ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
GENERAL
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. See Item 5.03 filed on Form 8-K filed July 26, 2018 for more details.
Effective
August 9, 2018, the company entered into a property assignment agreement (“the Property Purchase
Agreement”) between Blue Eagle Lithium Inc., and Oriental Rainbow Group Limited, pursuant to which the
Company acquired 200 mineral claims or 4,000 Acres in the Railroad Valley of Nevada. The parties agreed on a purchase
price for the 200 mineral claims, which was paid in by the Company issuing and delivering to Oriental Rainbow Group Limited
500,000 restricted shares in the common stock of the capital of the company as well as a further Issuance to Plateau Ventures
LLC of 300,000 restricted shares as follows; 100,000 restricted shares upon the effective date, 100,000 restricted shares
ninety (90) days following the effective date and a final 100,000 restricted shares one hundred and eighty (180) days. See
Exhibit 10.2 - Property Purchase Agreement filed on Form 8-K filed August 16, 2018 for more details.
Effective August 14, 2018, Rami Tabet (“
Tabet
”)
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 of Common Stock, $0.0001 par value
(“
Common Stock
”), of the Company (the “
Shares
”) 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 (approximately 53.3%) of the outstanding shares of Common Stock of the Company, which is sufficient ownership to give
him the power to elect all of the members of our Board of Directors. Tabet owned no shares of Common Stock immediately after giving
effect to the sale of the Shares to Ireland. For more details see Exhibit 10.1 – Share Purchase Agreement filed on Form
8-K filed August 16, 2018 for more details.
Effective
August 20, 2018, Mr. Peter Roderick Murray (“
Mr. Murray”
) was appointed and accepted the opportunity to serve
as an additional member on the Board of Directors, Mr. Murray was also appointed by the Board, and accepted the opportunity to
serve, as the Company’s Chief Operating Officer (“
COO”
) on a consultancy basis. Pursuant to Mr. Murray’s
appointment as COO and a director of the Board, the Company and Mr. Murray entered into a consulting agreement effective as of
August 20, 2018. See Item 5.02 filed on form 8-K filed August 23, 2018 for more details.
The
company maintains its statutory resident agent’s office at 1859 Whitney Mesa Drive, Henderson, Nevada, 89014 and its business
office is located at 2831 St Rose Parkway, Suite 200, Henderson, NV, 89052. The company’s office telephone number is (702)
889-3369.
The
company has an authorized capital of 200,000,000 shares of Common Stock with a par value of $0.0001 per share, of which
76,045,195 shares of Common Stock are currently issued and outstanding.
The
company has not been involved in any bankruptcy, receivership or similar proceedings. There have been no material reclassifications,
merger consolidations or purchase or sale of a significant amount of assets not in the ordinary course of the company’s
business.
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.
Three-Month
Period Ended July 31, 2018 Compared to the Three-Month Period Ended July 31, 2017.
Our
net loss for the three-month period ended July 31, 2018 was $14,189 (2017: $7,914), which consisted of professional fees of $2,725
(2017: $2,975), general and administration expenses of $6,925 (2017: $1,945), and interest on loans of $4,539 (2017: $2,994).
We did not generate any revenue during either three-month period in fiscal 2018 or 2017.The higher expenses in the current fiscal
year primarily relate to an increase in general expenses.
The
weighted average number of shares outstanding was 75,000,000 for the three-month period ended July 31, 2018 and 75,000,000 for
the three-month period ended July 31, 2017.
LIQUIDITY
AND CAPITAL RESOURCES
As
at July 31, 2018, our current assets were $3,594 compared to $15,618 at April 30, 2018. As at July 31, 2018, our current liabilities
were $213,075 compared to $210,910 at April 30, 2018. Current liabilities at July 31, 2018 were comprised of $101,300 in loans
payable, $50,000 in convertible notes payable and $61,775 in accounts payable and accrued liabilities.
