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. 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 (the “Shares”)
of Common Stock, $0.0001 par value (“Common Stock”), of the Company 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 is authorized to issue up to 200,000,000 shares of Common Stock with a par value of $0.0001 per share, of which 76,183,855
shares of Common Stock are currently issued and outstanding as at March 15, 2019. The Company’s common shares are listed
on the OTCQB under the symbol “BEAG”.
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.
Railroad
Valley Project
The
Railroad Valley property covers 4,000 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 is one of the largest trapped drainage basins in
North America and was first identified as lithium rich by the US Geological Survey with the potential to host lithium bearing
brines in its extensive 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 ft, the highstand shoreline of the southeast
side of Railroad Valley Lake at Heath Canyon is 4,860 ft. The rugged Grant and Quinn Ranges forms the eastern margin of the valley
and rises to 10,945 ft ASL at Troy Peak, while the undulant Pancake Range west of the valley reaches 6,260 ft ASL 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 Holocene time 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 up to 275 ppm 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 48 miles SW on US Hwy 6 toward Tonopah. A well-marked turnoff
to the southeast just inside the Railroad Valley leads to a well-maintained gravel road constructed for oil extraction and ranch
access along the east margin of the Railroad Valley basin provide access west of SRRV property. A former oilfield access gravel
road heads a few miles NW to the eastern side of the property. The total distance to the property form Ely is approximately 68
miles.
During
the period ended December 31, 2018, the Company conducted baseline surface soil samples, rock samples and water samples located
within the property. A total of 70 soil samples, 10 rock samples and 7 water samples have been analyzed. As a result, the Company
has initiated its recommended work program from the positive technical report from Tekhne Research. The recommended 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 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.
Geologix
Technologies will provide a secure cloud database constructed with an asset focused, geological information system (GIS) compliant
framework. The database is being populated with data available in historical public records, oil and water well records, seismic
date, remote sensing data, digital elevation models, lithological and geological maps. The database will be utilized to produce
propriety 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
recommended work program consists of the following with a budget of approximately $950,000 exclusive of contingency allowance
and applicable taxes:
Phase
1
1.
Collect and synthesize existing oil field data (seismic, gravity and drill logs)
2.
AMT surveys
3.
Sample playa soils
4.
Sample analysis
5.
Geology, field supervision and support, reports and data analysis
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 and Nine months period ended January 31, 2019
|
|
For
the three months
|
|
|
For
the nine months
|
|
|
|
ended
January 31,
|
|
|
ended
January 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
$
|
592
|
|
|
$
|
-
|
|
|
$
|
987
|
|
|
$
|
-
|
|
Consulting
fees
|
|
|
-
|
|
|
|
-
|
|
|
|
76,250
|
|
|
|
-
|
|
Management
fees
|
|
|
33,600
|
|
|
|
-
|
|
|
|
182,550
|
|
|
|
-
|
|
General
& administrative expenses
|
|
|
12,952
|
|
|
|
4,500
|
|
|
|
38,004
|
|
|
|
8,564
|
|
Marketing
and promotional expenses
|
|
|
2,654
|
|
|
|
-
|
|
|
|
81,527
|
|
|
|
-
|
|
Mineral
exploration expenses
|
|
|
34,742
|
|
|
|
-
|
|
|
|
67,242
|
|
|
|
-
|
|
Professional
fees
|
|
|
16,450
|
|
|
|
2,175
|
|
|
|
36,762
|
|
|
|
8,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
EXPENSES
|
|
|
100,990
|
|
|
|
6,675
|
|
|
|
483,332
|
|
|
|
16,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
LOSS
|
|
$
|
(100,990
|
)
|
|
$
|
(6,675
|
)
|
|
$
|
(483,332
|
)
|
|
$
|
(16,789
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on loans
|
|
|
5,081
|
|
|
|
4,064
|
|
|
|
14,159
|
|
|
|
10,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME/(LOSS)
|
|
$
|
(106,071
|
)
|
|
$
|
(10,739
|
)
|
|
$
|
(497,481
|
)
|
|
$
|
(26,911
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share, basic and diluted
|
|
$
|
(0.0014
|
)
|
|
$
|
(0.0001
|
)
|
|
$
|
(0.007
|
)
|
|
$
|
(0.0004
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding basic and diluted
|
|
|
75,166,537
|
|
|
|
75,000,000
|
|
|
|
75,673,607
|
|
|
|
75,000,000
|
|
Three
Months Period Ended January 31, 2019
Net
Loss.
During the three months period ended January 31, 2019, the Company had a net loss of $106,071 as compared to the same
period for the prior fiscal period of $10,739 net loss. The increase loss of $95,332 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.
The
weighted average number of shares outstanding was 75,166,537 for the three months period ended January 31, 2019 and 75,000,000
for the three months period ended January 31, 2018.
Operating
Expenses.
