UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended July 31, 2019

 

or

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from               to

 

Commission file number: 000-55588

 

BLUE EAGLE LITHIUM INC.

(Exact name of registrant as specified in its charter)

 

Nevada   35-2636271

State or other jurisdiction of

incorporation or organization

  (I.R.S. Employer
Identification No.)

 

2831 St. Rose Parkway, Suite 200, Henderson, NV

(Address of principal executive offices) (Zip Code)

 

(702) 889 – 3369

Registrant’s telephone number, including area code

 

 

 

(Former name of registrant)

 

 

 

(Former address of registrant)

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

 

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

 

Large accelerated filer [  ] Accelerated filer [  ]
       
Non-accelerated filer [X] Smaller reporting company [X]
       
Emerging growth company [  ]    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

76,758,855 shares of common stock are issued and outstanding as of September 12, 2019.

 

 

 

 

 

 

INDEX

 

    Page
PART I FINANCIAL INFORMATION  
     
  CONDENSED INTERIM BALANCE SHEETS 4
     
  CONDENSED INTERIM STATEMENTS OF OPERATIONS 5
     
  CONDENSED INTERIM STATEMENTS OF STOCKHOLDERS’ EQUITY 6
     
  CONDENSED INTERIM STATEMENTS OF CASH FLOWS 7
     
  NOTES TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS 8
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14
     
Item 3 Quantitative and Qualitative Disclosures About Market Risk 22
     
Item 4. Controls and Procedures 22
     
PART II OTHER INFORMATION  
     
Item 1. Legal Proceedings 22
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
     
Item 3. Defaults Upon Senior Securities. 22
     
Item 4. Mine Safety Disclosures 22
     
Item 5. Other Information. 22
     
Item 6. Exhibits 22
     
SIGNATURES 23

 

2

 

 

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

 

Certain information set forth in this Quarterly Report on Form 10-Q, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (and the “Liquidity and Capital Resources” section thereof) and elsewhere may address or relate to future events and expectations of our management and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. Such forward-looking statements involve significant risks and uncertainties. Such statements may include, without limitation, statements with respect to our plans, objectives, projections, expectations and intentions and other statements identified by words such as “projects”, “may”, “could”, “would”, “should”, “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans” or similar expressions.

 

Readers are cautioned that actual results, including, without limitation: the results of our mineral exploration activities and the overall establishment of our business as well as the results of our financing initiatives, may differ significantly from those set forth in the forward-looking statements. Such forward-looking statements also involve other factors which may cause our actual results, performance or achievements to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements and to vary significantly from reporting period to reporting period. Such factors include, among others, those described in the risk factors detailed from time to time in our other filings with the SEC. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual future results will not be different from the expectations expressed in this Report. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

 

3

 

 

PART I. FINANCIAL INFORMATION

 

BLUE EAGLE LITHIUM INC.

CONDENSED INTERIM BALANCE SHEETS

 

    July 31, 2019     April 30, 2019  
    (Unaudited)     (Audited)  
ASSETS                
Current Assets                
Cash   $ 151     $ 469  
Prepaids     5,333       7,833  
Total Current Assets     5,484       8,302  
                 
Equipment, net (Note 4)     2,150       2,150  
Intangible Assets, net (Note 5)     4,936       5,528  
Mineral Properties (Note 9)     957,097       627,000  
                 
TOTAL ASSETS   $ 969,667     $ 642,980  
                 
LIABILITIES & STOCKHOLDERS’ EQUITY                
                 
LIABILITIES                
Current Liabilities                
Accounts payable & Accrued expenses (Note 6)   $ 55,313     $ 53,454  
Due to related party (Note 11)     61,824       57,091  
Convertible loan payable (Note 7)     50,000       50,000  
Interest payable (Note 7)     66,144       59,728  
Loans payable (Note 7)     281,050       176,050  
TOTAL CURRENT LIABILITIES     514,331       396,323  
                 
Commitments and Contingencies   $ -     $ -  
                 
STOCKHOLDER’S DEFICIT                
Capital stock authorized: 200,000,000 common shares with a par value $0.0001                
Issued and outstanding: 76,583,855 common shares (Note 8) (76,283,855 common shares at April 30, 2019)   $ 7,658     $ 7,628  
Additional paid-in capital     1,320,067       1,026,097  
Accumulated deficit     (872,389 )     (787,068 )
                 
TOTAL STOCKHOLDER’S DEFICIT     455,336       246,657  
                 
TOTAL LIABILITIES & STOCKHOLDER’S DEFICIT   $ 969,667     $ 642,980  

 

See accompanying notes to the condensed unaudited interim financial statements

 

4

 

 

BLUE EAGLE LITHIUM INC.

CONDENSED INTERIM INCOME STATEMENTS

For the three months ended July 31, 2019 and 2018

(Unaudited)

 

    For the three months  
    ended July 31,  
    2019     2018  
OPERATING EXPENSES                
                 
Amortization   $ 592     $ -  
Consulting fees     -       250  
Management fees     33,600       -  
Rent     518       -  
General & administrative expenses     9,380       6,675  
Marketing and promotional expenses     4,010       -  
Mineral exploration expenses     10,555       -  
Professional fees     20,250       2,725  
                 
TOTAL EXPENSES     78,905       9,650  
                 
OPERATING LOSS   $ (78,905 )   $ (9,650 )
                 
OTHER EXPENSES                
Interest on loans     6,416       4,539  
      6,416       4,539  
                 
NET INCOME/(LOSS)   $ (85,321 )   $ (14,189 )
                 
Net loss per share, basic and diluted   $ (0.001 )   $ (0.0001 )
                 
Weighted average common shares outstanding basic and diluted     76,504,507       75,000,000  

 

See accompanying notes to the condensed unaudited interim financial statements

 

5

 

 

BLUE EAGLE LITHIUM INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the three months ended July 31, 2019 and 2018

(Unaudited)

 

    Common Stock
200,000,000 shares authorized 		    Additional           Total  
    Shares     Par Value     Paid in     Accumulated     Stockholders’  
    Issued     $.0001 per share     Capital     Deficit     Equity  
                               
Balance, April 30, 2019     76,283,855     $ 7,628     $ 1,026,097     $ (787,068 )   $ 246,657  
                                         
Shares issued at $0.87 per share for assets     200,000       20       173,980       -       174,000  
Shares issued at $1.20 per share for assets     100,000       10       119,990       -       120,000  
Net income/loss     -       -       -       (85,321 )     (85,321 )
                                         
Balance, July 31, 2019     76,583,855     $ 7,658     $ 1,320,067     $ (872,389 )   $ 455,336  

 

    Common Stock
200,000,000 shares authorized 		    Additional           Total  
    Shares     Par Value     Paid in     Accumulated     Stockholders’  
    Issued     $.0001 per share     Capital     Deficit     Equity  
                               
Balance, April 30, 2018     75,000,000     $ 7,500     $  14,500   $ (217,292 )   $ (195,292 )
Net income/loss     -       -       -       (14,189 )     (14,189 )
Balance, July 31, 2018     75,000,000     $ 7,500     $ 14,500   $ (231,481 )   $ (209,481 )

 

See accompanying notes to the condensed unaudited interim financial statements

 

6

 

 

BLUE EAGLE LITHIUM INC.

