Quantum Battery Metals Corp. — Management Reports 2020

Jun 10, 2020

QUANTUM COBALT CORP. Management Discussion and Analysis For the year ended January 31, 2020

The Management Discussion and Analysis (“MD&A”), prepared June 9, 2020 should be read in conjunction with the consolidated financial statements for the year ended January 31, 2020 and the notes thereto of Quantum Cobalt Corp. (“Quantum” or the “Company”) which were prepared in accordance with International Financial Reporting Standards (“IFRS”). Unless otherwise noted, all currency amounts are in Canadian dollars.

This management discussion and analysis may contain forward-looking statements in respect of various matters including upcoming events and include without limitation, statements regarding discussions of the Company’s business strategy, future plans, projections, objectives, estimates and forecasts and statements as to management's expectations with respect to, among other things, the development of the Company’s project. These forward-looking statements involve numerous risks and uncertainties and actual results may vary. Important factors that may cause actual results to vary include without limitation, certain transactions, certain approvals, changes in commodity prices, risks inherent in exploration results, timing and success, inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and mineral resources), delays in the receipt of government approvals, and changes in general economic conditions or conditions in the financial markets. In making the forward-looking statements in this MD&A, the Company has applied several material assumptions, including without limitation, the assumption that any additional financing needed will be available on reasonable terms.

Additional factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, among other factors: (1) the state of the global economy and economic and political events, including the deterioration of the global capital markets, affecting supply and demand and economic and political events affecting supply and demand; and (2) securing and the nature of regulatory permits and approvals and the costs of complying with environmental, health and safety laws and regulations.

The Company cannot assure you that any of these assumptions will prove to be correct.

The words “expect,” “anticipate,” “estimate,” “may,” “will,” “should,” “intend,” “believe,” “target,” “budget,” “plan,” “projection” and similar expressions are intended to identify forward-looking statements. Information concerning mineral reserve and mineral resource estimates also may be considered forward-looking statements, as such information constitutes a prediction of what mineralization might be found to be present during operations or if and when an undeveloped project is actually developed.

These factors should be considered carefully, and readers should not place undue reliance on the Company’s forward-looking statements. The Company believes that the expectations reflected in the forward-looking statements, including future-oriented financial information, contained in this MD&A and any documents incorporated by reference are reasonable, but no assurance can be given that these expectations will prove to be correct. In addition, although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, including future-oriented financial information, there may be other factors that cause actions, events, or results not to be as anticipated, estimated, or intended. The Company undertakes no obligation to disclose publicly any future revisions to forward-looking statements, including future-oriented financial information, to reflect events or circumstances after the date of this MD&A or to reflect the occurrence of unanticipated events, except as expressly required by law.

Additionally, the forward-looking statements, including future-oriented financial information, contained herein are presented solely for the purpose of conveying our reasonable belief of the direction of the Company and may not be appropriate for other purposes.

1

The results or events predicted in these forward-looking statements may differ materially from the actual results or events. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

DESCRIPTION OF BUSINESS

The Company was incorporated on August 6, 2010 under the British Columbia Business Corporations Act. On November 7, 2017, the Company changed its name to Quantum Cobalt Corp. from Bravura Ventures Corp. to better reflect its direction and cobalt resource properties and begun trading under the stock symbol “QBOT”. The Company is domiciled in Canada and is a reporting issuer with its common shares publicly traded on the Canadian Securities Exchange (“CSE”). The Company is currently in the process of identifying new business projects to pursue and develop further. The address of its head office is 400-837 West Hastings Street, Vancouver, British Columbia, Canada, V6C 3N6.

MINERAL PROPERTIES

	Musgrove	Grew Rabbit Kahuna Nipissing	Albanel	Kelso
	Creek	Creek Cobalt Cobalt Lorain	Lithium	Lithium
	Property	Property Property Property Property	Property	Property Total
Balance, January 31, 2018	$ 616,151 $ 322,161 $ 2,436,067 $ 1,022,567 $ 9,700,000 $ - $ - $ 14,096,946
Geological consulting	12,988	- - - -	-	- 12,988
Write-off	(629,139)	(322,161) - - -	-	- (951,300)
Balance, January 31, 2019	$ - $ - $ 2,436,067 $ 1,022,567 $ 9,700,000 $ - $ - $ 13,158,634
Property acquisition	-	- - - -	350,000	350,000 700,000
Write-off	-	-(2,436,067) (1,022,567) (9,700,000)	-	-(13,158,634)
Balance,January31,2020	$-$-$-$-$-$350,000$350,000$700,000

