Notes
to the Financial Statements
April
30, 2018
Note
1
Nature and Continuance of Operations
Wishbone
Pet Products Inc. was incorporated in the State of Nevada on July 30, 2009. The Company has been in the development stage since
its formation and has not realized any revenues from its planned operations. The Company was engaged in the business of developing,
manufacturing, marketing and selling dog waste removal devices. In May 2018 the Company decided to change its business focus on
the mining sector intending to acquire mineral assets related to lithium exploration.
On
May 10, 2018, a majority of the Company’s stockholders approved a share split of the issued and outstanding shares of common
stock, on a 20 for 1 basis, thereby increasing the issued and outstanding share capital from 3,750,000 to 75,000,000. On July
12, 2018 the Company effectively changed its name from Wishbone Pet Products Inc. to Blue Eagle Lithium Inc. These financial statements
give retroactive effect to both these changes.
The
Company has chosen an April 30 fiscal year end.
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 $217,292 since inception, has yet to achieve profitable operations and further 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 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 may seek additional equity
as necessary and it expects to raise funds through private or public equity investment 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
Summary of Principal Accounting Policies
Basis
of presentation
The
accompanying financial statements are stated in US dollars and have been prepared in accordance with generally accepted accounting
principles in the United States of America.
Cash
and cash equivalents
The
Company considers all short-term highly liquid investments that are readily convertible to known amounts of cash and have original
maturities of three months or less to be cash equivalents.
Use
of estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management
makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when
the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate,
which is typically in the period when new information becomes available to management. Actual results could differ from those
estimates.
Income
Taxes
The
Company follows the guideline under ASC Topic 740 “Income Taxes which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.
Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax
bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory
tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Since the Company is in the
developmental stage and has losses, no deferred tax asset or income taxes have been recorded in the financial statements.
Financial
instruments
The
Company’s financial instruments consist of cash, accounts payable and accrued liabilities and their carrying values approximate
fair value because of their short-term nature. Management is of the opinion that the Company is not exposed to significant interest
or credit risks arising from these financial instruments.
Fair
value measurements
The
Company follows the guidelines in ASC Topic 820 “Fair Value Measurements and Disclosures”. Fair value is defined as
the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required
to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact
and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such
as inherent risk, transfer restrictions and credit risk.
The
Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels
and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair
value measurement:
Level
1 — Quoted prices in active markets for identical assets or liabilities.
Level
2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for
identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities
Level
3— inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including
option pricing models and discounted cash flow models.
ASC
Topic 820, in and of itself, does not require any fair value measurements. As at April 30, 2018, the Company did not have assets
or liabilities subject to fair value measurement.
Loss
per share
The
Company reports basic loss per share in accordance with ASC Topic 260 “Earnings Per Share” (“EPS”). Basic
loss per share is based on the weighted average number of common shares outstanding and diluted EPS is based on the weighted average
number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net loss (numerator)
applicable to common stockholders by the weighted average number of common shares outstanding (denominator) for the period. There
are no potentially dilutive securities outstanding and therefore, diluted earnings per share is not presented. All per share and
per share information are adjusted retroactively to reflect stock splits and changes in par value.
Concentration
of credit risk
The
Company places its cash and cash equivalents with a high credit quality financial institution. The Company maintains United States
Dollars at a bank in Romania that are not insured. The Company minimizes its credit risks associated with cash by periodically
evaluating the credit quality of its primary financial institution.
Website
Development Costs
The
Company recognizes the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost”
that codified the American Institute of Certified Public Accountants (“AICPA”) Statement of Position (“SOP”)
NO. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Relating to website
development costs the Company follows the guidance pursuant to the Emerging Issues Task Force (EITF) NO. 00-2, “Accounting
for Website Development Costs”. The website development costs are divided into three stages, planning, development and production.
The development stage can further be classified as application and infrastructure development, graphics development and content
development. In short, website development cost for internal use should be capitalized except content input and data conversion
costs in content development stage. Amortization is based on estimated useful life on a straight line basis. At the year ended
April 30, 2018, the website was impaired.
Convertible
debt
The
Company accounts for convertible debt according to ASC 470, “Debt with Conversion and Other Options”. No portion of
the proceeds is attributable to the conversion feature when there is no beneficial conversion feature (“BCF”), There
is no BCF when the debt instrument is convertible into common stock at a specified price at the option of the holder and when
the debt instrument is issued at a price not significantly in excess of the face amount.
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.
Note
4
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 totalling $2,000 on March 1, 2018.
