GALAXY CAPITAL CORP.
Management’s Discussion and Analysis
For the Year Ended
January 31, 2012
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
INTRODUCTION
This discussion and analysis of financial position and results of operation is prepared as at April 20, 2012 and
should be read in conjunction with the annual audited financial statements for the fiscal period ended January 31,
2012 prepared in accordance with International Foreign Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”). This is the first time that the Company has prepared its
financial statements in accordance with IFRS, having previously prepared its financial statements in accordance
with pre-changeover Canadian Generally Accepted Accounting Principles (pre-changeover Canadian GAAP). An
explanation of how the transition to IFRS has affected the reported financial position, financial performance and
cash flows of the Company is provided under BASIS OF PREPARATION AND FIRST-TIME ADOPTION
OF INTERNATIONAL FINANCIAL REPORTING STANDARDS later in this document.
All dollar figures included therein and in the following management discussion and analysis (“MD&A”) are quoted
in Canadian dollars unless otherwise indicated. Additional information related to the Company, including its press
releases and quarterly and annual reports, is available for view on SEDAR at www.sedar.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this MD&A constitute “forward-looking statements”. Such forward-looking
statements involve a number of known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only as of the date the statements were
made, and readers are advised to consider such forward-looking statements in light of the risks set forth below and
as detailed under RISK AND UNCERTAINTIES in this MD&A.
Risk factors that could affect the Company’s future results include, but are not limited to, risks inherent in mineral
exploration and development and mining activities in general, volatility and sensitivity to market prices for
commodities, changes in government regulation and policies including environmental regulations and reclamation
requirements, receipt of required permits and approvals from governmental authorities, competition from other
companies, and the ability to attract and retain skilled employees and contractors. Further information regarding
these and other factors which may cause results to differ materially from those projected in forward-looking
statements are included in the Company’s filings with securities regulatory authorities. The Company does not
undertake to update any forward-looking statement that may be made from time to time by the Company or on its
behalf, except in accordance with applicable securities laws.
DESCRIPTION OF BUSINESS
Galaxy Capital Corp. (the "Company") was incorporated under the Business Corporations Act (BC) on December
14, 2009 and was classified as a Capital Pool Company as defined in TSX Venture Exchange (“TSX-V”) Policy
2.4 until December 2, 2011, when the Company completed its qualifying transaction and concurrent financing.
Subsequent to the completion of the qualifying transaction the principal business of the Company is the acquisition
and exploration of resource properties in Canada.
The qualifying transaction consists of an agreement with Brownell Lake Holdings Inc. (“Brownell”) where
Brownell agreed to grant to the Company an option to acquire a 100% interest in seven mining contiguous claims
located approximately 100 kilometres southeast of La Ronge, Saskatchewan.
Concurrent with the qualifying transaction the Company completed a financing consisting of 5,062,500 units at a
price of $0.13 per unit for gross proceeds of $658,125
To date the Company has undertaken no significant exploration programs on its properties held.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
MINERAL PROPERTIES
The Company has the following interests in mineral properties, all located in Canada
Brownwell Lake Property, Saskatchewan
On March 3, 2011, the Company signed a letter of Intent (“LOI”) with Brownell Lake Holdings Inc. (“Brownell”)
whereby Brownell agreed to grant to the Company an option to acquire a 100% interest in seven mining contiguous
claims located approximately 100 kilometres southeast of La Ronge, Saskatchewan. On December 2, 2011, the
Company received regulatory approval for its qualifying transaction.
The option, as granted by Brownell to the Company, consists of three separate options pursuant to which the
Company can acquire incrementally up to a 100% interest in the properties by paying Brownell the aggregate sum
of $825,000,($25,000 paid) issuing and allotting 5,000,000 common shares (1,000,000 – issued) and completing
expenditures in the aggregate sum of $1,250,000 on the properties over a three-year period. The agreement is
subject to a 2% net smelter royalty (“NSR”) on commercial production. The Company has the right to purchase
1/2 of the NSR within a period of two years from commencement of production for $1,500,000.