Musgrove Creek Property

On September 14, 2016, the Company entered into an agreement with Soleil Gold Corp. (“Soleil”) to acquire an undivided 100% interest in and to certain mineral property leases, together with the surface rights, mineral rights, personal property and permits associated therewith (“Musgrove Creek Property”), located in Lemhi County, Idaho. In connection with the option agreement, the Company has paid $20,000 cash to Soleil and issued 100,000 common shares. Beginning September 1, 2020, the Company has to pay advance royalty payments. The property is subject to a 2% net smelter royalty on future gold production which includes advance royalty payments of $50,000 annually.

During the year ended January 31, 2019, the Company was not able to renew the mining claims. As a result, a write-off of $629,139 was recorded to the consolidated statement of loss and comprehensive loss.

During the year ended January 31, 2020, the Company was served with a notice of civil claim (the “Claim”) filed with the Second Judicial District Court of the State of Nevada for failure to pay the United States Bureau of Land Management federal annual mining claim maintenance fees on the Musgrove Creek Property. On May 3, 2019, the claim was dismissed as a result of the settlement whereby the Company agreed to make a settlement payment of USD $150,000 (CAD $210,000). The Company recorded an expense of $210,000 in relation to this settlement.

Grew Creek Property

On October 24, 2016, the Company closed an option agreement with Golden Predator Mining Corp. (“Golden Predator”) to acquire up to a 90% in and to certain mineral properties together with the surface

2

rights, mineral rights, personal property and permits associated therewith (“Grew Creek Property”), located in the Watson Lake mining district in southeast Yukon. The Company has the option to acquire 90% of the Grew Creek Property in consideration for:

• a. Payment to Golden Predator of an aggregate amount of $950,000 to be paid upon the following: • $35,000 – on the closing date (paid);

• $50,000 – on the first anniversary of the closing date (paid);

• $75,000 – on the second anniversary of the closing date (unpaid);

• $140,000 – on the third anniversary of the closing date;

• $150,000 – on the fourth anniversary of the closing date;

• $250,000 – on the fifth anniversary of the closing date; and

• $250,000 – on the sixth anniversary of the closing date.

• b. Issuance to Golden Predator of an aggregate amount of 200,000 common shares and an additional 6% of the Company to be issued upon the following:

• 50,000 – on the closing date (issued);

• 50,000 – on the first anniversary of the closing date;

• 50,000 – on the second anniversary of the closing date;

• 50,000 – on the third anniversary of the closing date;

• On the fourth anniversary of the closing date such a number of common shares as is equal to 2% of the undiluted issued and outstanding common shares of the Company for 70% of the right, title and interest in assets;

• On the fifth anniversary of the closing date such a number of common shares as is equal to 2% of the undiluted issued and outstanding common shares of the Company for an additional 10% of asset;

• On the sixth anniversary of the closing date such a number of common shares as is equal to 2% of the undiluted issued and outstanding common shares of the Company for an additional 10 % for a total aggregate ownership of 90%; and

• Optionor shall transfer legal title to the assets to optionee on the six anniversary of closing date.

• c. If during the term, the Company receives a technical report that complies with National Instrument 43101 and defines a resource on the claims, the Company shall, within 30 days of receipt of such report, pay to Golden Predator an additional $50,000 and issue an additional 50,000 common shares. If, during the term but after its receipt of the first report, Golden Predator receives a second technical report that increases the resource estimate by 100% or more over the estimate contained in the first report, the Company shall issue to Golden Predator such number of common shares as is equal to 2% of the issued and outstanding common shares of the Company on the date that is 10 business days prior to the date of receipt of the second report.

During the year ended January 31, 2019, the Company did not make the scheduled cash and share payments on the second anniversary of the closing date and therefore, the option agreement was terminated. As a result, a write-off of $322,161 was recorded to the consolidated statement of loss and comprehensive loss.

Rabbit Cobalt Property

On August 16, 2017, the Company closed its acquisition of 10336602 Canada Inc. (“10336602”) pursuant to a share exchange agreement, dated July 28, 2017, among the Company, 10336602 and the shareholders of the target. 10336602 holds the approximately 1,000-hectares of a gold-nickel-silver property located 55 kilometers south of Cobalt, Ontario.

