GoldQuest Mining Corp. — Interim / Quarterly Report 2021

Nov 26, 2021

Michichi Capital Corp.

Management Discussion and Analysis

For the Period from Incorporation on March 16, 2021 to September 30, 2021 and the three-month period ended September 30, 2021

Michichi Capital Corp. Management Discussion and Analysis For the Period from Incorporation on March 16, 2021 to September 30, 2021 and the three-month period ended September 30, 2021

The following management’s discussion and analysis (“MD&A”) should be read in conjunction with the Corporation’s financial statements and notes thereto for the periods ended September 30, 2021.

Additional information relating to the Corporation is available on SEDAR at www.sedar.com

This MD&A was prepared by management of Michichi Capital Corp. (“the Corporation”) and was approved by the board of directors on November 26, 2021. All amounts are in Canadian dollars unless otherwise stated.

FORWARD LOOKING STATEMENTS

Certain statements contained in this document constitute “forward-looking statements”. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “propose”, “anticipate”, “believe”, used by any of the Corporation’s management, are intended to identify forward-looking statements. Such statements reflect the Corporation’s forecasts, estimates and expectations, as they relate to the Corporation’s current views based on their experience and expertise with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Corporation’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forwardlooking statements. There can be no assurance that it will be completed as proposed or at all. The Corporation does not intend, and does not assume any obligation, to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments unless required by law.

DESCRIPTION OF BUSINESS

Michichi Capital Corp. (the “Corporation”) was incorporated under the British Columbia Business Corporations Act on March 16, 2021 (the “Date of Incorporation”) and is classified as a Capital Pool Company (“CPC”) as defined by Policy 2.4 of the TSX Venture Exchange (the “Exchange”) corporate finance manual. On July 15, 2021, the Corporation closed its Initial Public Offering (the “Offering”). Consequently, the Corporation’s common shares (“Common Shares”) became listed, and commenced trading on the Exchange on July 15, 2021 under the trading symbol “MCCP.P”.

The principal business of the Corporation is to identify and evaluate assets or businesses with a view to completing a Qualifying Transaction (“QT”). The Corporation has not commenced commercial operations and has no significant assets other than cash. The Corporation’s ability to continue operations as intended are dependent upon its ability to identify, evaluate and negotiate an acquisition, or business, or an interest therein. Such an acquisition or business will be subject to the approval of the Exchange and in case of a non-arm’s length transaction approval of the majority of the Corporation’s minority shareholders.

The Corporation and Psilio Tec Health Solutions Inc. (‘PsilioTec”), announced that they have entered into a non-binding letter of intent dated August 12, 2021, pursuant to which the Corporation and PsilioTec intend to complete a business combination or other similarly structured transaction (the “Proposed Transaction”) which will constitute a reverse take-over of the Corporation. It is intended that the Proposed Transaction will be an arm’s length QT. Psilio Tec rebranded and launched as Zylorion Health on October 18, 2021.

Whilst a QT has been identified, the ability of the Corporation to complete the transaction is subject to various conditions including shareholder and regulatory approval. There is no assurance that the Corporation will be successful in completing the QT.

The head office of the Corporation is located at Suite 1242 – 12 Royal Vista Way NW, Calgary, AB, T3R 0N2.

The registered and records office of the Corporation is located at 1200 Waterfront Centre, 200 Burrard Street, Vancouver BC, V6C 3L6.

Michichi Capital Corp. Management Discussion and Analysis For the Period from Incorporation on March 16, 2021 to September 30, 2021 and the three-month period ended September 30, 2021

OPERATIONAL HIGHLIGHTS AND SIGNIFICANT DEVELOPMENTS

For the period from incorporation on March 16, 2021 until September 30, 2021, the Corporation’s activities were focused on forming the entity as a CPC, completing the Offering and advancing the QT. On July 15, 2021, the Corporation completed its Offering and listed its shares on the Exchange. The Corporation is currently focused on completing the QT.