INTERIM STATEMENTS OF CASH FLOWS

For the three months ended July 31, 2019 and 2018

(Unaudited)

 

    July 31, 2019     July 31, 2018  
Cash Flows from Operating Activities                
Net income/(loss)   $ (85,321 )   $ (14,189 )
Adjustments to reconcile net income/(loss) to net cash from operating activities:                
Amortization     592       -  
Changes in current assets and liabilities:                
Prepaids     2,500       2,500  
Accounts payable & accrued interest     13,008       2,165  
                 
Net cash used in operating activities   $ (69,221 )   $ (9,524 )
                 
Cash Flows from Investing Activities                
Purchase of Assets   $ (36,097 )   $ -  
               
Net cash provided by (used in) investing activities   $ (36,097 )   $ -  
                 
Cash Flows from Financing Activities                
Proceeds from loans payable   $ 105,000     $ -  
                 
Net cash provided by financing activities   $ 105,000     $ -  
                 
Net increase (decrease) in cash   $ (318 )   $ (9,524 )
                 
Cash and cash equivalents, beginning of period   $ 469     $ 9,785  
                 
Cash and cash equivalents, end of period   $ 151     $ 261  
                 
Supplemental Disclosure                
Interest paid   $ -     $ 4,539  
Taxes paid   $ -     $ -  
                 
Non-cash Financing and Investing Activities                
Common stock issued for assets   $ 294,000     $ -  

 

See accompanying notes to the condensed unaudited interim financial statements.

 

7

 

 

BLUE EAGLE LITHIUM INC.

Notes to the Interim Financial Statements

July 31, 2019

(Unaudited)

 

Note 1 Nature and Continuance of Operations

 

Blue Eagle Lithium Inc. (the “Company”) was incorporated in the State of Nevada on July 30, 2009. The Company is engaged in identifying, evaluating and developing early-stage lithium exploration opportunities and has not realized any revenues from its planned operations.

 

The Company’s fiscal year ends on April 30.

 

Note 2 Basis of Presentation – Going Concern Uncertainties

 

These financial statements have been prepared in conformity with generally accepted accounting principles in the United States, which contemplate continuation of the Company as a going concern. The Company is at its early stages of development and has limited operations and has sustained operating losses resulting in a deficit.

 

The Company has accumulated a deficit of $872,389 since inception, has yet to achieve revenue producing or profitable operations, and further significant losses are anticipated in the development of its business. The Company’s ability to continue as a going concern is in substantial doubt and is dependent upon obtaining financing and/or generating revenue and achieving a sustainable profitable level of operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company will need to seek additional equity financing from time to time in order to fund its business plan, and it plans to raise funds through private or public equity financings or loans from directors of the Company in order to support existing operations. There is no assurance that such additional funds will be available for the Company on acceptable terms, if at all.

 

Note 3 Interim Reporting and Significant Accounting Policies

 

The interim financial statements are prepared under the accrual basis of accounting in accordance with accounting principles generally accepted (GAAP) in the United States of America for the interim information. Accordingly, the financial statements do not include all of the information and notes required by GAAP for the complete financial statements. While the information presented is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, result of operation and cash flows for the interim periods presented in accordance with accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature. It is suggested that the interim financial statements be read in conjunction with the Company’s April 30, 2019 annual financial statements. Operating results for the three month period ended July 31, 2019 are not necessarily indicative of the results that can be expected for the year ended April 30, 2020.

 

There have been no changes in the accounting policies from those disclosed in the notes to the audited financial statements for the year ended April 30, 2019.

 

Recently issued accounting pronouncements

 

The Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective date. Management does not believe that any pronouncement not yet effective but recently issued by the FASB (including its Emerging Issues Task Force), the AICPA or the SEC would, if adopted, have a material effect on the accompanying financial statements.

 

8

 

 

Note 4 Equipment

 

The computer equipment is depreciated over 3 years on a straight-line basis.

 

Jul 31, 2019     Apr 30, 2019  
      Accumulated                 Accumulated        
Cost     Amortization     Net     Cost     Amortization     Net  
$ 2,150     $           -     $ 2,150     $ 2,150     $          -     $ 2,150  
                                             
$ 2,150     $ -     $ 2,150     $ 2,150     $ -     $ 2,150  

 

Note 5 Intangible Assets

 

The assets are amortized over 3 years on a straight-line basis.

 

Jul 31 2019     Apr 30 2019  
Website     Accumulated           Website     Accumulated        
Cost     Amortization     Net     Cost     Amortization     Net  
$ 7,107     $ (2,171 )   $ 4,936     $ 7,107     $ (1,579 )   $ 5,528  
                                             
$ 7,107     $ (2,171 )   $ 4,936     $ 7,107     $ (1,579 )   $ 5,528  

 

Note 6 Accounts Payable & Accrued Expenses

 

Accrued expenses as of July 31, 2019 and April 30, 2019 are summarized as follows:

 

    Jul 31, 2019     Apr 30, 2019  
Accrued accounting fees     14,850       16,675  
Accrued legal fees     25,259       26,950  
Accrued office expenses     15,204       9,829  
    $ 55,313     $ 53,454  

 

Note 7 Notes Payable

 

The Company entered into 11 unsecured notes payable. They are all due within 30 days following written demand and bears a monthly interest rate of 1% (12% per annum). The Company partially repaid one note and accrued interest totaling $2,000 on March 1, 2018. The following were the principal loan amounts and accrued interests remaining as at July 31, 2019 and April 30, 2019:

 

      July 31, 2019           April 30, 2019  
      Principal     Interest                 Principal     Interest        
      Amount     Accrued     Total           Amount     Accrued     Total  
Dec 31 12       17,000       13,430       30,430       Dec 31 12       17,000       12,920       29,920  
Aug 13 13       20,000       14,300       34,300       Aug 13 13       20,000       13,700       33,700  
Dec 04 14       11,000       6,148       17,148       Dec 04 14       11,000       5,818       16,818  
Jun 26 15       10,000       4,917       14,917       Jun 26 15       10,000       4,617       14,617  
Jan 25 16       3,671       587       4,258       Jan 25 16       3,671       477       4,148  
Mar 22 16       17,725       7,179       24,904       Mar 22 16       17,725       6,647       24,372  
Jul 28 16       2,700       972       3,672       Jul 28 16       2,700       891       3,591  
Oct 31 16       5,161       1,703       6,864       Oct 31 16       5,161       1,548       6,709  
Jan 31 17       3,902       1,171       5,073       Jan 31 17       3,902       1,054       4,956  
Apr 28 17       3,181       859       4,040       Apr 28 17       3,181       763       3,944  
Jun 03 17       6,961       1,810       8,771       Jun 03 17       6,961       1,601       8,562  
      $ 101,300     $ 53,075     $ 154,375             $ 101,300     $ 50,036     $ 151,336  

 

9

 

 

The Company entered into one unsecured note payable that is due November 1, 2019 with an interest rate of 12% per annum. The following was the principal amount and the accrued interest at July 31, 2019 and April 30, 2019:

 

      July 31, 2019           April 30, 2019  
      Amount     Interest     Total           Amount     Interest     Total  
Nov 01 18     $ 12,500     $ 1,122     $ 13,622     Nov 01 18     $ 12,500     $ 744     $ 13,244  

 

The Company entered into one unsecured note payable that is due on December 7, 2019 with an interest rate of 3% per annum. The following was the principal amount and the accrued interest at July 31, 2019 and April 30, 2019:

 

      July 31, 2019           April 30, 2019  
      Amount     Interest     Total           Amount     Interest     Total  
Dec 12 18     $ 39,000     $ 744     $ 39,744     Dec 12 18     $ 39,000     $ 448     $ 39,448  

 

The Company entered into one unsecured note payable that is due on April 11, 2020 with an interest rate of 12% per annum. The accrued interest commenced May 1, 2019. The following was the principal amount and the accrued interest at July 31, 2019 and April 30, 2019:

 

      July 31, 2019           April 30, 2019  
      Amount     Interest     Total           Amount     Interest     Total  
Apr 11 19     $ 23,250     $ 704     $ 23,954     Apr 11 19     $ 23,250       -     $ 23,250  

 

The Company entered into one unsecured note payable that is due on May 02, 2020 with an interest rate of 3% per annum. The following was the principal amount and the accrued interest at July 31, 2019:

 

      July 31, 2019  
      Amount     Interest     Total  
May 02 19     $ 25,000     $ 183     $ 25,183  

 

The Company entered into one unsecured note payable that is due on June 7, 2020 with an interest rate of 12% per annum. The following was the principal amount and the accrued interest at July 31, 2019:

 

      July 31, 2019  
      Amount     Interest     Total  
Jun 11 19     $ 20,000     $ 204     $ 20,204  

 

The Company entered into one unsecured note payable that is due on June 17, 2020 with an interest rate of 3% per annum. The accrued interest will commence July 1, 2019. The following was the principal amount and the accrued interest at July 31, 2019:

 

      July 31, 2019  
      Amount     Interest     Total  
Jun 17 19     $ 30,000     $ 76     $ 30,076  

 

10

 

 

The Company entered into one unsecured note payable that is due on July 06, 2020 with an interest rate of 3% per annum. The accrued interest will commence July 17, 2019. The following was the principal amount and the accrued interest at July 31, 2019:

 

      July 31, 2019  
      Amount     Interest     Total  
Jul 05 19     $ 30,000     $ 37     $ 30,037  

 

The Company entered into one unsecured convertible note payable on December 4, 2017. The note is due within 30 days following written demand and bears a monthly interest rate of 1% (12% per annum). At any time prior to repayment, the holder may convert all or part of the principal loan into common stock of the Company at a conversion price of $1.00 of debt to 1 common share. The effect that conversion would have on earnings per share has not been disclosed due to the current anti-dilutive effect. The conversion rate of $1.00 creates a zero conversion benefit at current stock prices at that time. Therefore, no beneficial conversion feature has been recorded.

 

      July 31, 2019           April 30, 2019  
      Principal     Interest                 Principal     Interest        
      Amount     Accrued     Total           Amount     Accrued     Total  
Dec 04 17     $ 50,000     $ 10,000     $ 60,000     Dec 04 17     $ 50,000     $ 8,500     $ 58,500  

 

Interest accrued on the notes bearing 3% interest was $1,040 as at July 31, 2019 (April 30, 2019 $448)

 

Interest accrued on the notes bearing 12% interest was $55,104 as at July 31, 2019 (April 30, 2019 $50,780)

 

Interest accrued on the convertible note bearing 12% interest was $10,000 as at July 31, 2019 (April 30, 2019 $8,500)

 

Note 8 Common Shares

 

On May 10, 2018, the Company effected a forward stock split on a 20 to 1 basis, thereby increasing the issued and outstanding share capital from 3,750,000 common shares to 75,000,000 common shares. The common stock par value was changed from $0.001 to $0.0001. These financial statements presented provide the retroactive effect to the changes.

 

On August 15, 2018, the Company issued 600,000 common shares at $0.75 per share for the purchase of the mineral properties. The share price was issued at market.

 

On August 17, 2018, the Company issued 83,333 common shares for cash at $0.60 per share to an investor. The share price was negotiated with a 20% discount when the market was at $0.75 per share.

 

On August 17, 2018, the Company issued 30,000 common shares at $0.95 per share for consulting services. The share price was issued at market.

 

On August 20, 2018, the Company issued 156,862 common shares for cash at $0.6375 per share to an investor. The share price was negotiated with a 15% discount when the market was at $0.75 per share.

 

11

 

 

On August 20, 2018, the Company issued 125,000 common shares at $0.95 per share to its Chief Operating Officer. The share price was issued at market

 

On August 20, 2018, the Company issued 50,000 common shares at $0.95 per share for board advisory services. The share price was issued at market.