Pursuant to the share exchange agreement, the Company made a cash payment of $350,000 and issued a total of 4,000,000 common shares in the capital of the Company, to the shareholders of 10336602 in exchange for 1,000,000 Class A common shares in the capital of 10336602. A finder’s fee in the amount of $35,000 was paid in connection with the acquisition.

3

As at January 31, 2020, substantive expenditure on further exploration for and evaluation of the Rabbit Cobalt Property has not been planned and will be evaluated pending the Company obtaining further funding. As a result, a write-off of $2,436,067 was recorded to the consolidated statement of loss and comprehensive loss.

Kahuna Cobalt Property

On October 5, 2017, the Company closed and signed the definitive agreement with Caprock Ventures Corp. dated August 10, 2017 to acquire 100% of the approximately 1,200-hectare Kahuna cobalt-silver property, located 37 kilometers south of Cobalt, Ontario. Pursuant to the share exchange agreement, the Company made a cash payment of $300,000 and issued a total of 1,000,000 common shares in the capital of the Company. A finder’s fee in the amount of $31,500 was paid in connection with the acquisition. The properties are subject to a 0.5% net smelter return royalty on cobalt-gold production, which includes advance royalty payments of $25,000 annually on December 31, beginning in 2020. The Company has the option at any time to purchase 0.5% of the royalty on payment of $500,000. The original vendors of the property will retain a 1% NSR on the properties. The Company will have the right to purchase the 1% for $1,000,000.

The Company received the approval for Kahuna Cobalt Property exploration on June 26, 2018 and completed the first phase of exploration on August 2, 2018. The first phase of exploration was completed over a 24-day period and included extensive soil sampling, prospecting and trenching. Soil sampling covered the length of the project area, targeting the Nipissing Lorrain diabase for cobalt mineralization within calcite veins.

==> picture [452 x 198] intentionally omitted <==

Preliminary review of results from the soil sampling identified multiple anomalous soil areas, along trend from historic workings and associated with localised structures. Peak values of up to 1185.2 ppm Co, 150.6 ppm Ni, 2136.12 ppm Cu and 1.293 ppm Ag were detected in soils across the property. The anomalies indicate the potential for further mineralisation on the Kahuna property and will help vector Quantum’s exploration going forward. The current exploration permit provisions for IP geophysics, as well as additional trenching and in-fill soil sampling.

4

==> picture [464 x 375] intentionally omitted <==

Rock and soil sample locations were recorded in field notebooks, assay sample tag books and waypoints on a Garmin 64s GPS unit. Rock samples were collected into individual 18” x 12” poly bags labeled with a unique 7-character sample ID. A tear-out tag with the barcode and unique sample ID was inserted in the bag, and the bag sealed with a cable tie in the field. Soil samples were collected from 30 to 60 cm depth using hand-held geo-tools and soil augers. The lower B and upper C horizon was targeted for sampling, with the depth, soil horizon, and colour recorded in field books. Each ~200g soil sample was placed into individually labelled Kraft paper bag with the sample tag and the sample number was written across the bottom. For the soil program every 20th sample was taken as a field duplicate for QA/QC control.

==> picture [449 x 153] intentionally omitted <==

As at January 31, 2020, substantive expenditure on further exploration for and evaluation of the Kahuna Cobalt Property has not yet been planned and will be evaluated pending the Company obtaining further

5

funding. As a result, a write-off of $1,022,567 was recorded to the consolidated statement of loss and comprehensive loss.

Nipissing Lorain Property

On November 29, 2017, the Company closed the acquisition of 1142674 B.C. Ltd. (“1142674”) pursuant to a share exchange agreement, among the Company, 1142674 and the shareholders of 1142674. The Nipissing Lorrain cobalt project is located 26 kilometers southeast of Cobalt, Ont. The property consists of two separate claims. Six separate underground workings have been historically mined for cobalt, silver and nickel.

Pursuant to the share exchange agreement, the Company will pay an aggregate amount of $1,000,000 over a six-month period from date of close of the share exchange agreement, with an initial cash payment of $500,000 (paid on closing) and $250,000 subsequently every three months. As at January 31, 2020, the Company has recorded a liability of $500,000 (2019 - $500,000) on the consolidated statement of financial position relating to the required subsequent payments. A total of 5,000,000 common shares in the capital of the Company were also issued on closing to the shareholders of 1142674 in exchange for one Class A common share in the capital of 1142674.

