Labrador Resources Inc. — Management Reports 2025

Feb 28, 2025

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LABRADOR RESOURCES INC.
(Formerly, Labrador Technologies Inc.)

YEAR ENDED OCTOBER 31, 2024
MANAGEMENT'S DISCUSSION & ANALYSIS

Introduction

The following Management Discussion and Analysis ("MD&A") is prepared in accordance with National Instrument 51-102F1, and should be read in conjunction with the audited financial statements of Labrador Resources Inc. (formerly, Labrador Technologies Inc. ("LTX" or the "Company") for the years ended October 31, 2024 and 2023. Additional information with respect to LTX can be found on SEDAR+ at www.sedarplus.ca. The functional and presentation currency is the Canadian dollar.

International Financial Reporting Standards

The Company's financial statements for the twelve-month periods ended October 31, 2024, and October 31, 2023, have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). For each reporting period in 2024, the Company has presented comparative information for 2023, both for interim and annual financial statements, as applicable, on an IFRS basis.

Non-IFRS Measures

In addition to the financial measures reported in accordance with IFRS, the Company uses certain non-IFRS measures, such as working capital, to supplement the analysis of financial performance, financial position, and cash flow. These non-IFRS measures provide investors and management with an alternative method for assessing the Company's operating results and financial position, focusing specifically on the Company's liquidity and capital resources.

Working capital is calculated as current assets subtracted by current liabilities and is intended to provide insight into the Company's liquidity position. Management uses this measure to evaluate the Company's ability to meet its short-term obligations and fund ongoing operations. This measure is derived from the Statement of Financial Position and can vary significantly over time as it is influenced by seasonal factors, changes in business operations, and the timing of cash receipts and payments.

These non-IFRS measures do not have a standardized meaning under IFRS and, therefore, may not be comparable to similar measures reported by other companies. They should be considered as supplementary information rather than as a substitute for measures of performance or financial position prepared in accordance with IFRS.

The Company also provides a reconciliation of non-IFRS measures to their most directly comparable IFRS measures where applicable. However, the reader is cautioned that these measures are provided to enhance the overall understanding of the Company's current liquidity and capital position and should not be viewed as a measure of performance or indicative of future results.

Forward-Looking Information

This MD&A contains forward-looking information and statements within the meaning of applicable Canadian securities legislation and the U.S. Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties, and other factors, including those described in this MD&A, which may cause actual results or events to differ materially from those expressed or implied by such forward-looking information.

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Forward-looking statements are typically identified by words such as "may," "will," "could," "expects," "intends," "plans," "anticipates," "believes," "estimates," "projects," or other similar expressions. These statements are based on management's current expectations, beliefs, and assumptions and include, but are not limited to, statements about our business prospects, strategies, future financial results, capital expenditures, intentions, and growth potential.

Factors that may cause actual results to differ materially include, but are not limited to, the risks related to our ability to raise capital, retain and recruit qualified staff, manage growth effectively, protect intellectual property, and adapt to regulatory changes.

Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to update any forward-looking statements to reflect new information, future events, or otherwise, except as required by law. These statements are subject to change and reflect management's current expectations as of the date of this MD&A.

This MD&A is dated as of February 24, 2024.

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Outlook

The Company is actively seeking to expand its technical team to take advantage of its oil and gas property - followed by expansion into other opportunities in the oil and gas sector. General and administrative expenses have decreased, which were offset by higher finance costs. Management remains committed to maintaining financial discipline until operations in the oil and gas sector that contribute positive cash flow have been completed.

Highlights

On September 3, 2024, the Company entered into a non-binding letter agreement to acquire 100% of the shares of Critical Path Resources Corp., an exploration company holding sixteen contiguous uranium exploration mineral claims in northern Saskatchewan (the "Acquisition Agreement"). The Acquisition Agreement contemplated that consideration would be paid to the vendor via the issuance of 5,800,000 common shares of the Company. Among other conditions, including obtaining regulatory approvals including that of the TSX Venture Exchange, closing remained conditional upon the completion of a private placement of the Company's common shares in the minimum amount of $800,000. The private placement was required to provide funding to complete exploration work commitments made part of the Acquisition Agreement. The Acquisition Agreement contemplated that additional common shares or cash payments would be made to the vendors upon the Company reaching certain exploration milestones. The acquisition agreement required that certain of the Company's creditors restructure existing debt to extend repayment terms and also to limit the assets that the creditor's general security agreements pertained to.

