Wellbeing Digital Sciences Inc. — Management Reports 2020

Jun 27, 2020

June 26, 2020

This Management Discussion and Analysis ("MD&A") of Auralite Investments Inc. ("Auralite" or the "Company") has been prepared by management as of June 26, 2020 and should be read together with the annual financial statements and related notes for the nine months ended April 30, 2020 which are prepared in accordance with International Financial Reporting Standards ("IFRS"). Additional information regarding the Company can be found on SEDAR at www.sedar.com. All of the following amounts are expressed in Canadian dollars unless otherwise stated.

This MD&A may contain "forward-looking statements" which reflect the Company's current expectations regarding the future results of operations, performance and achievements of the Company. The Company has tried, wherever possible, to identify these forward-looking statements by, among other things, using words such as "anticipate," "believe," "estimate," "expect" and similar expressions. The statements reflect the current beliefs of the management of the Company, and are based on currently available information. Accordingly, these statements are subject to known and unknown risks, uncertainties and other factors, which could cause the actual results, performance, or achievements of the Company to differ materially from those expressed in, or implied by, these statements.

The Company undertakes no obligation to publicly update or review the forward-looking statements whether as a result of new information, future events or otherwise. Historical results of operations and trends that may be inferred from the following discussions and analysis may not necessarily indicate future results from operations.

Overview of Company

Auralite Investments Inc. is a publicly listed investment issuer on the TSX Venture Exchange ("TSXV") trading under the symbol "AAAA". the Company will seek high return investment opportunities in privately held and publicly traded companies, with a focus on companies active in the high-tech, real estate, cannabis, mining and health & wellness sectors.

The Company's financial statements have been prepared in accordance with IFRS applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying financial statements

Investment Evaluation Process

In selecting opportunities for the investment portfolio of Auralite, the Investment Committee will consider various factors in relation to any particular investment, including:

• inherent value of an investment target's assets or potential;
• proven management, clearly defined management objectives and strong technical and professional support;
• future capital requirements to develop the full potential of its business and the expected ability to raise the necessary capital;
• anticipated rate of return and the level of risk;
• financial performance; and
• exit strategies and criteria

Investment Strategy

The following shall be the guidelines for Auralite's investment strategy:

• Auralite's primary focus will be to enhance shareholder value and generate a reasonable investment return by making investments in the high-tech, real estate, cannabis, mining and health and wellness sectors.
• The Company may invest in securities of both public and private companies or other entities that the Company believes have the potential for superior investment returns. The Company may provide financing of a private or public company in exchange for pre- determined royalties or distributions ("royalty securities"), and also acquire all or part of one or more businesses, portfolios or other assets, in each case that the Company believes will enhance value for the shareholders of the Company.
• Target investments may encompass companies at all stages of development, including early stage companies, as well as intermediate and senior companies where opportunities are available
• The Company's primary focus will be to invest in securities or debt instruments of issuers which have quality proven or prospective potential which management of the Company believes are, or will become, amenable to development of the potential. In other sectors, Auralite expects to invest in securities of issuers which it believes have competitive advantages in an area with a large potential market.
• Immediate liquidity shall not be a requirement, but each investment shall be evaluated in terms of a clear exit strategy designed to maximize the relative return in light of changing fundamentals and opportunities.
• Subject to applicable laws, there are no restrictions on the size or market capitalization with respect to Auralite's investments in the equity securities of public or private issuers.
• Depending upon the Company's assessment of market conditions and investment opportunities, the Company may, from time to time, be fully invested, partially invested or entirely uninvested such that the Company is holding only cash or cash-equivalent balances while the Company actively seeks to redeploy such cash or cash-equivalent balances in suitable investment opportunities. Funds that are not invested or expected to be invested in the near-term, while the Company actively seeks to redeploy such funds in one or more suitable investment opportunities, may, from time to time as appropriate, be placed into high quality money market investments, including but not limited to Canadian Treasury Bills or corporate notes rated at least R-1 by DBRS Limited, each with a term to maturity of less than one year.
• Subject to the full approval of the Board, the Investment Committee established by the Company may consider certain special investment situations, including assuming a controlling or joint-controlling interest in an investment target company, which may also involve the provision of advice to management and/or board participation. All investments shall be made in full compliance with applicable laws in relevant jurisdictions, and shall be made in accordance with and governed by the rules and policies of applicable regulatory authorities.
• Investments in private companies or in public companies listed in certain markets may trigger additional filing requirements with the TSX Venture Exchange. Where the investment is not publicly traded on a recognized exchange, advance notice will be provided to the Exchange while the Company is listed on the TSX Venture Exchange.