As at January 31, 2020, substantive expenditure on further exploration for and evaluation of the Nipissing Lorain Property has not yet been planned and will be evaluated pending the Company obtaining further funding. In addition, the Company has not made all of the required payments under its November 29, 2017 share exchange agreement. As a result, a write-off of $9,700,000 was recorded to the consolidated statement of loss and comprehensive loss .

Albanel Quebec Lithium Property

On October 3, 2019, the Company entered into a binding acquisition agreement with 1225768 B.C. Ltd. to acquire 100% interest in, and to, certain mineral properties, together with surface right, mineral rights, personal property and permits associated there with, located in the Albanel Quebec lithium property. The Albanel property is a lithium prospect with an approximate area of 2,751 hectares in a mining-friendly jurisdiction of Quebec. Pursuant to the acquisition agreement, the Company issued a total of 10,000,000 common shares in the capital of the Company with a fair value of $350,000.

Highlights of the project:

• Road accessible;

• 10 kilometers north of the Rose lithium-tantalum mine;

• 3 pegmatite occurrences mapped by government geologists; and

• Centrally located in a lithium-rich geologic subprovince.

Kelso Quebec Lithium Property

On October 3, 2019, the Company entered into a binding acquisition agreement with 1225768 B.C. Ltd. to acquire 100% interest in, and to, certain mineral properties, together with surface right, mineral rights, personal property and permits associated there with, located in the Kelso Quebec lithium property. The Kelso property is a lithium prospect with an approximate area of 2,592 hectares in a mining-friendly jurisdiction of Quebec. Pursuant to the acquisition agreement, the Company issued a total of 10,000,000 common shares in the capital of the Company with a fair value of $350,000.

Highlights of the project:

• 12 kilometers northwest of the Rose lithium-tantalum mine;

• 2 pegmatite showings mapped regionally by government geologists; and

• Centrally located in a lithium-rich geologic subprovince.

6

SELECTED ANNUAL FINANCIAL RESULTS

The following selected financial data with respect to the Company’s financial condition and results of operations have been derived from the audited consolidated financial statements of the Company for the years ended January 31, 2020, 2019, and 2018. The selected financial data should be read in conjunction with those consolidated financial statements and the notes thereto. In $000’s except per share amounts:

	2020	2019	2018
	$	$	$
Total revenue	Nil	Nil	Nil
Net loss	(13,662)	(1,892)	(5,720)
Basic and diluted loss per share	(0.29)	(0.05)	(0.36)
Total assets	734	13,278	14,668
Total long-term liabilities	Nil	Nil	Nil
Cash dividends declared per share for each
class of share	Nil	Nil	Nil

OPERATIONS

Three months ended January 31, 2020 compared with the three months ended January 31, 2019

During the three months ended January 31, 2020, the Company reported a net loss of $13,327,738 compared to a net loss of $371,960 during the three months ended January 31, 2019, representing an increase in net loss of $12,955,778. The increase in net loss was mainly due to the increase in write-off of mineral properties to $13,158,634 from $322,161 during the same period of the previous year. Write-off of mineral properties during the three months ended January 31, 2020 was due to write-off of Rabbit Cobalt Property, Kahuna Cobalt Property and Nipissing Lorain Property. Flow-through share penalties increased to $36,392 from $6,667 during the three months ended January 31, 2019. Consulting fees increased to $30,588 from a recovery of $2,500 during the same period of the previous year due to higher fees paid or accrued during the current period. Management fees increased to $23,500 from a recovery of $7,500 during the same period of the previous year due to higher management fees incurred during the current period. Office and miscellaneous expenses increased to $10,226 from $822 during the same period of the previous year due to increased business activities during the current period. Interest expense increased to $6,942 from $Nil during the same period of the previous year mainly due to the accruals of interest on loans payable received during the current period. These increases were offset by the decrease in professional fees to $11,741 from $50,862 during the same period of the previous year due to lower fees paid or accrued during the current period. Indemnification provision for flow-through shares decreased to $64,331 from $171,200 during the three months ended January 31, 2019.

