrued expenses of approximately $3,000.

Going Concern

Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At March 31, 2017, we did not have any business operations. We have experienced recurring operating losses and negative operating cash flows, and have financed our recent working capital requirements primarily through the issuance of debt and equity securities, as well as borrowings from related parties. As of March 31, 2017, our working capital deficiency was approximately $68,000 and our accumulated deficit was approximately $2,731,000. As a result, management believes that there is substantial doubt about our ability to continue as a going concern.

Management is seeking to identify an operating company and engage in a merger or business combination of some kind, or acquire assets or shares of an entity actively engaged in a business that generates sustained revenues. We are considering several potential acquisitions and is investigating various candidates to determine whether they would have the potential to add value to us for the benefit of our stockholders.

We do not intend to restrict our consideration to any particular business or industry segment, and we may consider, among other businesses, finance, brokerage, insurance, transportation, communications, services, natural resources, manufacturing or technology. Because we have limited resources, the scope and number of suitable candidates to merge with is relatively limited. Because we may participate in a business opportunity with a newly formed firm, a firm that is in the development stage, or a firm that is entering a new phase of growth, we may incur further risk due to the inability of the target’s management to have proven its abilities or effectiveness, or the lack of an established market for the target’s products or services, or the inability to reach profitability in the next few years.

Any business combination or transaction will likely result in a significant issuance of shares and substantial dilution to our present stockholders. As it is expected that the closing of such a transaction will result in a change in

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control, such transaction is expected to be accounted for as a reverse merger, with the operating company being considered the legal acquiree and accounting acquirer, and we would be considered the legal acquirer and the accounting acquiree. As a result, at and subsequent to closing of any such transaction, the financial statements of the operating company would become our financial statements for all periods presented.

Commitments

We do not have any long-term commitments at March 31, 2017.

Off-Balance Sheet Arrangements

At March 31, 2017, we did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of our management, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of March 31, 2017 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our management concluded that, as of March 31, 2017, our internal control over financial reporting was not effective due to (i) insufficient segregation of duties in the finance and accounting functions due to limited personnel; and (ii) inadequate corporate governance policies. In the future, subject to working capital limitations, we intend to take appropriate and reasonable steps to make improvements to remediate these deficiencies.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the fiscal period to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

We are not the subject of any pending legal proceedings; and to the knowledge of management, no proceedings are presently contemplated against us by any federal, state or local governmental agency. Further, to the knowledge of management, no director or executive officer is party to any action in which any has an interest adverse to us.

Item 1A.

Risk Factors

There have not been any material changes from the risk factors previously disclosed under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016.

Item 2.

Unregistered Sales of Equity Securities

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

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Item 6.

Exhibits

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Pursuant to the requirements of Section 13 or 15(d) 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, thereunto duly authorized.

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