Quri-Mayu Developments Ltd. — Management Reports 2020

Feb 28, 2020

QURI-MAYU DEVELOPMENTS LTD.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE COMPANY’S FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 2019

FORM 51-102F1

DATE AND SUBJECT OF REPORT

The following Management Discussion & Analysis (“MD&A”) is intended to assist in the understanding of the trends and significant changes in the financial condition and results of operations of Quri-Mayu Developments Ltd. (hereinafter “Quri-Mayu” or the “Company”) for the year ended October 31, 2019. The MD&A should be read in conjunction with the consolidated financial statements for the year ended October 31, 2019. The MD&A has been prepared effective February 26, 2020.

SCOPE OF ANALYSIS

The following is a discussion and analysis of Quri-Mayu Developments Ltd. The Company reports its financial results in Canadian dollars and in accordance with International Financial Reporting Standards (“IFRS”) and related interpretations as issued by the International Standards Board (“IASB”). All published financial results include the assets, liabilities and results of operations for the Company and its subsidiaries.

FORWARD LOOKING STATEMENTS

The information set forth in this MD&A contains statements concerning future results, future performance, intentions, objectives, plans and expectations that are, or may be deemed to be, forward-looking statements. These statements concerning possible or assumed future results of operations of the Company are preceded by, followed by or include the words ‘believes,’ ‘expects,’ ‘anticipates,’ ‘estimates,’ ‘intends,’ ‘plans,’ ‘forecasts,’ or similar expressions. Forward-looking statements are not guarantee of future performance. These forward-looking statements are based on current expectations that involve numerous risks and uncertainties, including, but not limited to, those identified in the Risks Factors section. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate. These factors should be considered carefully, and readers should not place undue reliance on forward-looking statements. The Company may not provide updates or revise any forward-looking statements, except those otherwise required under paragraph 5.8(2) of NI 51-102, whether written or oral that may be made by or on the Company's behalf.

TRENDS

Other than as disclosed in this MD&A, the Company is not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon its revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

GENERAL BUSINESS AND DEVELOPMENT

Quri-Mayu is in the business of mining and exploration.

The Company’s office is located at 1000 – 1285 W Pender Street, Vancouver, BC, V6E 4B1, Canada.

The Company is a reporting issuer in the Province of British Columbia. All public filings for the Company are on the SEDAR website www.sedar.com.

BUSINESS CHRONOLOGY

Quri-Mayu Developments Ltd. (the "Company") was incorporated as Quri-Mayu Ventures Ltd. as a wholly-owned subsidiary of reporting issuer EVI Global Group Developments Corp. (“EGGD”) on November 28, 2017 under the laws of British Columbia, Canada. The Company changed its name to Quri-Mayu Developments Ltd. on August 13, 2018. The Company was divested (spun out) and completed its plan of arrangement with EGGD on October 3, 2018.

On February 15, 2019, the Company acquired a 100% interest in a newly formed private company, 1169783 B.C. Ltd. (“783 B.C.”) through the issuance of 5,065,020 common shares with a fair value of $88,972.

From incorporation to date, no significant operations have begun, and management is continuing to evaluate and consult on available business opportunities.

ACQUISITION OF 1169783 B.C. LTD

On February 15, 2019, the Company acquired a 100% interest in 783 B.C. through the issuance of 5,065,020 common shares with a fair value of $88,972. The net assets acquired are as follows:

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Fair value of shares issued to acquire 783 B.C. $ 88,972
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Allocated to:
Cash	7,081
GST receivable	6,150
Prepaid	26,250
Exploration and evaluation asset	114,641
Accounts payable and accrued liabilities	(50,150)
Loanpayable	(15,000)
	$ 88,972

EXPLORATION AND EVALUATION ASSET

EXPLORATION AND EVALUATION ASSET
	October 31, 2019
	$
Balance, beginning	-
Acquisition of 783 B.C.	114,641
Exploration expenditures	73,157
Impairment	(187,798)
Balance,ending	-

Casa Minerals Inc. (“CMI”), had optioned a 100% interest in certain tenures situated in the Province of British Columbia (the “Keaper property”), and 783 B.C. had optioned a 60% interest in the Keaper property from CMI. Upon acquisition of 783 B.C., the Company assumed the option agreement.