Twelve months ended January 31, 2020 compared with the twelve months ended January 31, 2019

During the twelve months ended January 31, 2020, the Company reported a net loss of $13,662,159 compared to a net loss of $1,892,147 during the twelve months ended January 31, 2019, representing an increase in net loss of $11,770,012. The increase in net loss was mainly attributable to the increase in write-off of mineral properties to $13,158,634 from $951,300 during the previous fiscal year. Write-off of mineral properties during the twelve months ended January 31, 2020 was due to write-off of Rabbit Cobalt Property, Kahuna Cobalt Property and Nipissing Lorain Property. Flow-through share penalties increased to $36,392 from $6,667 during the twelve months ended January 31, 2019. Interest expense increased to $48,108 from $Nil during the previous fiscal year mainly due to the accruals of interest on loans payable received during the current fiscal year. Office and miscellaneous expenses increased to $26,426 from $14,803 during the previous fiscal year due to increased business activities during the current fiscal year. Settlement on mineral property claims increased to $210,000 from $Nil during the previous fiscal year due to the fee dispute and legal claim brought against the Company on the Musgrove Creek Property during the current fiscal year. These increases were offset by the decrease in consulting fees to $30,588 from

7

$383,371 during the previous fiscal year due to lower fees paid or accrued during the current fiscal year. Geological consulting decreased to $Nil from $122,217 during the previous fiscal year due no fees incurred on the exploration of mineral properties during the current fiscal year. Management fees decreased to $82,000 from $157,500 during the previous fiscal year due to lower management fees incurred during the current fiscal year. Rent expense decreased to $Nil from $85,000 during the previous fiscal year due to no rental fees were incurred during the current fiscal year. Transfer agent and filing fees decreased to $27,929 from $58,840 during the previous fiscal year due to decreased activity and regulatory periodic filing fees incurred during the current fiscal year. Indemnification provision for flow-through shares decreased to $64,331 from $171,200 during the previous fiscal year. Professional fees decreased to $74,729 from $109,606 during the previous fiscal year due to lower professional fees paid or accrued during the current fiscal year.

SUMMARY OF QUARTERLY RESULTS

($000’s except earnings per share)

January 31, 2020	October 31, 2019 July 31, 2019 April 30, 2019
$ Revenue Nil Net Income (Loss) (13,328) Basic and Diluted Income(Loss) per share (0.22)	$ $ $ Nil Nil Nil (93) (279) 38 (0.00) (0.01) 0.00
January 31, 2019	October 31, 2018 July 31, 2018 April 30, 2018
$ Revenue Nil Net Loss (372) Basic and Diluted Lossper share (0.00)	$ $ $ Nil Nil Nil (691) (380) (449) (0.02) (0.01) (0.01)

During the fourth quarter of 2020, the Company recorded a net loss of $13,327,738 compared to a net loss of $371,960 in the fourth quarter of 2019. The significant change is mainly due to write-off of Rabbit Cobalt Property, Kahuna Cobalt Property and Nipissing Lorain Property of $13,158,634 during the fourth quarter of 2020.

During the third quarter of 2020, the Company had a net loss of $93,437 compared to a net loss of $690,577 in the third quarter of 2019. The significant change is mainly due to a write-off of Musgrove Creek Property of $629,139 in the same period of the previous year.

During the second quarter of 2020, the Company had a net loss of $278,703 compared to a net loss of $380,181 in the second quarter of 2019. The significant change is mainly due to the decrease in consulting fees and geological consulting partially offset by the increase in settlement on mineral property claims and interest expense incurred during the second quarter of 2020.

During the first quarter of 2020, the Company had a net income of $37,719 compared to a net loss of $449,429 in the first quarter of 2019. The change is mainly due to no consulting fees incurred during the current period, partially offset by the recovery of geological consulting expenses.

LIQUIDITY AND CAPITAL RESOURCES

As at January 31, 2020, the Company had a cash balance of $23,857 and working capital deficiency of $1,983,292 compared to $3,798 and $1,174,767, respectively, as at January 31, 2019.

During the year ended January 31, 2020, net cash used in operating activities was $266,741 (2019 - $782,780) comprising a loss of $13,662,159 (2019 - $1,892,147), accrued interest of $48,108 (2019 - $Nil), gain on debt settlement $Nil (2019 - $169,500), write-off of receivables of $430 (2019 - $Nil),

8

write-off of mineral properties of $13,158,634 (2019 - $951,300), a decrease in amounts receivable of $103,006 (2019 - increase of $19,878), a decrease in prepaid expenses of $2,489 (2019 - $216,500) and an increase in accounts payable and accrued liabilities of $82,751 (2019 - $130,945).