 

On November 1, 2018, the Company issued 38,660 common shares for cash at $1.034 per share to a shareholder. The share price was negotiated with a 15% discount from the previous 10 days closing average price of $1.2175 per share.

 

On November 14, 2018, the Company issued 100,000 common shares at $1.03 per share for the purchase of the mineral properties. The share price was issued at market.

 

On April 24, 2019, the Company issued 100,000 common shares at $0.74 per share for the purchase of the mineral properties. The share price was issued at market.

 

On May 14, 2019, the Company issued 200,000 common shares at $0.87 per share for the purchase of 50 mineral properties. The share price was issued at market.

 

On June 14, 2019, the Company issued 100,000 commons shares at $1.20 per share for the purchased of an additional 26 mineral properties. The share price was issued at market.

 

At July 31, 2019, the Company had 76,583,855 common shares outstanding (76,283,855 common shares at April 30, 2019). There were no warrants or stock options outstanding as of July 31, 2019.

 

Note 9 Mineral Properties

 

On August 9, 2018, the Company entered into a property lease assignment agreement with a third party (the “Assignor”) to purchase 200 mineral claims totaling 4,000 acres located in the State of Nevada known as the Railroad Valley, in Nye County. The Company agreed to assume all the rights, titles and interest in the lease in exchange for issuing to the Assignor 500,000 common shares and to the lessor of the property (the “Lessor”) 300,000 common shares as follows (see Note 8):

 

To the Assignor – 500,000 common shares upon completion of the agreement (issued)
To the Lessor – 100,000 common shares upon completion of the agreement (issued); and
  – 100,000 common shares within 90 days upon completion of the agreement (issued); and
  – 100,000 common shares within 180 days upon completion of the agreement (issued)

 

In addition, the Company further acknowledged and agreed that the Lessor shall reserve onto itself a royalty on revenues derived from the sale of lithium concentrate and other ores extracted from the property. The Lessor shall have the right to buy 1% of the royalty at any time for $2,000,000 from the Company. Such cash payment will be paid in 90 days intervals, upon completion of an inferred resource calculation that confirms the presence on the property of a minimum 500,000 tons of lithium carbonate equivalent grading no lower than a 40 parts per million lithium grade average.

 

On April 22, 2019, the Company entered into an agreement to acquire the mineral rights from RangeFront Geological to purchase 100% interest in 50 mineral claims covering approximately 1,000 acres located in the State of Nevada in the Railroad Valley, in Nye County. The Company agreed to issue to RangeFront Geological 200,000 common shares within 15 business days from the date of the recording of the staked Claims with the County and BLM. The agreed shares were issued on May 14, 2019.

 

As part of the purchase, the Company also agreed to pay the following (which were all paid during the period ended July 31, 2019:

 

  a) County fees of approximately $2,250, within 90 days of the Agreement
  b) BLM fees of approximately $10,600, within 90 days of the Agreement
  c) Transfer fees of approximately $1,000, upon payment of BLM fees
  d) Staking fees of $7,500, within 15 days of the Agreement

 

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In addition, the Company holds an exclusive option to acquire an additional 26 claims in the Railroad Valley comprising of 520 acres. This option is valid for 30 business days from the date of the closing of the Agreement by paying RangeFront Geological $7,500 (paid during the period ended July 31, 2019), and issuing a further 100,000 common shares within 15 business days from the exercise date of the option. The shares were issued on June 14, 2019.

 

Moreover, the Company acknowledged and agreed that RangeFront Geological shall reserve onto itself, a royalty equal to 1.0% on revenues derived from the sale of lithium concentrate and other ores extracted from the properties. The Company also have the right to buy back 0.5% of the royalty from RangeFront at any time for $1,000,000. The Company also agreed to pay RangeFront $1,000,000 upon completion of an inferred resource calculation that confirms the presence of a minimum 700,000 tons of lithium carbonate equivalent grading no lower than a 40 ppm Li grade average on the properties.

 

Note 10 Commitments

 

Effective August 15, 2018, the Company entered into a consulting agreement with John P Hart for a period of one year. Upon signing, the Company issued 30,000 common shares valued at $28,500. (see Note 8). John P Hart’s term has ended in August 2019 and the Company did not renew.

 

Effective August 20, 2018, the Company entered into an annual consulting agreement with Peter R Murray, the Company’s Chief Operating Officer and director. The agreement requires the Company to pay Mr. Murray a monthly consulting fee of $3,000 and a stock remuneration of up to 500,000 common shares as follows (see Note 8):

 

125,000 common shares effective immediately (issued)

 

125,000 common shares in the event the agreement is first renewed on the first anniversary date (issued subsequent to July 31, 2019)

 

125,000 common shares in the event the agreement is renewed on the second anniversary date

 

125,000 common shares in the event the agreement is renewed on the third anniversary date

 

On August 20, 2018, the Company entered into an annual consulting agreement with Robert FE Jones as a board advisor. The agreement requires the Company to pay Mr. Jones a daily rate of $350 and a stock remuneration of up to 200,000 common shares as follows (see Note 8):

 

50,000 common shares effective immediately (issued)

 

50,000 common shares in the event the agreement is first renewed on the first anniversary date (issued subsequent to July 31, 2019)

 

50,000 common shares in the event the agreement is renewed on the second anniversary date

 

50,000 common shares in the event the agreement is renewed on the third anniversary date

 

Note 11 Related Party Transactions

 

Amounts due to related parties were for services rendered to the Company by the director and officers of the Company are unsecured, non-interest bearing and have no specific terms of repayment. During the period ended July 31, 2019, the amount due to related parties were $61,824 as follows:

 

Chief Executive Officer $ 51,638 for management fees and $186 for out-of-pocket expenses

 

Chief Operating Officer $ 10,000 for management fees

 

Note 12 Subsequent Events

 

Subsequent to the period ended July 31, 2019, the Company entered into further loan agreements of $100,000 with a shareholder.

 

The Company issued a further 125,000 common shares to the COO for the renewal of his contract (see Note 10).

 

The Company issued a further 50,000 common shares to an advisor for the renewal of his contract (see Note 10).