The Company will be deemed to have exercised the option upon:

• I. Paying an aggregate of $550,000 to CMI as follows:

• $15,000 on execution of the option agreement; (Paid)

• $30,000 on or before the first anniversary of the date of the option agreement;

• $75,000 on or before the second anniversary of the date of the option agreement;

• $150,000 on or before the third anniversary of the date of the option agreement; and

• $280,000 on or before the fourth anniversary of the date of the option agreement.

• II. Issuing an aggregate of 2,500,000 common shares to CMI as follows:

• 400,000 shares on execution of the option agreement; (Issued February 27, 2019)

• 600,000 shares on or before the first anniversary of the date of the option agreement;

• 500,000 shares on or before the second anniversary of the date of the option agreement;

• 500,000 shares on or before the third anniversary of the date of the option agreement; and

• 500,000 shares on or before the fourth anniversary of the date of the option agreement.

• III. Incurring aggregate exploration expenditures of $4,000,000 on the property as follows:

• $150,000 on or before the first anniversary of the date of the option agreement;

• $350,000 on or before the second anniversary of the date of the option agreement;

• $1,00,000 on or before the third anniversary of the date of the option agreement;

• $1,00,000 on or before the fourth anniversary of the date of the option agreement; and

• $1,500,000 on or before the fifth anniversary of the date of the option agreement.

The Company shall pay a 1.5% net smelter royalty to CMI upon commencement of commercial production and the Company will have the right to purchase 0.5% of the net smelter royalty on or before the sixth anniversary of the date of the option agreement upon payment of an aggregate of $500,000 to CMI. The Company shall have the right to manage and operate its own work programs.

At October 31, 2019, the Company decided not to proceed with the option agreement on the Keaper property. The Company recorded an impairment loss of $187,798 for the year ended October 31, 2019. The Company will continue its efforts on finding new properties and other mineral exploration projects.

SELECTED ANNUAL INFORMATION

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October 31, October 31,
2019 2018
$ $
Financial Results
Net loss for the year (759,248) (29,312)
Loss per share – basic and diluted (0.05) (0.25)
Balance Sheet Data
Total liabilities 569,637 23,914
Shareholders' deficiency (475,824) (22,062)
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RESULTS OF OPERATIONS

Year ended October 31, 2019

The Company had no revenue and a net loss of $759,248 for the year ended October 31, 2019 compared to a net loss of $29,312 for the prior period ended October 31, 2018.

Major variances are as follows:

• For the year ended October 31, 2019, property evaluation costs were $375,000 compared to $Nil for the prior period ended October 31, 2018. Property evaluation costs were related to fees paid to a related company (“Xmin”) to investigate potential exploration and mining opportunities;

• For the year ended October 31, 2019, management and consulting fees were $80,278 compared to $25,617 for the prior period ended October 31, 2018. The variance was due to a new consulting and management fee agreement entered into by the Company during the current year;

• For the year ended October 31, 2019, the Company recorded listing and filing fees of $89,281. The increase of $89,086 relates to expenditures incurred in connection with share capital activities as well as the costs incurred with respect to listing the Company on Canadian Securities Exchange;

• For year ended October 31, 2019, administration costs were $15,240 compared to $Nil for the prior period ended October 31, 2018. The increase is related to new office premises and new shared administration services in the current year;

• For the year ended October 31, 2019, impairment loss was $187,798 compared to $Nil for the prior period ended October 31, 2018. The impairment was related to the Company not proceeding with the option agreement on the Keaper property during the current year.

Three months ended October 31, 2019

The Company had no revenue and a net loss of $260,342 for the three months ended October 31, 2019 compared to a net loss of $28,959 for the quarter ended October 31, 2018.

Major variances are as follows:

• For the quarter ended October 31, 2019, the Company recorded listing and filing fees of $62,771. The increase of $62,929 relates to costs incurred with respect to listing the Company on the Canadian Securities Exchange;

• For the quarter ended October 31, 2019, the Company recorded a recovery of management and consulting fees of $8,597. The recovery was a result of debt forgiven by a company controlled by a former director;

• For quarter ended October 31, 2019, administration costs were $7,586 compared to $Nil for the prior quarter ended October 31, 2018. The increase is related to new office premises and new shared administration services in the current year;

• For the quarter ended October 31, 2019, professional fees were $10,784 compared to $3,500 for the prior quarter ended October 31, 2018. The increase is related to the timing of recording of legal and audit fees. Legal fees for prior quarters were recorded in the fourth quarter. In addition, no audit fees were recorded in the prior quarters and audit fees for the year were recorded in the fourth quarter;

• For the quarter ended October 31, 2019, impairment loss was $187,798 compared to $Nil for the prior quarter ended October 31, 2018. The impairment was related to the Company not proceeding with the option agreement on the Keaper property during the current year.