Stockholders’
deficit increased from $195,292 as of April 30, 2018 to $209,481 as of July 31, 2018.
Cash
Flows from Operating Activities
We have not generated positive cash flows
from operating activities. For the three-month period ended July 31, 2018, net cash flows used in operating activities were $9,524
consisting of a net loss of $14,189, an increase in accounts payable and accrued interest of $2,165 and a $2,500
increase in prepaid expenses. For the three-month period ended July 31, 2017, net cash flows used in operating activities
were $6,974.
Cash
Flows from Financing Activities
We
have financed our operations primarily from either the issuance of our shares of common stock or from loans. In the three-month
period ended July 31, 2018, we received $nil from financing activities. In the comparative period for fiscal 2017, we generated
$6,961 in proceeds relating to shareholder loans.
PLAN
OF OPERATION AND FUNDING
In
order to evaluate the lithium resource potential of the Railroad Valley Property, the company, plans to build a technical
database using cloud GIS technology populated by publicly available geological, oil well, water well and seismic data. This database
will be used to produce proprietary surface, subsurface and GIS maps. Additional technical studies addressing 3D mapping enhancement,
age dating, source migration, burial history, glacial rebound, X ray diffraction and grain size will help fine tune the database.
A budget of $350,000 will be required for personnel, 3rd party consultancy fees and software programs to complete these tasks
by the end of October 2019.
The
technical database construction is planned to take place in parallel to work programs and designed to complement findings from
the 43-101 report, fill technical data gaps and move the Railroad Valley understandings towards defensible resource estimates
and a Guide 7 report. Baseline surface sampling has already been conducted for the 43-101 and company operations team commence
field mapping, environmental impact assessments, shallow surface borehole planning, drilling and evaluation, seismic acquisition
program planning, 2D/3D seismic execution phase, processing and interpretation. A budget of $800,000 will be required for personnel,
3rd party consultancy fees and equipment to complete these tasks by the end of December 2019.
As
the data gaps are filled and resource potential quantified, planning will take place for deeper borehole drilling, production
borehole drilling and surface production pond/equipment construction. Environmental Impact Studies and permissions will be updated
to reflect planning requirements. The planning process is anticipated to require $250,000 and the execution phases is anticipate
to require $5,000,000 to be completed in December 2020.
We
estimate that the company we will require approximately
$6,400,000 to conduct the full exploration program over a two year period. This amount will be used to pay for prospecting
and geological mapping, airborne surveys, lodging and food for workers, transportation of workers to and from the work sites,
fuel, pick-up truck rentals, assays, drilling, equipment rental, additional claim staking, and supervision.
The
officers and directors have agreed to pay all costs and expenses of having the Company comply with the federal and state
securities laws (associated with being a public company) should the Company be unable to do so. We estimate that these
costs will be approximately $20,000 per year. Our officers and directors have also agreed to pay the other expenses of the Company,
excluding those direct costs and expenses of data gathering and mineral exploration, should the Company be unable to do so. To
implement our business plan, we will need to secure financing for our business development. We have no source for funding at this
time. If we are unable to raise additional funds to implement our business plan and satisfy our reporting obligations,
there is a risk the company may be unable to continue as a going concern and/or that investors will no longer have access
to current financial and other information about our business affairs. Additional funding to conduct either our full exploration
program or a partial exploration program will depend upon our ability to secure loans or obtain either private or public financing.
We have had some preliminary negotiations for funding that have been unsuccessful and we currently have not undertaken any further
negotiations. There is no assurance that we will be able to obtain such funding on any terms or terms acceptable to us and if
adequate funds are not secured in a timely fashion, then there is a substantial risk that the Company will be unable to implement
our business plan and/or continue as a going concern. Accordingly, there is no assurance that we will be able to continue
in business.
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 to investors.
GOING
CONCERN
The
independent auditors’ report accompanying our April 30, 2018 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.