A technical report dated March 7, 2011, amended May 19, 2011, on the Brownell Lake Property can be reviewed
on Sedar at www.sedar.com
The Brownell Lake Property is located in northeastern Saskatchewan within NTS Map Sheets 63L13 and 63M04
with central coordinates of Latitude: 54 º 59’N and Longitude: 103 º 45’W (UTM 6092500N, 580000E, Nad83
Zone 13N). The property comprises eight contiguous mineral claims totaling 10,850 hectares. All eight claims are
currently held 100 % by 101053292 Sask. Ltd (which subsequently changed its name to Brownell (which
subsequently changed its name to Brownell Lake Holdings Inc).
Galaxy can earn a 100% undivided interest in the property in three stages by paying an aggregate sum of
CDN$825,000 to the vendors, issuing 5,000,000 Common Shares to the vendors and spending an aggregate sum of
CDN$1,250,000 on expenditures over a three year period.
An NI43-101 Technical Report was prepared for property vendor in October 2009. The report concluded that the
Brownell Lake project is at an early exploration stage and additional ground geophysics, ground prospecting,
geological mapping and geochemical sampling are warranted. Significant amounts of exploration data are available
from the Saskatchewan Government and the digitization and compilation into a GIS database would greatly
enhance the framework and help focus further work. Subsequent to compilation and further ground work,
additional diamond drilling was recommended and should be undertaken to assess continuity of mineralization
tested in 2007 and 2008 and to evaluate the other anomalous zones in the area.
Following on these recommendations, Galaxy is planning a summer exploration program on the property
consisting of ground geophysics (Mag-VLF) and detailed grid sampling.
The claim block is located approximately 100 kilometers ESE of La Ronge, Saskatchewan and is best accessed
from there via float or ski equipped aircraft. Alternatively, the property can also be easily accessed from Flin Flon,
Manitoba (~120 km to the ESE). The closest transmission lines are at Pelican Narrows ~60 km to the ENE and La
Ronge to the W. Deschambault Lake, a small Cree Nation community with highway access and basic services, is
located approximately 25 km to the SE.
The Olsen Lake showing has been the main subject of exploration by 101053292 Sask Ltd. receiving preliminary
drilling in 2007. Follow up drilling in 2008 successfully tested lateral and down dip extensions of the first
promising drill hole, DDH BL-1. In total, 5 holes totaling 894.5 m have been drilled on the Brownell Lake
Property. The drilling results include mineralized zones correlating between drill holes, assay values up to 13 g/t
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
MINERAL PROPERTIES (continued)
Brownwell Lake Property, Saskatchewan (continued)
Au over 0.65 m (DDH BL-4), composite continuous assay values of up to 1.52 g/t Au over 11.6 m (DDH BL-4),
and discontinuous composite assay values of 0.56 g/t over 17.3 m (DDH BL-2).
Sun Graphite Property, Quebec
On February 28, 2012, the Company entered into a property option agreement with Zimtu Capital Corp, to acquire
an undivided 100% interest in the Sun Graphite property, comprising 76 claims covering 4,205 hectares, located
approximately 125 km northwest of Baie Comeau, Quebec
Consideration for the acquisition comprises staged payments aggregating $100,000 cash, the issuance of 2,000,000
Common shares, and exploration expenditures aggregating $150,000. The vendor will retain a 2% Net Milling
Returns Royalty, of which the Company may acquire one-half thereof for $1,000,000.
The agreement is currently subject to regulatory approval.
The Sun Graphite property consists of 4,200 hectares, located approximately 145 km by road, north of BaieComeau, QC. The property is owned 100% by Zimtu Capital Corp. The claim block hosts multiple targets for
large flake graphite, initially identified by Outokumpu Mines Inc. in 1998, looking for base metal mineralization.
Outokumpu conducted a 2500 km helicopter-borne magnetometer and electromagnetic survey over the area in
1998. Ground follow-up of the resulting anomalies determined that all of the conductive zones were caused by
graphite, rather than by massive sulphides containing base metals. No further ground work was performed by
Outokumpu at that time.
The property is located within the Central Metasedimentary Belt of the Grenville Province of the Canadian Shield.
This geological province is characterized by a high level of metamorphism, critical in the development of coarse
flake graphite. This metamorphism is believed to have occurred approximately one billion years ago.
The property geology features a contact zone between the Lac de la Blache anorthosite complex and a variably
magnetic sequence of cataclastic gabbro interlayered with paragneiss. According to reports prepared for
Outokumpu on the ground follow-up work in 2000, the paragneiss is the main host for graphite mineralization.