Cash used in investing activity for the year ended January 31, 2020 was $Nil (2019 - $12,988), which was primarily related to the mineral property exploration costs.

Cash provided by financing activities for the year ended January 31, 2020 was $286,800 (2019 - $540,541), which was primarily related to the proceeds from loans, partially offset by the repayment of loan, and share subscriptions refund.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has not entered into any off-balance sheet arrangements.

TRANSACTIONS WITH RELATED PARTIES

All transactions with related parties have occurred in the normal course of operations. Key management is comprised of directors and executive officers. The following compensation was paid to key management or companies controlled by key management during the years ended January 31, 2020 and 2019:

		2020		2019
Management fees	$	76,000	$	170,500
Management fees–former director		6,000		-
	$	82,000	$	170,500

As at January 31, 2020, the Company has included in accounts payable and accrued liabilities a total of $199,213 (2019 - $127,113), which are payable to former directors, former officers, and companies controlled by a former officer.

As at January 31, 2020, the Company has included in accounts payable and accrued liabilities a total of $246,353 (2019 - $189,266), which are payable to current directors, officers, and companies controlled by directors.

During the year ended January 31, 2020, the Company obtained loans for a total of $232,050 from companies controlled by a director and former director of the Company. The Company repaid $22,050 of these loans. These loans are unsecured, non-interest bearing and due on demand.

On November 8, 2019, the Company commenced legal action the former CEO, David Schmidt, for gross negligence that resulted in significant shareholder value loss. The claim alleged that while serving in the role of chief executive officer of the Company, Mr. Schmidt failed to act honestly and in good faith with a view to the best interests of the Company and failed to exercise the care, diligence and skill of a reasonably prudent individual. Mr. Schmidt failed to make key property payments, which caused significant loss and damage, in particular:

• Payment to Idaho's Bureau of Land Management by September 1, 2018: The failure to make this payment resulted in the irrevocable forfeiture of the Company's Musgrove mining claims. Further, Mr. Schmidt failed to direct the Company to take any steps to restake the claims, which resulted in a third party acquiring the claims.

• Option payment by December 31, 2018: The failure to respond to notices of payment for Grew Creek and the further failure to direct the company to cure the default resulted in Quantum losing its option on the Grew Creek property.

9

Subsequent to the year ended January 31, 2020, the Company entered into settlement agreement with Mr. Schmidt.

CRITICAL ACCOUNTING POLICIES

Financial Instruments

Fair Values

The Company’s financial instruments consist of cash, accounts payable, loans payable and other payables. The following table summarizes the carrying values of the Company’s financial instruments as at January 31, 2020 and 2019:

		2020		2019
FVTPL (i)	$	23,857	$	3,798
Amortized cost(ii)	$	1,612,036	$	1,344,208

(i) Cash

(ii) Accounts payable, loans payable, and other payables

The Company classifies its fair value measurements in accordance with the three-level fair value hierarchy as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 – Inputs that are not based on observable market data.

Cash is measured at fair value using level one as the basis for measurement in the fair value hierarchy. The fair values of accounts payable, loans payable and other payables approximate their carrying values because of their current nature.

Credit Risk

Credit risk is the risk of loss associated with the counterparty’s inability to fulfill its payment obligations. Financial instruments that potentially subject the Company to concentrations of credit risks consist principally of cash. To minimize the credit risk the Company places these instruments with a high-quality financial institution. The Company believes it has no significant credit risk.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure and financial leverage as outlined above. The Company monitors its ability to meet its short-term exploration and administrative expenditures by raising additional funds through share issuance when required. The Company’s accounts payable, loans payable, and other payables have contractual maturities of 30 days or are due on demand and are subject to normal trade terms. The Company does not have investments in any asset backed deposits. The Company is exposed to liquidity risk.

Foreign Exchange Risk

Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency.

10

The Company does not have significant foreign exchange risk as majority of its transactions are in Canadian dollars.

Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flow of a financial instrument will fluctuate because of changes in market interest rate. The Company is not exposed to significant interest rate risk .

SHARE CAPITAL

Issued

The Company has 60,425,192 shares issued and outstanding as at January 31, 2020 and as at June 9, 2020.

Share Purchase Options

The Company has no stock options outstanding as at January 31, 2020 and as at June 9, 2020.

Warrants

The Company has 52,500 share purchase warrants outstanding as at January 31, 2020 and as at June 9, 2020.