On October 31, 2024 the Acquisition Agreement was terminated by mutual consent as a result of the Company not having completed the private placement in the minimum amount.

On June 18, 2024, the Company settled its two-year promissory note, issued on April 5, 2022, in cash. The note had a face value of $50,000 and bore interest at a rate of 7% per annum.

On February 28, 2024, February 2, 2023, and October 30, 2023, the Company entered into debt extending agreements (the "Debt Extension Agreements") regarding certain indebtedness of the Company that were acquired by an arm's length party in the amount of $291,662 as at October 31, 2024. The Debt Extension Agreements extended the repayment terms of the debt such that it is repayable on November 30, 2025.

On February 2, 2023, a promissory note was issued in the amount of $232,000 in relation to the acquisition of the Company's oil and gas property. On February 28, 2024, the term of promissory note was extended from February 28, 2025 to November 30, 2025.

On February 2, 2023, a convertible debenture in the face value amount of $350,000 was issued by the Company in respect of the closing of the acquisition of the Company's oil and gas property. The convertible debenture was not convertible by the Company or the Vendor until a minimum of six months following the closing date. The conversion price was $0.05 per common share for the period ending 12 months following closing and at price of $0.10 per common share for the following 12 months. On February 28, 2024, the maturity date was extended to November 30, 2025. Effective February 2, 2025, the convertibility feature of the convertible debenture terminated (see "Subsequent Events").

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Annual Financial Information

Selected statements of loss and comprehensive loss information for the years ended:	October 31 2024 ($)	October 31, 2023 ($)	October 31, 2022 ($)
Expenses
General & Administrative	80,596	72,142	140,939
Debt Settlement	-	-	(24,291)
Share based compensation	3,495	19,384	-
Marketing & Sales	67	769	-
Operating Loss	(84,158)	(92,295)	(116,648)
Finance Costs	(130,664)	(92,602)	(3,991)
Gain on initial recognition of financial liabilities	73,770	45,948	-
Net loss and comprehensive loss	(141,052)	(138,949)	(120,639)
Loss per share (basic & diluted)	(0.01)	(0.01)	(0.01)
	October 31, 2024	October 31, 2023	October 31, 2022
Selected Statement of financial position information as at:	($)	($)	($)
Total assets	1,020,045	1,167,177	26,051
Total liabilities	1,068,417	1,077,992	469,422
Outstanding common shares	24,672,144	24,672,144	13,472,144

On February 2, 2023, the acquisition of the oil and gas properties, together with the minimum private placement, closed. As a result, the following shares were issued: 4,000,000 Common Shares, at a price of $0.05 per Common Share, for aggregate proceeds of $200,000, and 7,200,000 Flow-Through Shares, at a price of $0.05 per Flow-Through Share, for aggregate proceeds of $360,000.

No common shares were issued during the period ending October 31, 2024.

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Results of Operations

As at October 31, 2024, the Company had cash of $79,862, current liabilities of $24,536, $824,114 in long-term debt and a current period net and comprehensive loss of $129,497 and working capital of $55,326.

Summary of Quarterly Results:

| | 2024
Q4 | 2024
Q3 | 2024
Q2 | 2024
Q1 | 2023
Q4 | 2023
Q3 | 2023
Q2 | 2023
Q1 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | $ | $ | $ | $ | $ | $ | $ | $ |
| Expenses | | | | | | | | |
| General& Administrative | 40,545 | 11,859 | 26,584 | 1,608 | 4,734 | 4,208 | 36,325 | 26,875 |
| Share Based Compensation | - | - | - | 3,495 | 4,154 | 5,011 | 10,219 | - |
| Marketing & Sales | - | - | - | 67 | 215 | - | 554 | - |
| Operating Income (loss) | (40,545) | (11,859) | (26,584) | (5,170) | (9,103) | (9,219) | (47,098) | (26,875) |
| Finance Costs | (28,492) | (37,779) | (29,796) | (34,597) | (47,028) | (22,934) | (21,252) | (1,388) |
| Gain on initial recognition of financial liabilities | 73,770 | - | - | - | 45,948 | - | - | - |
| Net loss & comprehensive loss | 4,733 | (49,638) | (56,380) | (39,767) | (10,183) | (32,153) | (68,350) | (28,263) |
| Net loss per share, basic & diluted | 0.00 | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) |
| Outstanding shares | 24,672,144 | 24,672,144 | 24,672,144 | 24,672,144 | 24,672,144 | 24,672,144 | 24,672,144 | 13,472,144 |
| Total assets | 1,020,045 | 1,078,915 | 1,161,141 | 1,165,538 | 1,167,177 | 1,116,341 | 1,112,203 | 25,009 |

Please note that the quarterly information is unaudited.

Revenue

Presently, the Company has no ongoing sources of revenue. The Company is actively working on expanding its technical team with the objective of establishing a presence in the Canadian resource sector.

Expenses

a) General and Administrative:

a. Three Months: Increased by $35,811 (756%) to $40,545 in Q4 2024, mainly due to fees related to the Annual General Meeting (AGM) and accounting expenses.
b. Twelve Months: Increased by $8,454 (12%) to $80,596 in 2024, primarily due to fees related to the Annual General Meeting (AGM) and accounting expenses.

b) Share-Based Compensation:

• No share-based compensation was recorded in Q4 2024. For the 12 months ending October 31, 2024, share-based compensation decreased by $15,889 (-82%) to $3,495, reflecting the full vesting of stock options in the prior period.

c) Marketing & Sales:

• No marketing expenses were recorded in Q4 2024. For the 12 months, expenses decreased by $702 (-91%) to $67, reflecting reduced marketing activities related to the technical team search.

d) Total Expenses:

• Three Months: Increased by $31,442 (345%) to $40,545.
• Twelve Months: Decreased by $8,137 (-41%) to $84,158 primarily due to reduced G&A expenses and lower share-based compensation.

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e) Finance Costs:
- Three Months: Decreased by $18,536 (-39%) to $28,492, mainly due to accretion expenses and interest costs related to the change of business (COB) financing.
- Twelve Months: Increased by $38,062 (41%) to $130,664, reflecting higher costs associated with debt extension and convertible debentures.

f) Net Loss & Comprehensive Loss:
- The net profit for the three months ended October 31, 2024, was $4,733 and for the 12 months ended, it was a loss of $141,052. This represents a comparable loss from the comparative periods.

Financial Position

As of October 31, 2024, the Company had cash of $79,862, down from $196,525 as of October 31, 2023. This reduction reflects the use of cash in operating activities, financing costs, and investment in or carrying costs associated with the Company's oil and gas property.

Liquidity and Capital Resources

The Company had working capital of $43,771 as of October 31, 2024 (October 31, 2023 – $182,243) to fund continuing operations.

The Company has an operating facility in place that allows for maximum draws of $650,000. During the period, the Company repaid a $50,000 of the draws under the operating facility together with accrued interest, resulting in both a reduction in cash and an increase in the available credit facility to its full amount.

The Company may need to secure additional financing from time to time in excess of the maximum amount that can be drawn under the credit facility.

Key Management Personnel Compensation

The key management personnel of the Company are the members of the Company's executive management team and Board of Directors.

In addition to their salaries and director fees, as applicable, directors and executive officers, along with certain employees of the Company, also participate in the Company's stock option plan. Compensation expenses incurred with respect to key management personnel were as follows:

	Three months ended October 31,		Twelve months ended October 31,
	2024	2023	2024	2023
	$	$	$	$
Consulting fees	-	-	-	17,500
Total Compensation	-	-	-	17,500

Going Concern

The Company's financial statements for the period ended October 31, 2024, have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, the Company continues to incur operating losses and has limited cash reserves, raising uncertainty about its ability to continue as a going concern. Management is actively seeking additional financing through debt or equity to fund operations. If the Company is unable to secure adequate funding, it may be required to delay, reduce, or cease certain business activities.