Graphite was found in zones up to 20 meters in width. Within these zones, disseminated graphite, typically
containing 10% graphite, and massive veins, 20-30 cm in width, were commonly observed.
Within the property boundary, in excess of 25 km of conductive horizons were identified from the airborne survey.
All of this may be considered prospective for graphite mineralization.
Because graphite was not the commodity of interest, no testing of the graphite (such as sieve tests) was carried out.
However, elsewhere in the Grenville Province, similar geological environments are usually characterized by the
presence of coarse flake graphite.
The Company cautions that it has not verified the quality and accuracy of the historic data reported, which predate
the introduction of National Instrument 43-101 and cautions readers not to rely upon them. The historic
information was generated from internal company reports from a previous operator. This source is believed to be
reliable; however, it has not been confirmed by the company’s Qualified Person.
A field program of ground geophysics (mag/VLF), mapping, prospecting and sampling is planned for early
summer 2012, with the objective of developing targets for a late summer drill program.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
MINERAL PROPERTIES (continued)
Buckingham Graphite Property
On March 15, 2012, the Company entered into a an agreement with 9187-1400 Quebec Inc. to acquire an undivided
100% interest in the Buckingham Graphite Property, comprising 22 mining claims covering 1324 hectares located
east of Buckingham, Quebec.
Consideration for the acquisition comprises staged payments aggregating $30,000, ($15,000 paid) and the issuance
of $600,000 Common shares.. The vendor will retain a 2% Net Milling Returns Royalty, of which the Company
may acquire one-half thereof for $1,000,000.
The agreement is subject to regulatory approval.
The Buckingham Graphite property comprises two former producing mines, located just east of Buckingham, QC.
They are located in the highly prospective Central Metasedimentary Belt of the Grenville geological province, host
to many active graphite projects. The host rocks for both deposits are graphitic crystalline marbles, similar to the
host stratigraphy at Timcal’s Lac des Iles graphite mine, currently Canada’s only producing graphite mine. The
two properties cover a total of 1,324 Ha on 22 mining claims.
The Ste-Marie deposit had small scale production in 1865, with a total reported production of 50 tons of graphite.
The mineralization is hosted in lenticular masses and mineralized veins, within a crystalline limestone marble. The
mineralization results from carbonitization of organic matter in calcareous sedimentary formations during the
Grenvillian metamorphic event. The graphite mineralization is typically massive.
The Dominion mine produced a reported 916 tons of graphite, between 1910 and 1919. The geological setting is
very similar to the Ste-Marie deposit. Flake graphite is reported to be the common form of graphite in the deposit.
The Company cautions that it has not verified the quality and accuracy of the historic data reported which predate
the introduction of National Instrument 43-101 and cautions readers not to rely upon them. The historic
information was generated from property data on the website of the Quebec Ministère des Resources Naturelle et
de la Faune. This source is believed to be reliable; however, it has not been confirmed by the company’s Qualified
Person.
A field program of ground geophysics (mag/VLF), mapping, prospecting and sampling is planned for summer
2012.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
SELECTED ANNUAL FINANCIAL INFORMATION
The following selected financial information was obtained directly from or calculated using the Company’s
financial statements for the years ended January 31, 2012 and 2011 and the period from inception December 14,
2009 to January 31, 2010:
Year Ended
January 31,
2011**
Year Ended
January 31,
2012**
Results of Operations
Total Revenue
Net loss for the year / period
Basic and diluted loss per share
Financial Position
Working Capital
Total Assets
Total Shareholders’ Equity
Period
December 14,
2009
to
January 31
2010*
$
(173,151)
(0.04)
$
(111,496)
(0.04)
$
(13,912)
(0.23)
$
779,418
974,035
934,418
$
366,552
379,265
366,552
$
274,088
286,788
274,088
* Prepared under Canadian GAAP
** Prepared under IFRS
RESULTS OF OPERATIONS FOR THE YEAR ENDED JANUARY 31, 2012
For the year ended January 31, 2012 the Company incurred a net loss of $173,151 (2011 - $111,496).