 

The Company evaluated all events and transactions that occurred after July 31, 2019 through the date the Company issued these financial statements and found no other subsequent events that needed to be reported.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

OVERVIEW

 

Blue Eagle Lithium Inc. (“the company”) is a Nevada corporation that was incorporated on July 30, 2009. The company was initially incorporated under the name “Wishbone Pet Products Inc.” with the intent to commence business operations by developing, manufacturing, marketing, and selling dog waste removal devices.

 

Effective July 20, 2018, the company changed its name to “Blue Eagle Lithium Inc.” and affected a 20-for-1 forward split of its common stock by a majority vote of the shareholders on May 10, 2018. See Item 5.03 filed on Form 8-K filed July 26, 2018 for more details. The Company changed its direction to the business of the acquisition and exploration of lithium and rare earth metal resources. The Company’s current mandate is to identify, evaluate and develop early-stage lithium exploration opportunities in North America, with a current focus on areas in the state of Nevada.

 

The Company has not generated any revenue since inception and is not expected to generate revenue for the foreseeable future as it engages in exploratory activities.

 

August 2018 Acquisition of Mineral Claims in the Railroad Valley

 

On August 16, 2018, the Company acquired 200 mineral claims covering approximately 4,000 acres in the Railroad Valley of Nevada (the “Railroad Valley Property”), pursuant to the terms and conditions of a property assignment agreement, dated August 9, 2018 (the “Assignment Agreement”), between the Company and Oriental Rainbow Group Limited (“ORG”). The parties agreed on a purchase price for the Railroad Valley Property, which was paid in full when the Company issued and delivered to ORG 500,000 shares of Common Stock, as well as a further issuance to Plateau Ventures LLC (“Plateau Ventures”) of 300,000 shares of Common Stock pursuant to the following schedule: 100,000 shares of Common Stock upon the effective date of the Assignment Agreement, 100,000 shares of Common Stock ninety (90) days following the effective date of the Assignment Agreement and a final 100,000 shares of Common Stock one hundred and eighty (180) days following the effective date of the Assignment Agreement.

 

The leases and concessions for the Railroad Valley Property were officially transferred into the Company’s name on October 5, 2018 by the Bureau of Land Management, a federal agency within the United States Department of the Interior (“BLM”). Following such name transfer, the Company currently has a 100% working interest in 200 placer claims in Railroad Valley, Nevada, an area the Company believes to be a highly prospective green-fields lithium brine target in the heart of the Basin and Range geologic province. The staked claims cover approximately 4,000 acres (or approximately 1,619 hectares) over a large portion of Railroad Valley’s dry lakebed (playa).

 

Additionally, the Assignment Agreement provides Plateau Ventures with a 2% royalty on revenues derived from the sale of lithium concentrate and other ores extracted from the property. The Company shall have the right to buy 50% of the royalty amount at any time for $2 million from Plateau Ventures. Such payment will be paid in 90 day intervals upon completion of an inferred resource calculation that confirms the presence on the property of a minimum 500,000 tons of lithium carbonate equivalent grading no lower than 40 parts per million (or ppm) lithium grade average on the subject properties.

 

August 2018 Stock Purchase Agreement

 

On August 14, 2018, Rami Tabet (“Tabet”), the Company’s previous controlling stockholder and Chief Executive Officer, and Rupert Ireland (“Ireland”) entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”), which provided for the sale by Tabet to Ireland of 40,000,000 shares (the “Shares”) of Common Stock for a purchase price of $100,000. The transfer of the Shares to Ireland was effective on August 14, 2018. Upon his acquisition of the Shares, Ireland became the holder of a majority of the outstanding shares of Common Stock and the Chief Executive Officer, which is sufficient ownership to give him the power to elect all of the members of our Board of Directors (the “Board”). Tabet owned no shares of Common Stock immediately after giving effect to the sale of the Shares to Ireland. Mr. Tabet resigned his positions with the Company upon consummation of the Stock Purchase Agreement.

 

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April 2019 Agreement with RangeFront Geological

 

On April 22, 2019, the Company entered into a purchase and sale agreement (the “Purchase and Sale Agreement”) with Rangefront Consulting, LLC, DBA Rangefront Geological (“Rangefront Geological”), a geology and exploration company based in Elko, Nevada, to purchase a 100% working interest in 50 mineral claims covering 1,000 acres in the Railroad Valley region in the State of Nevada with an option to acquire an additional 26 mineral claims comprising of 520 acres in the Railroad Valley region in the State of Nevada. The parties agreed on a purchase price for the 50 mineral claims by the Company issuing and delivering to Rangefront Geological 200,000 restricted shares in Common Stock. The agreed purchase price for the additional 26 mineral claims will be a further issuance and delivery of 100,000 restricted shares in Common Stock, which was issued and delivered on May 14, 2019.

 

As part of the Purchase and Sale Agreement, the Company also agreed to pay the following (which were all paid during the period ended July 31, 2019:

 

  a) County fees of approximately $2,250, within 90 days of the Agreement
  b) BLM fees of approximately $10,600, within 90 days of the Agreement
  c) Transfer fees of approximately $1,000, upon payment of BLM fees
  d) Staking fees of $7,500, within 15 days of the Agreement

 

Moreover, the Company agreed that RangeFront Geological shall be entitled to a royalty equal to 1.0% of revenues derived from the sale of lithium concentrate and other ores extracted from the subject properties. The Company also has the right to buy back 50% of the royalty amount from RangeFront at any time for $1,000,000. The Company also agreed to pay RangeFront $1,000,000 upon completion of an inferred resource calculation that confirms the presence of a minimum 700,000 tons of lithium carbonate equivalent grading no lower than a 40 ppm grade average of lithium on the subject properties.

 

Subsequently, on May 14, 2019, pursuant to the Purchase and Sale Agreement, the Company issued 200,000 restricted shares of Common Stock to RangeFront Geological in full payment for the 50 mineral claims. Additionally, on June 11, 2019, the Company exercised its option to purchase the additional 26 mineral claims pursuant to the Purchase and Sale Agreement and paid RangeFront Geological an additional $7,500 and on June 14, 2019, the Company also issued an additional 100,000 shares of restricted Common Stock to RangeFront Geological for the acquisition of such mineral claims.

 

The Company also entered into a work program with RangeFront on June 8, 2019 whereby the Company advanced $10,000 deposit to commence Phase 1 work on the Railroad Valley 5,520 acres property. The total cost for Phase 1 is $57,800. Upon delivery of the summary report for the Phase 1 work, the Company agreed to issue RangeFront 50,000 restricted shares of Common Stock.