The following were the principal loan amounts and accrued interests remaining as at April 30, 2018 and 2017:
|
|
April
30, 2018
|
|
|
|
|
April
30, 2017
|
|
|
|
Principal
|
|
|
Interest
|
|
|
|
|
|
|
|
Principal
|
|
|
Interest
|
|
|
|
|
|
|
Amount
|
|
|
Accrued
|
|
|
Total
|
|
|
|
|
Amount
|
|
|
Accrued
|
|
|
Total
|
|
Dec 31 12
|
|
$
|
17,000
|
|
|
$
|
10,880
|
|
|
$
|
27,880
|
|
|
Dec 31 12
|
|
$
|
17,000
|
|
|
$
|
8,840
|
|
|
$
|
25,840
|
|
Aug 13 13
|
|
|
20,000
|
|
|
|
11,300
|
|
|
|
31,300
|
|
|
Aug 13 13
|
|
|
20,000
|
|
|
|
8,900
|
|
|
|
28,900
|
|
Dec 04 14
|
|
|
11,000
|
|
|
|
4,498
|
|
|
|
15,498
|
|
|
Dec 04 14
|
|
|
11,000
|
|
|
|
3,178
|
|
|
|
14,178
|
|
Jun 26 15
|
|
|
10,000
|
|
|
|
3,417
|
|
|
|
13,417
|
|
|
Jun 26 15
|
|
|
10,000
|
|
|
|
2,217
|
|
|
|
12,217
|
|
Jan 25 16
|
|
|
3,671
|
|
|
|
36
|
|
|
|
3,707
|
|
|
Jan 25 16
|
|
|
4,500
|
|
|
|
676
|
|
|
|
5,176
|
|
Mar 22 16
|
|
|
17,725
|
|
|
|
4,520
|
|
|
|
22,245
|
|
|
Mar 22 16
|
|
|
17,725
|
|
|
|
2,393
|
|
|
|
20,118
|
|
Jul 28 16
|
|
|
2,700
|
|
|
|
567
|
|
|
|
3,267
|
|
|
Jul 28 16
|
|
|
2,700
|
|
|
|
243
|
|
|
|
2,943
|
|
Oct 31 16
|
|
|
5,161
|
|
|
|
929
|
|
|
|
6,090
|
|
|
Oct 31 16
|
|
|
5,161
|
|
|
|
309
|
|
|
|
5,470
|
|
Jan 31 17
|
|
|
3,902
|
|
|
|
585
|
|
|
|
4,487
|
|
|
Jan 31 17
|
|
|
3,902
|
|
|
|
117
|
|
|
|
4,019
|
|
Apr 28 17
|
|
|
3,180
|
|
|
|
382
|
|
|
|
3,562
|
|
|
Apr 28 17
|
|
|
3,180
|
|
|
|
-
|
|
|
|
3,180
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|
Jun 03 17
|
|
|
6,961
|
|
|
|
766
|
|
|
|
7,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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$
|
101,300
|
|
|
$
|
37,880
|
|
|
$
|
139,180
|
|
|
|
|
$
|
95,168
|
|
|
$
|
26,873
|
|
|
$
|
122,041
|
|
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.
|
|
Principal
|
|
|
Interest
|
|
|
|
|
|
|
Amount
|
|
|
Accrued
|
|
|
Total
|
|
Dec 04 17
|
|
$
|
50,000
|
|
|
$
|
2,500
|
|
|
$
|
52,500
|
|
Note
5
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.
No
shares were issued during the years ended April 30, 2018 and April 30, 2017.
Note
6
Income Taxes
Income
tax recovery differs from that which would be expected from applying the effective tax rates to the net loss for the years ended
April 30, 2018 and 2017 as follows:
|
|
For the year Ended
|
|
|
|
April 30, 2018
|
|
|
April 30, 2017
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
$
|
(46,790
|
)
|
|
$
|
(29,893
|
)
|
Statutory and effective tax rate
|
|
|
21
|
%
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
Income tax expense (recovery) at the effective rate
|
|
$
|
(9,826
|
)
|
|
$
|
(10,164
|
)
|
Permanent differences
|
|
|
-
|
|
|
|
-
|
|
Tax losses carry forward deferred
|
|
|
9,826
|
|
|
|
10,164
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery and income taxes recoverable
|
|
$
|
-
|
|
|
$
|
-
|
|
The
Company has accumulated non-capital income tax losses of $ 217,292. Under normal circumstances the losses will expire in the years
2031 to 2038.
As
at April 30, 2018, the tax effect of the temporary timing differences that give rise to significant components of deferred income
tax asset are noted below. A valuation allowance has been recorded as management believes it is more likely than not that the
deferred income tax asset will not be realized.
Tax attributes
|
|
April 30, 2018
|
|
|
April 30, 2017
|
|
|
|
|
|
|
|
|
Tax loss carried forward
|
|
$
|
217,292
|
|
|
$
|
170,502
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax assets
|
|
|
67,797
|
|
|
|
57,971
|
|
Valuation allowance
|
|
|
(67,797
|
)
|
|
|
(57,971
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The
Company’s tax jurisdictions are the United States of America and in the State of Nevada. At April 30, 2018, the Company
is subject to examination for all unfiled tax years. The Company has not filed tax returns since inception.
The
US Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017. The Tax Reform Act reduces the US
federal corporate tax rate from 35% to 21% effective January 1, 2018, requires companies to pay a one-time transition tax on earnings
of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. As
of April 30, 2018, we have not completed the accounting for the tax effects of enactment of the Tax Reform Act; however, we have
made a reasonable estimate of the effects on existing deferred tax balances. These amounts are provisional and subject to change.
Note
7
Subsequent Events
The
Company received majority consent from its stockholders to change its name from Wishbone Pet Products Inc. to Blue Eagle Lithium
Inc., and to effect a forward stock split of its issued and outstanding common shares on the basis of twenty (20) post-split shares
of common stock for every one (1) pre-split share of common stock.
The
Company evaluated all events and transactions that occurred after April 30, 2018 up through the date the Company issued these
financial statements and found no other subsequent events that needed to be reported.