The main changes in expenses incurred between the year ended January 31, 2012 and 2011 were as follows:
Professional fees increased to $97,150 (2011 - $40,157) as a result of increased accounting costs being incurred
relating to the transition to reporting under International Financial Reporting Standards and legal and accounting
fees being incurred pursuant the qualifying transaction, these costs were not incurred in the comparative period;
management fees increased to $8,000 (2011 - $nil) as the Company entered into a Management contract with KJN
Management a company controlled by a Director for management services in December 2011; property
investigation costs increased to $3,000 (2011 - $nil) as the Company expensed the cost of the technical report on
the Brownell property during the current year which was incurred prior to acquisition of the property; regulatory
transfer and filing fees increased to $47,116 (2011 - $26,191) again as significant fees were incurred in the current
year pursuant to the qualifying transaction and concurrent financing, in the comparative year the Company incurred
costs relating to the private placement which was undertaken; rent and utilities increased to $15,300 (2011 $9,800) as rent for the full twelve months was charged during 2012 whereas a charge for seven months was
recorded in 2011; stock based compensation decreased to $nil (2011 - $36,400) as no stock options were granted in
the current year; office expenses increased to $5,513 (2011 – $1,105), as the Company incurred approximately
$4,500 of development costs relating to the Corporate website in the current year. The Company also recorded
$2,928 (2011 - $2,157) of interest received on the short term investments held.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
SUMMARY OF QUARTERLY RESULTS
The quarterly results for the period from inception to January 31, 2012 are presented below
January 31,
2012 (2)
Total Revenue
Income loss for the period
Basic and diluted loss per share
$
52,461
(0.01)
January 31,
2011 (1)
Total Revenue
Income loss for the period
Basic and diluted loss per share
1.
Prepared under Canadian GAAP
2.
Prepared under IFRS
$
(19,193)
(0.00)
Three Month
Periods Ended
October 31,
July 31,
2011 (2)
2011 (2)
$
(68,938)
(0.01)
$
(21,360)
(0.00)
April 30,
2011 (2)
$
Three Month
Periods Ended
October 31,
July 31,
2010 (1)
2010 (1)
$
(8,087)
(0.00)
$
(82,851)
(0.04)
(30,392)
(0.01)
April 30,
2010 (1)
$
(1,365)
(0.00)
Period
December 14,
2009 to
January 31,
2010 (1)
$
(13,912)
(0.00)
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JANUARY 31, 2012
For the three month period ended January 31, 2012 the Company incurred a net loss of $52,461 (2011 - $19,193).
Professional fees increased to $34,000 (2011 - $13,046) as a result of increased legal costs and accounting costs
being incurred regarding the qualifying transaction and the adoption of IFRS; management fees increased to $8,000
(2011 - $nil) as the Company entered into a Management contract with KJN Management a company controlled by
a Director for management services in December 2011; regulatory, transfer and filing fees increased to $2,469
(2011 - $2,258) as the Company incurred regulatory pursuant to the qualifying transaction and concurrent financing
in the three month period; rent and utility costs decreased to $3,750 (2011 - $4,800); office expenses increased to
$4,892 (2011 - $211) as the Company incurred approximately $4,500 of development costs relating to the
Corporate website in the current period. The Company also recorded $650 (2011 - $1,122) of interest received on
the short term investments held.
FINANCIAL INSTRUMENTS
As at January 31, 2012, the Company's financial instruments consist of cash, short term investments and accounts
payable and accrued liabilities. Unless otherwise noted, it is management's opinion that the Company is not
exposed to significant interest or credit risks arising from these financial instruments.
The fair value of these financial instruments approximates their carrying values, unless otherwise noted.
Management does not believe the Company is exposed to significance financial risk arising from fluctuations in
foreign exchange rates and the degree of volatility of these rates, as its’ operations are conducted in Canadian
dollars. The Company does not use derivative instruments to reduce its exposure to foreign currency risk.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
FINANCIAL INSTRUMENTS (continued)
Financial Risk Factors
The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:
Foreign Currency Risk
The Company is not subject to any currency risk.
Credit Risk
Credit risk is the risk of a financial loss to the Company if counterparty to a financial instrument fails to meet
its contractual obligations. The Company’s cash is primary held in large Canadian financial institutions.
Management believes that the credit risk concentration with respect to cash is remote.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The risk that the Company will realize a loss as a result of a
decline in the fair value of its cash is limited because the Company’s cash are held by a Canadian chartered
bank and the Company has no bank debt.
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 approach to manage liquidity risk is to ensure that it will have sufficient liquidity to meet
liabilities when due. Accounts payable and accrued liabilities are due within the current operating period and
the Company has sufficient liquidity to meet these obligations.