The Company’s operating expenses during the three months period ended January 31, 2019 were $100,990 compared
to $6,675 for the same period ended January 31, 2018. The increase of $94,315 which was primarily due to the increase in the Company’s
operations relating corporate management fees of $33,600, professional fees of $16,450, marketing and promotional expenses of
$2,654, and general and administrative expenses of $12,952. The Company has commenced preliminary exploratory activities and incurred
expenditures of $34,742 which included site visits and work at the mineral properties.
Nine
Months Period Ended January 31, 2019
Net
Loss.
During the nine months period ended January 31, 2019, the Company had a net loss of $497,481 or $ (0.007) per share.
The loss 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, compared
to the same period for the prior fiscal period when the Company had a net loss of $26,911 or $(0.0004) per share, which was primarily
due to general & administrative expenses, professional fees and interest on loans.
The
weighted average number of shares outstanding was 75,673,607 for the nine months period ended January 31, 2019 and 75,000,000
for the nine months period ended January 31, 2018.
Operating
Expenses.
The Company’s operating expenses during the nine months period ended January 31, 2019 were $483,332 compared
to $16,789 for the same period ended January 31, 2018. The increase of $466,533 which was primarily due to the increase in the
Company’s operations relating to shares issued to consultants for their services of $76,000, shares issued to corporate
management of $118,750, corporate management fees of $63,800, professional fees of $36,762, marketing and promotional expenses
of $81,527, mineral exploration expenses of $67,242, and general and administrative expenses of $38,004.
LIQUIDITY
AND CAPITAL RESOURCES
Nine
Months Period Ended January 31, 2019
As
at January 31, 2019, our current assets were $10,498 compared to $15,618 as of April 30, 2018. As of January 31, 2019, our current
liabilities were $326,817 compared to $210,910 at April 30, 2018. Current liabilities as of January 31, 2019 were comprised of
$152,800 in loans payable, $50,000 in convertible notes payable and $124,017 in accounts payable and accrued liabilities. The
Company had working capital deficiency of $316,319 as of January 31, 2019 compared to working capital deficiency of $195,292 as
of April 30, 2018.
During
the nine months ended January 31, 2019, the Company received net proceeds of $189,975 from private placement subscriptions. As
a result, stockholders’ equity (deficit) increased from $(195,292) as of April 30, 2018 to $244,952 as of January 31, 2019.
Cash
Flows from Operating Activities
We
have not generated positive cash flows from operating activities. For the nine months period ended January 31, 2019, net cash
flow used in operating activities were $(241,837) consisting of a net loss of $497,481, an increase in accounts payable and accrued
interest of $64,407, and a $4,500 decrease in prepaid expenses. For the nine months period ended January 31, 2018, net cash flow
used in operating activities were $(40,024). During January 31, 2019, non-cash adjustments to reconcile net income used in operating
activities include $194,750 for shares issued for consulting and management services.
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 nine months period ended January 31, 2019, we received $189,975 in Common Stock subscription proceeds, $39,000 relating
to shareholder loans and $12,500 in proceeds from notes payable. In the comparative period for fiscal 2018, we generated $6,961
in proceeds relating to shareholder loans and $50,000 in proceeds from notes payable.
Cash
Flows from Investing Activities
We
have spent $9,258 to develop our website and infrastructure during the nine months period ended January 31, 2019 as compared to
$5,000 for the same time period for the prior for fiscal period in 2018.
PLAN
OF OPERATION AND FUNDING
In
order to evaluate the lithium resource potential of the Railroad Valley Property, the company, plans to develop a technical database
using cloud geographic information system (“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, third party consultancy fees
and software programs to complete these tasks by the end of October 2019.
The
technical database development is planned to take place in parallel to work programs and is designed to fill technical data gaps
and move the Railroad Valley understandings towards defensible resource estimates. Baseline surface sampling has already been
conducted at the property in Railroad Valley and the Company’s operations team has commenced field mapping, environmental
impact assessments, shallow surface borehole planning, drilling and evaluation, seismic acquisition program planning, 2D/3D seismic
execution phase, processing and interpretation. We project that a budget of $800,000 will be required for personnel, third party
consultancy fees and equipment to complete these objectives by the end of December 2019.
As
the data gaps are filled and resource potential quantified, we are planning 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 anticipated to require
$5,000,000 to be ideally completed in December 2020.
We
estimate that the company will require approximately $6,400,000 to conduct the full exploration program over a two-year period,
which 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.
Our
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 of funding at this time and, to date, have
largely relied on private placement issuances of our Common Stock and debt for our operations. 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 implement our full business plan 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 its business plan and/or continue as a going concern, which
could lead to significant diminution in the value of the Company or the failure of our 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.
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.
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 January 31, 2019, the Company had a cash and cash equivalent balance of $10,498 and current liabilities
of $326,817. 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.
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, 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.
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 $316,319 as of January 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.