Closing of the Initial Public Offering

On July 15, 2021, the Corporation closed its Offering issuing 1,500,000 Common Shares at a price of $0.50 per Common Share for gross proceeds of $750,000. In connection with the Offering, Lightyear Capital Inc. (the “Agent”) was paid a cash commission of $75,000, a corporate finance fee of $10,500 and reimbursable legal and other expenses of $25,513. Further, the Company made cash payments amounting to $13,364 to other consultants in relation to this transaction.

The Corporation also granted the Agent 150,000 warrant options to the agent that have an exercise price of $0.50 per Common Share and expire in July 2023 (the “Agent’s Warrants”). The fair value of the warrants was $39,188.

Options

The Corporation adopted an incentive stock option plan (the “Plan”). The Plan provides that the board of directors of the Corporation may grant to directors, officers, employees and consultants to the Corporation non-transferrable options to purchase Common Shares, provided the number of Common Shares reserved for issuance do not exceed 10% of the issued and outstanding Common Shares upon closing of the Offering.

On July 15, 2021, concurrent with the closing of the Offering the Corporation granted 210,000 stock options to directors and officers with an exercise price of $0.50 per Common Share (the “Options”). The fair value of these options was $77,871.

SELECTED FINANCIAL INFORMATION

The following table summarizes the Corporation’s key financial results for the period from incorporation on March 16, 2021 to September 30, 2021.

				As at and
Selected Financial				for the
Information	Period	Three	Three	period
	from March	months	months	from March
	16, 2021 to	ended	ended	16, 2021 to
	March 31,	June 30,	September	September
	2021	2021	30, 2021	30, 2021
Current and total assets				$ 676,459
Current and total liabilities				41,878
Total shareholders’ equity				634,581
General and administrative expenses	$ (2,400)	$ (70,981)	$ (64,376)	$ (137,757)
Share based compensation	-	-	(77,871)	(77,871)
Net loss for the period	(2,400)	(70,981)	(142,247)	(215,628)
Lossper share – basic and diluted	-	(0.12)	(0.08)	(0.19)

Michichi Capital Corp. Management Discussion and Analysis For the Period from Incorporation on March 16, 2021 to September 30, 2021 and the three-month period ended September 30, 2021

SELECTED FINANCIAL INFORMATION (CONTINUED)

The Corporation does not have any operations and will not conduct any business other than the identification and evaluation of business assets to complete a QT.

During the three-month period ended September 30, 2021, the Corporation recorded a net loss and comprehensive loss of $142,247. The net loss is comprised of general and administrative expenses of $64,376 and share based compensation of $77,871. General and administrative expense included $26,057 in legal costs, $10,700 in auditor fees and $27,619 in other administrative costs.

For the period from March 16, 2021 to September 30, 2021, the corporation recorded a net loss of $215,628. The net loss YTD is comprised of general and administrative expenses of $137,757 and share based compensation of $77,871. General and administrative expense included $82,862 in legal costs, $21,400 in auditor fees and $33,495 in other administrative costs.

FINANCIAL CONDITION INCLUDING CASH FLOWS, LIQUITDY AND CAPITAL RESOURCES

As at September 30, 2021, the Corporation had current assets of $676,459 and current liabilities of $41,878. Current assets included a cash balance of $667,813. Based on current information, the Corporation anticipates that its working capital is sufficient to meet its expected ongoing obligations. However, there is no assurance the Corporation will be able to obtain adequate financing in the future. Further equity and debt financing may be required.

OUTSTANDING SHARE DATA

The Corporation is authorized to issue an unlimited number of Common Shares and an unlimited number of Preferred Shares.

As at September 30, 2021, the Corporation had 2,100,000 Common Shares issued and outstanding.

On July 15, 2021, the Corporation closed its Offering and issued an additional 1.5 million Common Shares, 150,000 Agents Warrants and 210,000 Options (see “Operational Highlights and Significant Developments” section of this MD&A and note 3 of the interim financial statements).