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Financial Risk Management

The Company is exposed to various financial risks, including liquidity risk, credit risk, and market risk:

• Liquidity Risk: The Company's exposure to liquidity risk arises from its obligation to meet short-term liabilities. With cash of $79,862 as of October 31, 2024, and the full credit facility available, the Company continues to actively manage its liquidity through cost control and seeking additional financing.
• Credit Risk: The Company limits its exposure to credit risk by maintaining cash balances with large financial institutions. The repayment of the $50,000 advance under its operating facility will serve to improve the Company's credit profile with its lenders.
• Market Risk: The Company's loans and borrowings are subject to fixed interest rates, thus mitigating exposure to interest rate fluctuations. However, changes in commodity prices for uranium and oil may impact future revenue potential.

Management believes the going concern assumption is still appropriate for these financial statements but is dependent upon the successful raising of sufficient capital in the future as required, achieving and sustaining profitable operations, as well as the continued support from related parties and trade and other creditors. There can be no assurance that the steps management is taking will be successful. This assumption will be reviewed on an ongoing basis by management and the Board of Directors. If the going concern assumption were not appropriate for these financial statements, adjustments would be necessary to the carrying value of assets and liabilities, reported revenues and expenses and the classifications used in the statement of financial position. The Company does not engage in hedging activities to manage risks.

Capital Management

The Company makes adjustments to its capital structure in light of general economic conditions and the Company's working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval from its Board of Directors, may pay dividends, buy back shares or undertake other activities as deemed appropriate under the specific circumstances. The Board of Directors reviews and approves any material transactions not in the ordinary course of business. The Company's objectives in managing capital are to ensure sufficient liquidity to pursue its strategy to maximize the return to its shareholders. The capital structure of the Company consists of cash, credit facility and shareholders' deficit. The credit facility is not subject to any financial covenants. The Company does not have any externally imposed capital requirements and does not presently utilize any quantitative measures to monitor its capital.

The following table sets forth the Company's total available credit:

As at	October 31, 2024	October 31, 2023
Maximum borrowing base limit:	$	$
Credit facility (1)	650,000	650,000
Principal amount utilized:
Note Payable (See Settlement of Promissory Note below)	-	(50,000)
Accrued and Unpaid Interest	-	(5,408)
	-	(55,408)
Unused credit	650,000	594,592

(1) On April 4, 2022, the Company entered into a commitment letter regarding a two-year credit facility bearing a fixed interest rate of 7% per annum maturing on April 4, 2024. The maturity date was subsequently extended to November 30, 2025.

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Settlement of Promissory Note

On June 18, 2024, the Company settled its two-year promissory note issued on April 5, 2022. The note had a face value of $50,000 and bore interest at a rate of 7% per annum. The note was initially recorded at its present value, discounted at a rate of 16.50% per annum. As of June 18, 2024, the total amount payable to settle the promissory note was $57,803. This amount included the principal sum of $50,000, interest accrued during the initial term of $7,000, and interest accrued post-maturity of $803.

The Company makes adjustments to its capital structure in light of general economic conditions and the Company's working capital requirements. To maintain or adjust its capital structure, the Company, upon approval from its Board of Directors, may pay dividends, buy back shares or undertake other activities as deemed appropriate under the specific circumstances. The Board of Directors reviews and approves any material transactions not in the ordinary course of business.

Outstanding Share Data

As at October 31, 2024 and October 31, 2023, the Company had 24,672,144 common shares outstanding.

Summary

Labrador Resources Inc. has made some strides in its financial and operational management during the year ended October 31, 2024. The reduction in general and administrative expenses, the proposed acquisition of uranium claims, and the ongoing debt payments, extensions and restructuring efforts highlight the Company's commitment to managing capital, diversifying its asset base and exploring new opportunities within the resource sector.

Subsequent Event

Effective February 2, 2025, the conversion feature of the convertible debenture terminated.

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