Investment Strategy (Continued)

• Investments made by the Company are geographically agnostic. It will seek to pursue international opportunities as long as the investment creates value for the Company's shareholders.
• The Company has no specific policy with respect to investment diversification. Each investment will be assessed on its own merits and based upon its potential to generate above market gains for the Company.
• The Company may, from time to time, use borrowed funds to purchase or make investments or to fund working capital requirements, or may make investments jointly with third parties.

Select Financial Information and Results of Operations

As at April 30, 2020, the Company had total assets of $4,160,544 (July 31, 2019 - $3,731,845). As at April 30, 2020, the Company has current liabilities of $62,791 (July 31, 2019 - $nil).

For the nine months ended April 30, 2020, the Company reported a net and comprehensive income of $382,963 (2019 – loss of $3,820,551). Explanations of the nature of costs incurred, along with explanations for those changes in costs are discussed below.

Gain on sale of investment increased to $308,844 from a loss of $3,420,000. During the period ended April 30, 2020, Champignon Brands Inc. (or "Champignon") became a publicly traded company with shares on the Canadian Stock Exchange. Due to the successful public offering, the Company's investment in Champignon increased in value, subsequently, the Company disposed of 1,423,000 million shares of Champignon to realize a gain on investment of $308,844. In the same period in 2019, the Company recognized a charge of $3,420,000 to debt securities investment.

Unrealized gain on investment increased to $470,255 from $nil. The unrealized gain is due to the adjustment to fair value of the investment in shares of Champignon as of April 30, 2020.

As a result of management's effort to lower costs throughout the period ending on April 30, 2020, general and administrative fees decreased to $44,199 from $127,709, professional fees decreased to $55,186 from $81,337 and transfer agent and filing fees decreased to $56,042 from $147,398.

Consulting fees increased to $216,503 from $110,251 as a result of management's increased efforts to identify strategic approaches to invest in the current market environment through the use of consultants.

Summary of Quarterly Results

The Company's previous eight quarters have been presented in the table below.

	Q3	Q2	Q1	Q4	Q3	Q2	Q1	Q4
	2020	2020	2020	2019	2019	2019	2019	2019
Net Income (Loss) for thePeriod	$579,142	$(130,975)	$(74,247)		$(2,767,236) $(1,997,152)	$(95,543)	$(1,718,998)	$(94,559)
Gain (Loss) Per Share	-	-	-	$(0.01)	$(0.01)	-	$(0.01)	-

Auralite Investments Inc.

MANAGEMENT DISCUSSION & ANALYSIS For the Nine Months Ended April 30, 2020

Liquidity and Capital Resources

The Company reported working capital of $4,041,447 (2019 - $3,714,790) at April 30, 2020 and cash of $3,128,708 (2019 - $3,189,070). Current liabilities as at April 30, 2020 consisted of accounts payables and accrued liabilities of $5,541 (2019 - $17,055) and lease liabilities of $57,250 (2019 - $Nil).

The Company may continue to have capital requirements in excess of its currently available resources. In the event the Company's plans change, its assumptions change or prove inaccurate, or its capital resources in addition to projected cash flow, if any, prove to be insufficient to fund operations, the Company may be required to seek additional financing. There can be no assurance that the Company will have sufficient financing to meet its future capital requirements or that additional financing will be available on terms acceptable to the Company in the future.

Investments

At April 30, 2020, the Company's investment portfolio consisted of two privately held investments and one publicly held investment for a total fair value of $860,530.

Share Investments

	Akiva	EVVO	Champignon	Total
Balance July 31, 2019	$-	$247,000	$150,000	$397,000
Additions	100,000	-	-	100,000
Disposals	-	-	(106,725)	(106,725)
Change in fair value	-	-	470,255	470,255
Balance, April 30, 2020	$100,000	$247,000	$513,530	$860,530

On September 7, 2018, the Company purchased 29,411 shares of EVVO Labs Pte Ltd. ("EVVO") for cash consideration of $1,500,000. At January 31, 2020, the fair value of this investment was $247,000, which was determined by applying a valuation technique based on observable market inputs of comparable companies.

On July 11, 2019, the Company subscribed to 2,000,000 shares of Champignon Brands Inc. ("Champignon") for cash consideration of $150,000. During the period ended April 30, 2020, Champignon became a publicly traded company on the Canadian stock exchange, subsequently, the company sold 1,423,000 million shares of Champignon. At April 30, 2020, the fair value of the remaining shares was $513,530, which was based on the share price at the end of the trading session on April 30, 2020.

On April 13, the Company purchased an aggregate of 1,000,000 common shares of Akiva (Akiva Shares") and 500,000 common share purchase warrants exercisable for an additional 500,000 Akiva Shares at a price of $0.40 for a period of 24 months from issuance. At April 30, 2020, the fair value of this investment was $100,000, which was determined by applying a valuation technique based on observable market inputs of comparable companies.

Off-Balance Sheet Arrangements

The Company does not utilize off-balance sheet arrangements.

Auralite Investments Inc.