SUMMARY OF FINANCIAL RESULTS FOR RECENTLY COMPLETED QUARTERS

Results of the most recent fiscal quarters are summarized in the table below:

	Oct 31,	Jul 31,	Apr 30,	Jan 31,	Oct 31,	Jul 31,	Apr 30,	Jan 31,
	2019(Q4)	2019(Q3)	2019(Q2)	2019(Q1)	2018(Q4)	2018(Q3)	2018(Q2)	2018(Q1)
Expenses	$ 72,544	$ 38,139	$ 32,875	$ 427,810	$ 28,959	$ -	$ -	$ 353
Other items	187,798	-	82	-	-	-	-	-
Net loss	(260,342)	(38,139)	(32,957)	(427,810)	(28,959)	-	-	(353)
Basic and diluted
lossper share	(0.01)	(0.01)	(0.01)	(0.12)	(0.06)	-	-	(3.53)
Assets	93,813	229,302	252,749	23,243	1,852	1,000	1,000	1,000
Working capital
(deficiency)	(475,824)	(357,418)	(319,279)	(233,358)	(22,062)	648	648	648

The Company had not commenced commercial operations as of October 31, 2019, nor to the date of filing of this MD&A. Notwithstanding, the Company and management continue to identify business opportunities for the Company.

LIQUIDITY AND CAPITAL RESOURCES

As at October 31, 2019, the Company had a working capital deficit of $475,824.

During the year ended October 31, 2019, the Company incurred a net loss of $759,248 and, as at October 31, 2019, had a cumulative deficit of $788,560.

On January 22, 2019, the Company entered into debt settlement and subscription agreements to settle a total of $216,514 in debt for past services in exchange for 12,325,700 common shares of the Company.

On October 17, 2018, the Company entered into debt settlement and subscription agreements to settle a total of $6,250 in debt for past services in exchange for 1,250,000 common shares of the Company.

The continuation of the Company as a going-concern is dependent on its ability to raise additional capital or debt financing, including on reasonable terms, in order to meet business objectives towards achieving profitable business operations.

There can be no assurance that consultants, service providers, and advisors will continue to extend unpaid accounts, services, and liabilities to the Company in order to maintain its business and filing requirements as a reporting issuer.

SHARE CAPITAL AND OUTSTANDING SHARE DATA

Common Shares: Authorized — unlimited Common shares, without par value

Issued and Outstanding:

— 19,496,120 common shares as of October 31, 2019 and February 26, 2020

The Company has no options or warrants issued or outstanding.

RELATED PARTY TRANSACTIONS

Related party balances

The following amounts due to related parties are included in trade payables and accrued liabilities. These amounts are unsecured, non-interest bearing and have no fixed terms of repayment.

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October 31, October 31,
2019 2018
$ $
Directors and officers of the Company 212,438 12,600
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On February 15, 2019, the Company acquired a 100% interest in 783 B.C. As a result of the transaction, the Company assumed a loan of $15,000 payable to Xmin.

During the year ended October 31, 2019, the company received two additional loans from Xmin. The first loan of $165,422 is unsecured, non-interest bearing and has no specified terms of repayment.

The second loan of $25,000 was secured by a promissory note, was payable on demand and bore interest at 6% per annum. The loan principal was settled during the year. Accrued interest as at October 31, 2019 is $82 and is included in accounts payable and accrued liabilities.

Transactions

During the year ended October 31, 2019 and 2018, the following amounts were incurred with directors and officers of the Company:

and officers of the Company:
	October 31,	October 31,
	2019	2018
	$	$
Management and consulting fees paid	-	12,400
Propertyinvestigation cost	375,000	-
	375,000	12,400

On January 22, 2019, the Company entered into debt settlement and subscription agreements to settle debt for past services in exchange for common shares. Included in the debt settlements were related party settlements for past services and amounts owing.

During the year ended October 31, 2019, a $1,000 related party receivable was offset against amounts owing for management and consulting fees.

MANAGEMENT OF INDUSTRY AND FINANCIAL RISK

The Company is in the mineral exploration sector and manages related industry risk issues directly.

Management is not aware of and does not anticipate any significant environmental exposure or risk of remediation costs or liabilities as it does not currently have any active mineral exploration operations.