Escrow Shares

The Company has no shares held in escrow as at January 31, 2020 and as at June 9, 2020.

Listing on Canadian Stock Exchange

The Company began trading on the CSE on November 7, 2017 under the symbol “QBOT”. Effective February 10, 2015, the common shares of the Company were delisted from the TSX Venture Exchange (“TSXV”).

Private placements

During the year ended January 31, 2019, the Company issued 2,563,084 common shares pursuant to the exercise of warrants for total proceeds of $521,541.

As at January 31, 2019, the Company had $306,500 share subscriptions receipts. On July 31, 2019, the Company converted $300,000 share subscriptions receipts into a loan. As at January 31, 2020, the Company had $1,500 share subscriptions receipts.

Shares issued for mineral property

On October 3, 2019, the Company issued a total of 20,000,000 common shares with a fair value of $700,000 pursuant to Albanel Quebec Lithium Property and Kelso Quebec Lithium Property acquisition.

Flow-through shares issued

During fiscal 2018, the Company renounced $471,500 of Canadian exploration expenditures to subscribers of the 2018 flow-through financing. As a result of the flow-through financing, the Company recognized a liability relating to the premiums subscribers had paid for the flow-through feature.

Funds raised through the issuance of flow-through shares are required to be expended on qualified Canadian mineral exploration expenditures, as defined pursuant to Canadian income tax legislation. The flow-through gross proceeds received less the qualified expenditures made to date represent the funds

11

received from flow-through share issuances that have not been spent on qualifying expenditures. At January 31, 2020, the amount of flow-through proceeds remaining to be spent on qualifying expenditures was $311,000.

As a result of not incurring the qualified expenditures and not filing the forms with Canada Revenue Agency, during the year ended January 31, 2020, the Company recognized an expense of $36,392 (2019 - $6,667) for late filing penalties and accrued. As at January 31, 2020, accounts payable and accrued liabilities include $43,059 (2019 - $6,667) related to interest and penalties.

The Company agreed to indemnify the flow-through shareholders for certain costs they incurred as a result of not meeting its obligation to spend the flow-through share proceeds on qualifying Canadian exploration expenditures in compliance with the applicable tax rules and pursuant to the share subscription agreement entered into. During the year ended at January 31, 2020, the Company recognized and expense of $64,331 (2019 - $171,200) for the indemnification of flow-through shareholders. As at January 31, 2020, accounts payable and accrued liabilities include $235,531 (2019 - $171,200) related these indemnification provision.

CHANGES IN ACCOUNTING POLICIES

See Note 2 “Summary of Significant Accounting Policies” and Note 3 “Recent Accounting Pronouncements” of the consolidated financial statements for the year ended January 31, 2020.

MANAGEMENT CHANGES

On August 8, 2017, the Company added Jerry Huang to the board of the Company.

On June 2, 2018, the Company appointed David Schmidt as the Company’s CEO and to the board of directors. Greg Burns has resigned from the board of directors and as the Company’s CEO.

On May 22, 2019, the Company appointed David Greenway as the Company’s CEO following a meeting between the directors and the resignation of David Schmidt as CEO. The Company also appointed Dino Minichiello to the board of directors.

On December 13, 2019, Dino Minichiello resigned from the board of directors and Dave Jenkins was appointed as a Director of the Company.

The Company’s board now consist of Von Torres, David Greenway, Quinn Field-Dyte, and Dave Jenkins.

SUBSEQUENT EVENTS

• a) On March 20, 2020, the Company entered into a settlement agreement with its former director and Chief Executive Officer David Schmidt. Schmidt. Pursuant to the settlement agreement, Mr. Schmidt forgave a loan of $210,000 to the Company. The Company has provided Mr. Schmidt a full and final release.

• b) Subsequent to year-end, there was a global outbreak of COVID-19 (coronavirus), which has had a significant impact on businesses through the restrictions put in place by the Canadian, provincial and municipal governments regarding travel, business operations and isolation/quarantine orders. At this time, it is unknown the extent of the impact the COVID-19 outbreak may have on the Company as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration of travel restrictions, business closures or disruptions, and quarantine/isolation measures that are currently, or may be put, in place by Canada and other countries to fight the virus. While the extent of the impact is unknown, we

12

anticipate this outbreak might increase the difficulty in capital raising which may negatively impact the Company’s business and financial condition.

13