MANAGEMENT DISCUSSION & ANALYSIS For the Nine Months Ended April 30, 2020

Transactions with Related Parties

During the nine months ended April 30, 2020, the Company paid the following advisory and consulting fees:

Consulting and Management Fees

			Nine months ended
	March 31, 2020		March 31, 2019
Consulting fees paid to the CEO of the Company	$	31,500	$	12,600
Consulting fees paid to a private company where an independent		9,000		24,000
director of the Company is also a director
Consulting fees paid to a private company controlled by an		9,450		-
independent director of the Company
	$	49,950	$	36,600

Significant Accounting Policies

New Accounting Change

IFRS 16 Leases:

In January 2016, the IASB issued IFRS16 – Leases which replaces IAS 17 – Leases and its associated interpretative guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, onbalance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for shortterm leases or leases of low value assets. Lessor accounting remains similar to current accounting practice. The standard is effective for annual periods beginning on or after January 1, 2019. The Company adopted this new standard on August 1, 2019. The Company's analysis of contracts determined that the adoption of the new standard will result in recognition of a right-of-use asset and lease liability of $80,437.

Critical Accounting Estimates

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Not applicable for Venture Issuers.

Financial Instruments and Risks

The fair values of cash, investments and accounts payable approximate their carrying values.

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

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 or indirectly; and

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

(a) The following is an analysis of the Company's financial assets measured at fair value as at April 30, 2020:

	As at April 30, 2020
		Level 1	Level 2	Level 3
Cash	$	3,128,708	$-	$-
Restricted cash		115,000	-	-
Share investments		513,530	347,000	-
	$	3,757,238	$347,000	$-

Auralite Investments Inc.

MANAGEMENT DISCUSSION & ANALYSIS For the Nine Months Ended April 30, 2020

Financial Instruments and Risks (Continued)

(b) Interest rate

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its restricted cash as these instruments have maturities of one year or less and are therefore exposed to interest rate fluctuations on renewal. A 1% change in the market interest rates would have an impact on the Company's net income of $1,150.

(c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company's objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet its liquidity requirements at any point in time. The Company achieves this by maintaining sufficient cash on hand to meet its financial obligations. Liquidity risk is assessed as high.

(d) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's exposure to credit risk is on its cash held in bank accounts and on its investments. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies. Credit risk on investments is assessed as high.

(e) Global economic conditions

General global economic conditions, including, without limitation, general levels of economic activity, fluctuations in the market prices of securities, participation by other investors in the financial markets, economic uncertainty, national and international political circumstances, natural disasters, public health crises(such as the recent global outbreak of a novel coronavirus, COVID-19) and other events outside of our control, may affect the activities of Auralite and its investments.

Subsequent Events

On May 22, 2020 Auralite has acquired an aggregate of 2,000,000 common shares of Gold Lion Resources Inc. ("Gold Lion") and 2,000,000 common share purchase warrants exercisable for an additional 2,000,000 Gold Lion Shares at a price of $0.75 for a period of 24 months from issuance.

On May 22, 2020 Auralite has disposed of its interest in Singapore-based EVVO Labs Pte. Ltd. back to EVVO, in consideration for a $250,000 (Singapore dollars) secured by a promissory note (the "Secured Note"). The Secured Note is due one year from issuance and is secured by a pledge of the shares being sold back to EVVO.

On May 26, 2020 the Company has appointed James Henning as a Director of the Company effective immediately. Mr. Terry Thompson has resigned as a Director and as the Chief Financial Officer of the Company effective immediately. Mr. Peter Nguyen has been appointed as the Chief Financial Officer to replace Mr. Thompson. Mr. Nguyen currently also serves as a Director of the Company.

On May 27, 2020 Alvin Tan has resigned from the Company's board of directors, effective immediately. The Company intends to fill the vacancy left by Mr. Tan's resignation and continues to interview qualified candidates.

On May 28, the Company announced its intention to consolidate all of the Company's issued and outstanding common shares on the basis of ten pre-consolidation shares for one post-consolidated share (the "Consolidation"). The Company currently has 289,197,000 common shares issued and outstanding. Following completion of the Consolidation, the Company will have 28,919,700 common shares issued and outstanding.

On May 28, the Company announced its intention to change its name from "Auralite Investments Inc." to "Myconic Capital Corp." (the "Name Change"), or such other name as the Company's directors may determine to better reflect the Company's business activities going forward.

Other Requirements

Summary of Outstanding Securities as at June 26, 2020

Authorized: Unlimited number of common shares without par value.

Issued and outstanding: 289,197,000 Shares (including 2,700,000 Shares held in escrow)

Stock options: 500,000 @ $0.025 per share.

ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS WITHOUT SIGNIFICANT REVENUE

Additional information relating to our Company, including periodic quarterly and audited financial reports, is available on SEDAR at www.sedar.com.