Market risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign
exchange rates and commodity prices
(a) Interest rate risk
The Company has cash and no interest-bearing debt. The Company’s current policy is to invest excess
cash in investment-grade short-term demand deposit issued by its banking institutions. The Company
periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.
(b) Foreign currency risk
The Company’s operations to date have been in Canada. The Company is not exposed to foreign
currency risk.
(c) Price risk
The Company is exposed to price risk with respect to commodity prices. Commodity price risk is
defined as the potential adverse impact on the Company’s earnings due to movements in individual
commodity price movements and volatilities. The Company closely monitors individual commodity
prices to determine the appropriate course of action to be taken by the Company.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
LIQUIDITY AND CAPITAL MARKETS
The Company has financed its operations to date primarily through the issuance of common shares. The Company
continues to seek capital through various means including the issuance of equity and/or debt.
The financial statements 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 for the foreseeable future. The
continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to
commence profitable operations in the future.
January 31, 2012
Working Capital
Deficit
$
$
779,418
(298,559)
January 31, 2011
$
$
366,552
(125,408)
On July 7, 2010 the Company closed its Initial Public Offering and issued 2,000,000 Common shares at $0.10 per
share for gross proceeds of $200,000.
The Company paid cash finder’s fees of $42,440 and issued 200,000 Agents Warrants exercisable at $0.10 per
warrant into 200,000 Common shares until July 7, 2012. The Agent’s Warrants have a fair value of $10,500,
estimated using the Black-Scholes option pricing model.
During the year ended January 31, 2011, the Company also issued;
i) 50,000 common shares on the exercise of stock options for gross proceeds of $5,000 and;
ii) 50,000 common shares on the exercise of agents warrants for gross proceeds of $5,000.
On November 30, 2011, as part of its qualifying transaction the Company completed a private placement and
issued 5,062,500 Units at $0.13 per Unit for gross proceeds of $658,125. Each Unit consists one common share
and one non-transferable share purchase warrant. Each share purchase warrant can be exercised at $0.175 into one
common share of the Company until November 30, 2013.
In connection with the private placement the Company paid cash finder’s fees of $29,068 and issued 151,600
finders compensation warrants exercisable at $0.175 each into 151,600 common shares until November 30, 2013.
The finders compensation warrants have a fair value of $5,700, estimated using the Black-Scholes option pricing
model. The Company also incurred other share issue costs comprising legal and regulatory fees aggregating
$18,040.
The proceeds from the private placement will be utilized to fund the first phase of a proposed work program on the
property and for general working capital.
On November 30, 2011 the Company issued 1,000,000 common shares with a fair value of $130,000 pursuant to
the Brownell Lake mineral property option agreement.
On March 27, 2012, the Company arranged for a non-brokered private placement of up to 12,000,000 units at a
price of $0.18 per unit. Each unit consists of one common share and one-half of one non-transferable share
purchase warrant. Each full share purchase warrant is exercisable at a price of $0.25 into one common share of the
Company until 18 months after the closing date.
Finder’s fees of 8% cash and 8% broker’s warrants will be paid to qualifying finders. Each broker’s warrant is
exercisable at $0.25 into one common share of the Company until 12 months after the closing date.
The private placement is subject to regulatory approval.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
RELATED PARTY TRANSACTIONS
Key management personnel are the persons responsible for planning, directing and controlling the activities of the
Company, and include both executive and non-executive directors, and entities controlled by such persons. The
Company considers all directors and officers of the Company to be key management personnel.
As at January 31, 2012, accounts payable and accrued liabilities included $6,500 (2011 - $1,990) for professional
fees due to a M. G. Wright Inc. a company controlled by Matthew Wright, an officer of the Company.
During the year ended January 31, 2012 and 2011, the Company accrued or was charged the following by related
individuals or Companys’ controlled by related parties:
i)
Rent of $15,300 (2011 - $9,800) was charged by Ansell Capital Corp, a Company with three common directors,
being Rahoul Sharan, Bev Funston and Patrick Campling Jnr, and a common officer, being Matthew Wright.
ii) Professional fees of $11,700 (2011 - $2,058) were charged by M. G. Wright Inc, a company controlled by
Matthew Wight, an officer of the Company.
iii) Management fees of $8,000 (2011 – $Nil) were charged by KJN Management Ltd. a company controlled
Rahoul Sharan, a Director of the Company.