 

As of the date of this Report, the Company’s total land package in the Railroad Valley region in the State of Nevada is approximately 5,520 acres (approximately 2,223 hectares).

 

From September 2018 to March 2019, the Company commenced its baseline soil-sampling program and engaged Tekhne Research Inc. (“Tekhne Research”) to compile a report detailing the nature and geological background of the Railroad Valley Property. Upon receiving the report, the Company initiated its long term plan to build its database from the services of Geologix Technologies Inc., a company experienced in the digitization of well and seismic data and the construction of technical/corporate databases. During 2019, the Company has continued surface soil and water sampling programs and has initiated a work program developed by Company management based on the Tekhne Research report.

 

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Railroad Valley Project

 

The Railroad Valley properties covers an aggregate of 5,520 acres within Railroad Valley, Nevada, approximately 100 miles northeast of Tonopah, Nye County, Nevada and can be accessed directly from US Route 6. Railroad Valley was first identified as lithium rich by the US Geological Survey with the potential to host lithium bearing brines in its subterranean aquifers beneath the valley floor. The property is situated in the Great Basin physiographic province of the Basin and Range tectonic province. North-south trending mountain ranges and intramontane basins often with playas characterize the area. Elevations in the Railroad Valley playa range from 4,725 to 4,760 feet. The highstand shoreline of the southeast side of Railroad Valley Lake at Heath Canyon is 4,860 feet. The rugged Grant and Quinn Ranges forms the eastern margin of the valley and rises to 10,945 feet above sea level at Troy Peak, while the undulant Pancake Range west of the valley reaches 6,260 feet above sea level on Hwy 6.

 

The Railroad Valley basin is a green-fields lithium target believed to be an analogue to Clayton Valley, about 124 miles to the west-southwest. Both are typical arid, closed basins with no water outflow and a common stratigraphic history of pluvial and arid climate variations. Railroad Valley hosts a larger playa, larger catchment area, and deeper basin fill than Clayton Valley. Similar graben fault structures active into modern times occur in both settings which suggest the potential for tectonic isolation of potential brine aquifers to retain brines. Surface reconnaissance soil sampling on nearby properties have returned samples of up to 275 ppm of lithium. Similar values occur in the brine at the Albemarle Silver Peak lithium mine.

 

The Railroad Valley property is accessible from Ely, Nevada by traveling approximately 48 miles southwest on US Highway 6 toward Tonopah. A well-marked turnoff to the southeast just inside the Railroad Valley leads to a well-maintained gravel road, which was constructed for oil extraction and ranch access along the east margin of the Railroad Valley basin and provides access west of Southern Railroad Valley, Nevada. A former oilfield access gravel road heads a few miles northwest to the eastern side of the property. The total distance to the property form Ely is approximately 68 miles.

 

During the period ended April 30, 2019, the Company conducted baseline surface soil samples, rock samples and water samples located within the property on four separate occasions. Each of the teams have been lead by experienced field geologists to optimize operational data gathering and to ensure safe and efficient program delivery. A total of 65 sets of soil samples, 10 rock samples and 10 water samples have been analyzed. As a result, the Company has initiated a work program developed by Company management based on the findings in the Tekhne Research report. The Company’s work program is comprised of two phases. The first phase is the collation of relevant available data in both Railroad Valley and Clayton Valley to build a propriety database with associated exclusive geographical information system (or GIS) or 3D maps and subsequent interpretation. The Company has engaged Geologix Technologies of Houston as its strategic technology partner to provide the Company with cutting edge digitized databases and mapping. The second phase will focus on drilling to test targets defined in phase one. The Company will be using diamond drilling for physical properties and geology to provide better quality core details. In concert, the technical team will compile data for the GIS database, including geophysics, oil drilling and aerial images to provide a regional structural analysis.

 

Geologix Technologies will provide a secure cloud database constructed with an asset focused, GIS compliant framework which will be utilized to more accurately determine the optimal area to initiate boreholes. The database is currently being populated with data available in historical public records, oil and water well records, seismic date, remote sensing data, digital elevation models and lithological and geological maps. The database will be utilized to produce proprietary surface, sub-surface and GIS maps. The Company’s database and proprietary maps will be used to optimize a shallow borehole drilling program in phase two. In addition, the database will help find probable properties in the Railroad Valley neighboring target areas and possibly identify suitable lithium properties.

 

The Company’s work program for the Railroad Valley property consists of the following goals within each phase, with a budget of approximately $950,000, exclusive of contingency allowances and any applicable taxes:

 

Phase 1

 

  1. Collect and synthesize existing oil field data (seismic, gravity and drill logs)
  2. Audio-magnetotellurics (or AMT) surveys
  3. Sample playa soils
  4. Sample analysis
  5. Geology, field supervision and support, reports and data analysis

 

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Phase 2

 

  1. Re-open and sample five nearby wells
  2. Diamond drilling
  3. Water samples
  4. Geology, field supervision and support, reports and data analysis

 

RESULTS OF OPERATIONS

 

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

 

Results of Operations for the Three period ended July 31, 2019

 

    For the three months  
    ended July 31,  
    2019     2018  
OPERATING EXPENSES                
                 
Amortization   $ 592     $ -  
Consulting fees     -       250  
Management fees     33,600       -  
Rent     518       -  
General & administrative expenses     9,380       6,675  
Marketing and promotional expenses     4,010       -  
Mineral exploration expenses     10,555       -  
Professional fees     20,250       2,725  
                 
TOTAL EXPENSES     78,905       9,650  
                 
OPERATING LOSS   $ (78,905 )   $ (9,650 )
                 
OTHER EXPENSES                
Interest on loans     6,416       4,539  
      6,416       4,539  
                 
NET INCOME/(LOSS)   $ (85,321 )   $ (14,189 )

 

Three Months Period Ended July 31, 2019

 

Net Loss. During the three months period ended July 31, 2019, the Company had a net loss of $85,321 as compared to the same period for the prior fiscal period of $14,189 net loss. The increased loss of $71,132 was primarily due to losses relating to amortization, consulting fees, management fees, general & administrative expenses, marketing and promotional expenses, mineral exploration expenses, professional fees and interest on loans. This was due to the new business activities of the Company which include operational costs relating to the start of exploratory activities, management services, start-up costs, marketing and promotional expenses and maintaining mineral rights.