ESCROW

Concurrent with the closing of the Offering and pursuant to the Escrow Agreement signed June 23, 2021 between the Corporation and Computershare Investor Services Inc. as escrow agent, 600,000 Common Shares and 210,000 Options held by the directors and officers of the Corporation were placed into escrow, to be released in accordance with Exchange Policy 2.4. Subject to various requirements of Exchange Policy 2.4, the escrow provisions are generally that 25% of the escrowed shares are released upon completion of a qualifying transactions and an additional 25% are released every 6 months thereafter.

Michichi Capital Corp. Management Discussion and Analysis For the Period from Incorporation on March 16, 2021 to September 30, 2021 and the three-month period ended September 30, 2021

CASH RESTRICTION

The proceeds raised from the issuance of Common Shares are restricted in use such that they are to be used to identify and complete the QT and certain general and administrative costs of the Corporation. These restrictions apply until the completion of a QT by the Corporation as defined under the Exchange Policy 2.4.

OFF-BALANCE SHEET ARRANGEMENTS

There are no off-balance sheet arrangements as at September 30, 2021.

RELATED PARTY TRANSACTIONS

During the period from incorporation until June 30, 2021, the Corporation did not pay any cash compensation. Concurrent with the closing of the Offering on July 15, 2021, the Corporation issued 210,000 options to directors of the Corporation. For the quarter ended September 30, the company recorded sharebased compensation of $77,871.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Corporation’s significant accounting polices and estimates are disclosed in the financial statements for the period ended September 30, 2021.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Capital Management

The Corporation’s objective when managing capital is to maintain its ability to continue as a going concern, in order to provide returns for the shareholders and benefits for other stakeholders. The Corporation includes equity, comprised of issued Common Shares, in the definition of capital.

The Corporation’s primary objective, with respect to its capital management, is to ensure that it has sufficient cash resources to fund the identification and evaluation of potential acquisitions. To secure the additional capital necessary to purse this objective, the Corporation may attempt to raise additional funds through the issuance of equity and by securing strategic partners.

Whilst the Corporation is a CPC it is subject to externally imposed capital requirements under the policies and regulations of Exchange applicable to CPC entities. In summary, the Corporation is required to use its available funds to identify and complete a QT and fund reasonable general and administrative costs, including costs related to the initial public offering of the CPC. There are prohibitions under the policies and regulations of the Exchange to use available funds for payments to non-arm’s length parties in the form of compensation such as salaries, consulting fees and bonuses.

Risk disclosures

Credit risk:

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Corporation’s cash on hand. The carrying amount of cash and accounts receivable represents the maximum credit exposure to the Corporation. Accounts receivable relates to GST whereby the collection risk is minimal. The Corporation manages credit exposure related to cash by selecting financial institution counterparties with high credit ratings or retaining the cash in trust with external legal counsel.

Michichi Capital Corp. Management Discussion and Analysis For the Period from Incorporation on March 16, 2021 to September 30, 2021 and the three-month period ended September 30, 2021

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

Liquidity risk:

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The Corporation’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. The Corporation has accounts payable and accrued liabilities of $41,878 as at September 30, 2021 and does not have significant exposure to liquidity risk.

Market risk:

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices. The Corporation does not have significant exposure to these risks.

Covid-19 Pandemic:

On March 11, 2020, the World Health Organization declared the COVID-19 coronavirus outbreak a pandemic, which continues to spread globally. As a CPC with no commercial operations, the COVID-19 pandemic has not had a significant impact on the Company’s routine operations or on the carrying value of its assets. However, the pandemic’s effect on broader capital markets may hinder the Company’s ability to complete the IPO or identify and complete a QT.

SUBSEQUENT EVENTS

There are no events after the reporting date which could have had a material effect on the financial position of the Company as at September 30, 2021 and on the profit or loss for the period ended on that date which have not been adequately provided for or disclosed in the financial statements.

OTHER INFORMATION

The policies of the Exchange prohibit Capital Pool Companies from carrying on formal investor relations activities. Corporate communications and investor inquiries are handled by the Directors of the Corporation. Additional information about the Corporation is available on SEDAR at www.sedar.com.