The Company’s has minimal exposure to any financial risks having not commenced commercial operations. The Company’s primary financial risk to liquidity risk due to its reliance on demand loans, vendors and consultants continuing to extend payment terms, and management continuing to accrue expenses for unpaid services. Any one or more of these liquidity risks may have a material financial impact on the Company, should favorable loans, services, and/or terms become no longer available to the Company.

OFF-BALANCE SHEET TRANSACTIONS

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

RISK AND UNCERTAINTIES

Core Business

The Company’s business focus is on mining and exploration.

Significant capital investment, geological and mining personnel, management, and consultants will be required for the development of any potential mining and exploration project.

There is no certainty that any expenditures to be made by the Company as described herein will result in successful mining and exploration. There is aggressive competition within the mineral exploration and development sector with larger exploration companies developing related technology internally. As such, significant capital investment is required along with extensive other resources to develop any potential mineral claims and future mining operations, if attainable. There can be no assurance the Company will be successful in obtaining required capital on acceptable terms to reach its business objectives.

Some risks the Company may be exposed to include, but are not limited to the following:

Conflicts of Interest

The Company’s directors and officers also serve as directors and/or officers of other private and public companies involved in other business ventures. Consequently, there exists the possibility for such directors and/or officers to be in a position of conflict. Any decision made by such directors involving the Company will be made in accordance with their duties and obligations to deal fairly and in good faith with the Company and such other companies. As such, these individuals would refrain from voting on the conflicted matter and would be forced to forego potential business or conduct such business in conflict.

Going Concern Risk

The ability of the Company to continue as a going concern is uncertain and dependent upon its ability to achieve profitable operations, obtain additional capital and receive continued support from its shareholders. Management of the Company will have to raise capital through private placements or debt financing and proposes to continue to do so through future private placements and offerings. The outcome of these matters cannot be predicted at this time.

Operating History and Expected Losses

The Company expects to make significant investments in order to develop its services, increase marketing efforts, improve its operations, conduct research and development and update its equipment. As a result, start-up operating losses are expected, and such losses may be greater than anticipated, which could have a significant effect on the long-term viability of the Company.

Competition

The mining and exploration sector is highly competitive. Other companies in the sector have significantly more geological, engineering, technical, mining expertise, equipment, and financial resources. There can be no assurance the Company will attain a level of such resources in order to compete with.

Reliance on Joint Ventures, Partnerships, or Minority Interests

The nature of the Company’s operations may require it to enter into various agreements with partners, joint venture partners, or minority interests in mineral and exploration projects.

There is no guarantee that those with whom the Company needs to deal will be successful in these joint or participating interests for mining and exploration.

Uninsured Risks

The Company may carry insurance to protect against certain risks in such amounts as it considers adequate. Risks not insured against include key person insurance as the Company heavily relies on the company’s directors and officers.

Growth Management

In executing the Company’s business plan for the future, there will be significant pressure on management, operations, technical, and other assets or resources. The Company anticipates that its operating and personnel costs will increase substantially in the future when and if it is able to commence commercial operations. In order to manage its growth, the Company will have to substantially increase consultants, geological personnel, engineers, technical, human resources, and executive and administration staff to run its operations, while at the same time efficiently maintaining a large number of relationships with third parties. The Company will also have to acquire, lease, or rent a substantial amount of mining and extraction equipment. There can be no assurance that the Company will be able to meet these growth objectives.

Reliance on Key Personnel, Service Provider, and Advisors

The Company relies heavily on its director and officers, along with key service providers, business advisors and consultants. The loss of their services would have a material effect on the business of the Company. There can be no assurance that directors and officers, or consultants engaged by the Company will continue to provide services in the employ of, or in a consulting capacity to, the Company or that they will not set up competing businesses or accept positions with competitors. There is no guarantee that certain employees of, and contractors to, the Company who have access to confidential information will not disclose the confidential information.

MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The information provided in this report as referenced from the Company’s consolidated financial statements for the referenced reporting period is the sole responsibility of management. In the preparation of the information along with related and accompanying statements and estimates contained herein, management uses careful judgement in assessing the values (or future values) of certain assets or liabilities. It is the opinion of management that such estimates are fair and accurate as presented.

OTHER INFORMATION

Additional information on the Company is available on SEDAR at www.sedar.com.

CORPORATE INFORMATION

Directors: Kevin Smith Braydon Hobbs Ronald Woo