 

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Operating Expenses. The Company’s operating expenses during the three months period ended July 31, 2019 were $78,905 compared to $9,650 for the same period ended July 31, 2018. The increase of $69,255 which was primarily due to the increase in the Company’s operations relating corporate management fees of $33,600, professional fees of $20,250, marketing and promotional expenses of $4,010, and general and administrative expenses of $9,380. The Company has commenced preliminary exploratory activities and incurred expenditures of $10,555 which included site visits and commencement of a work program at the mineral properties.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Three Months Period Ended July 31, 2019

 

As at July 31, 2019, our current assets were $5,484 compared to $8,302 as of April 30, 2019. As of July 31, 2019, our current liabilities were $514,331 compared to $396,323 at April 30, 2019. Current liabilities as of July 31, 2019 were comprised of $281,050 in loans payable, $50,000 in convertible notes payable and $55,313 in accounts payable and accrued liabilities. The Company also owe our officers and directors of $61,824 for management fees and out of pocket expenses. The Company had working capital deficiency of $508,847 as of July 31, 2019 compared to working capital deficiency of $388,021 as of April 30, 2019.

 

During the three months ended July 31, 2019, the Company issued 300,000 shares for the acquisition of 76 additional mineral properties pursuant to an agreement with RangeFront Geological dated April 22, 2019. As a result, stockholders’ equity increased from $246,657 as of April 30, 2019 to $455,336 as of July 31, 2019.

 

Cash Flows from Operating Activities

 

We have not generated positive cash flows from operating activities. For the three months period ended July 31, 2019, net cash flow used in operating activities were $(69,221) consisting of a net loss of $85,321, an increase in accounts payable and accrued interest of $13,008, and a $2,500 increase in prepaid expenses. For the three months period ended July 31, 2018, net cash flow used in operating activities were $(9,524).

 

Cash Flows from Investing Activities

 

We have spent $36,097 and issued 300,000 common shares valued at $294,000 for the acquisition costs of the additional 76 mineral claims. There were no activities for the same comparative period for fiscal 2018.

 

Cash Flows from Financing Activities

 

We have financed our operations primarily from either the issuance of our shares of common stock under private placements or from loans. In the three months period ended July 31, 2019, we received $105,000 relating to note payable proceeds. In the comparative period for fiscal 2018, we generated $nil in proceeds relating to note payable loans.

 

PLAN OF OPERATION AND FUNDING

 

We anticipate that our cash expenses will increase over the next 12 months. During the next 12 months management plans on commencing a drill program that is estimated to cost $950,000 exclusive of contingency allowance and applicable taxes. The Company has minimal finances and accordingly there is no assurance that it will be able to seek funding to start its exploration work program. Management anticipates that the Company will have to complete additional financings to maintain its current properties and to commence the Company’s work program for the Railroad Valley Property. To date, the Company has not entered into any new agreements for the acquisition of any interest in a new property. Further, the Company has no arrangements for any financing required to fund our continued operations or the acquisition of any interest in a new property in the future. There is no assurance that it will be able to raise the financing necessary to complete exploration of the current properties. Based on the Company’s financial position, there is no assurance that the Company will be able to continue its business operations.

 

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In addition, management anticipates incurring the following expenses during the next 12 month period:

 

  ● Management anticipates spending approximately $25,000 in ongoing general and administrative expenses per month for the next 12 months, for a total anticipated expenditure of $300,000 over the next 12 months. The general and administrative expenses for the year will consist primarily of professional fees for the audit and legal work relating to the Company’s regulatory filings throughout the year, as well as transfer agent fees, annual mineral claim fees and general office expenses.
     
  ● Management anticipates spending approximately $50,000 in complying with the Company’s obligations as a reporting company under the Securities Exchange Act of 1934, as amended. These expenses will consist primarily of professional fees relating to the preparation of the Company’s financial statements and completing its annual report, quarterly report, and current report filings with the SEC as well as maintaining an OTCQB listing.

 

As at July 31, 2019, the Company had cash of $151 and a working capital deficit of $508,847. Accordingly, the Company will require additional financing in the amount of $350,000 in order to fund its obligations as a reporting company under the Securities Act of 1934, as amended (the “Act”), and its general and administrative expenses for the next 12 months.

 

During the 12 month period following the date of this annual report, management anticipates that the Company will not generate any revenue. Accordingly, the Company will be required to obtain additional financing in order to continue its plan of operations. Management believes that debt financing will not be an alternative for funding the Company’s plan of operations as it does not have tangible assets to secure any debt financing. Rather, management anticipates that additional funding will be in the form of equity financing from the sale of the Company’s Common Stock. However, the Company does not have any financing arranged and cannot provide investors with any assurance that it will be able to raise sufficient funding from the sale of its Common Stock to fund its plan of operations. In the absence of such financing, the Company will not be able to commence its exploratory work program and its business plan will fail. Even if the Company is successful in obtaining equity financing and acquire an interest in a new property, additional exploration property will be required before a determination as to whether commercially exploitable mineralization or quantities of oil or gas present. If the Company does not continue to obtain additional financing, it will be forced to abandon its business and plan of operations.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

As of the date of this report, we do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material.

 

RISKS

 

The Company’s financial risks arising from its financial instruments are credit risk, liquidity risk, interest rate risk and foreign exchange rate risk. The Company’s exposure to these risks and the policies on how to mitigate these risks are set out below. Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

 

Credit risk

 

Credit risk is the risk of potential loss to the Company if the counter party to a financial instrument fails to meet is contractual obligations. The credit risk of the Company is associated with cash and cash equivalents and restricted cash. Management does not expect these counterparts to fail to meet their obligations.

 

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Liquidity risk

 

Liquidity risk is the risk that the Company will not meet its obligations associated with its financial liabilities as they fall due. The Company performs cash flow forecasting for each fiscal year to ensure there is sufficient cash available to fund its projects and operations. As at July 31, 2019, the Company had a cash and cash equivalent balance of $151 and current liabilities of $514,331. The Company’s financial liabilities include trade and other payables which have contractual maturities of 30 days or are due on demand or notes due within a year. At present, the Company’s operations do not generate cash flow. The Company’s primary source of funding has been the issuance of equity securities through private placements and notes payable. Despite previous success in completing these financings, there is no guarantee of obtaining future financings.

 

Interest rate risk

 

Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in the market interest rates. The Company is currently not exposed to interest rate risk.

 

Foreign exchange rate risk

 

Foreign exchange rate risk is the risk that fair value or future cash flows of financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s functional currency is the United States dollar and major purchases are transacted in United States dollars. The Company funds certain operations, exploration and administrative expenses in Canadian dollars, Euros and UK Pounds Sterling by paying expenditures from its United States bank account. The foreign exchange rate risks on these payments are not considered significant due to the small value of the transactions. The Company does not hedge its foreign exchange risk.

 

OPERATION RISK AND UNCERTAINTIES

 

Operating hazards and risks

 

Mineral exploration involves many risks. The operation in which the Company has a direct or indirect interest will be subject to all the hazards and risks normally incidental to exploration, any of which could result in work stoppage and damage to persons or property or the environment and possible legal liability for any and all damage. Fires, power outages, labor disruptions, flooding, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are some of the risks involved in the conduct of exploration programs.

 

Environmental Factors

 

The Company currently conducts exploration activities in the State of Nevada. Such activities are subject to various laws, rules and regulations governing the protection of the environment. Such legislation imposes rigorous standards on the mining industry to reduce or eliminate the effects of waste generated by extraction and processing operations and subsequently deposited on the ground or emitted into the air or in the water.

 

All phases of the Company’s operations are subject to environmental regulation in the jurisdiction in which it operates. Environmental legislation is evolving in a manner which requires stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed properties and a heightened degree of responsibility for the companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company’s operations. The cost of compliance with changes in governmental regulations has the potential to preclude entirely the economic development of a property.

 

The Company is able to conduct its exploration within the provisions of the applicable environmental legislation without undue constraint on its ability to carry on efficient operations. The estimated annual cost of environmental compliance for all properties held by the Company in the exploration stage is minimal and pertains primarily to carrying out diamond drilling, trenching or stripping. Environmental hazards may exist on the Company’s properties, which hazards are unknown to the Company at present, which have been caused by previous or existing owners or operators of the properties.

 

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Governmental Regulation

 

Exploration activities on the Company’s properties are affected to varying degrees by government regulations relating to such matters as environmental protection, health, safety and labor; mining law reform; restrictions on production, price controls and tax increases; maintenance of claims; tenure; and expropriation of property. There is no assurance that future changes in such regulation, if any, will not adversely affect the Company’s operations. Changes in such regulation could result in additional expenses and capital expenditures, restrictions on the availability of capital, competition, reserve uncertainty, potential conflicts of interest, title risks, dilution and restrictions and delays in operations, the extent of which cannot be predicted.

 

The Company is at the exploration stage on all of its properties. Exploration on the Company’s properties requires responsible best exploration practices to comply with company policy, government regulations, maintenance of claims and tenure. All mining activities in Nevada, regardless of the private or public status of the land which they occurs, are regulated through the Nevada Division of Environmental Protection’s (NDEP) Bureau of Mining Regulation and Reclamation (MBRR). The Bureau administers the State mining laws and mine-related environmental permits. It is composed of three technical branches: Regulation, Closure and Reclamation, all of which protects the waters of the State under the Water Pollution Control regulations. The Regulation Branch provides permitting and inspections; the Closure Branch works with facilities at the cessation of operations to ensure that all components are left chemically stable for the long term, and that the activities will not degrade waters of the State; and the Reclamation Branch regulates exploration and mining operations for permits to explore and mine to reclaim the disturbance created to a safe condition post mining land use.

 

If any of the Company’s projects are advanced to the development stage, those operations will also be subject to various laws and regulations concerning development, production, taxes, labor standards, environmental protection, mine safety and other matters.

 

Additional funding requirements

 

Further exploration on and any development of the Company’s projects will require additional resources and funding. The Company currently does not have sufficient funds to fully explore and develop these projects. In addition, any positive production decision, if achieved, would require significant funding for project engineering and construction. Accordingly, the continuing development of the Company’s properties will depend upon the Company’s ability to obtain financing through debt financing, equity financing, joint venture projects or other means. There is no assurance that the Company will be successful in obtaining the required financing for these or other purposes, including for general working capital.

 

GOING CONCERN

 

The independent auditors’ report accompanying our audited April 30, 2019 financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared “assuming that we will continue as a going concern,” which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

 

The Company is an exploration stage company. Presently, the Company’s operations do not generate cash flow and its financial success is dependent on management’s ability to discover economically viable mineral deposits. The mineral exploration process can take many years and is subject to factors that are beyond the Company’s control. In order to continue as a going concern and to meet its corporate objectives, which primarily consist of exploration work on its mineral properties, the Company will require additional financing through debt or equity issuances or other available means. The Company had working capital deficiency of $508,847 as of July 31, 2019. Although the Company has been partially successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company. As described under Plan of Operation and Funding above, Management believes it may have the opportunity to raise equity capital as required in the long term but recognizes there will be risks involved that may be beyond their control. The annual and interim financial statements do not include any adjustments to the recoverability and classification of reduced asset amounts and classification of liabilities that might be necessary should the Company be unable to continue operations. These adjustments could be material. The Company is not subject to material externally-imposed capital constraints.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a smaller reporting company, we are not required to provide the information required by this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

 

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of July 31, 2019. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the three months period ended July 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On May 14, 2019, pursuant to the purchase and sale agreement, the Company issued 200,000 common shares valued at $174,000 to RangeFront Geological ($0.87 per share) for 50 mineral properties.

 

On June 14, 2019, pursuant to the purchase and sale agreement, the Company issued 100,000 common shares valued at $120,000 to RangeFront Geological ($1.20 per share) for additional 26 mineral properties.

 

On August 29, 2019, pursuant to the consulting agreement, the Company issued 125,000 common shares valued at $46,250 to the COO and director of the Company ($0.37 per share).

 

On September 11, 2019, pursuant to the consulting agreement, the Company issued 50,000 common shares valued at $19,000 to the advisor of the Company ($0.38 per share).

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

Exhibits:

 

31.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act
     
31.2   Certification of Chief Executive Officer and Chief Financial Officer Under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act.
     
101   Interactive data files pursuant to Rule 405 of Regulation S-T.

 

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SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  BLUE EAGLE LITHIUM INC.
   
Dated: September 13, 2019 By: /s/ Rupert Ireland
    Rupert Ireland, President and Chief Executive Officer and Chief Financial Officer

 

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