These transactions were in the normal course of operations and measured at the exchange amount, which is the amount
established and agreed to by the related parties.
On December 1, 2011, the Company entered into a management contract with KJN Management Ltd. (“KJN”), a
Company controlled by a Rahoul Sharan, the President of the Company. The agreement was for a minimum term
of thirty six months expiring on January 15, 2015. Pursuant to the agreement, KJN would receive $4,000 per
month over the term of the agreement. The agreement could be terminated by KJN by giving 90 days written
notice to the Company and by the Company by delivering twelve months written notice to KJN after the expiry of
the initial term. Subsequent to the year end on March 1, 2012, by mutual agreement of the parties, the contract was
cancelled upon the resignation of Rahoul Sharan as President and the appointment of the Company’s new President
and CEO, Mr Chris Healey. At that time the Company entered into a new contract for consulting services with
KJN.
The new consulting agreement with KJN is for a term of up to one year expiring February 28, 2013. Pursuant to
the agreement, KJN will receive $2,500 per month over the term of the agreement. The agreement can be
terminated by either party upon 30 days written notice.
On March 1, 2012, Mr. Chris Healey was appointed President and CEO of the Company. At that time the company
entered into a management contract with Healex Consulting ltd, (“Healex”) a company controlled by Chris Healey.
Remuneration pursuant to the agreement is $3,000 per month for managerial services plus $750 per day if time
incurred exceeds 4 days per month based on a three month rolling average. The agreement can be terminated by
either party upon 90 days written notice.
MANAGEMENT
Our Company’s Board and management is a highly qualified team of professionals with essential experience in
resource acquisition, exploration, and development, finance and marketing. We are committed to building a highly
valued asset base and a strong, loyal shareholder following.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has not entered into any off-Balance Sheet arrangements.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
BASIS OF PREPARATION AND FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS
First time adoption of IFRS
The Company’s financial statements for the year-ended January 31, 2012 are the first annual financial statements
prepared in accordance with IFRS. IFRS 1, First Time Adoption of International Financial Reporting Standards
(“IFRS 1”), requires that comparative financial information be provided. As a result, the first date at which the
Company has applied IFRS was February 1, 2010 (the “Transition Date”). IFRS 1 requires first-time adopters to
retrospectively apply all effective IFRS standards as of the reporting date, which for the Company was January 31,
2012. Therefore, the financial statements for the year ended January 31, 2012, the comparative information
presented in the financial statements for the year ended January 31, 2011 and the opening IFRS balance sheet at
February 1, 2010 are prepared in accordance with IFRS standards effective at the reporting date. However, IFRS 1
also provides for certain optional exemptions and certain mandatory exceptions for first time IFRS adopters. Prior
to transition to IFRS, the Company prepared its financial statements in accordance with pre-changeover Canadian
Generally Accepted Accounting Principles (“Pre-changeover Canadian GAAP”).
In preparing the Company’s opening IFRS financial statements, the Company has reviewed the amounts reported
previously in its financial statements prepared in accordance with Pre-changeover Canadian GAAP, and
determined that that no adjustments were required to the previously reported amounts as a result of adopting IFRS.
First time adoption of IFRS (continued)
In preparing these financial statements in accordance with IFRS 1, the Company has applied the following optional
exemptions and exceptions from full retrospective application of IFRS:
Elected exemptions from full retrospective application
Share-based payment transactions
The Company has elected not to retrospectively apply IFRS 2 to equity instruments that were granted and that vest
before the transition date. As a result of applying this exemption, the Company will apply the provision of IFRS 2
to all outstanding equity instruments that are unvested prior to the date of transition to IFRS.
Business combinations
The Company has elected not to retrospectively apply IFRS 3, Business Combinations, to any business
combinations that may have occurred prior to its Transition Date and such business combinations have not been
restated.
Mandatory exceptions to retrospective application
Estimates
In accordance with IFRS 1, an entity’s estimates under IFRS at the date of transition to IFRS must be consistent
with estimates made for the same date under previous GAAP, unless there is objective evidence that those
estimates were in error. The Company’s IFRS estimates as of February 1, 2010 are consistent with its Canadian
GAAP estimates for the same date.
IFRS employs a conceptual framework that is similar to Canadian GAAP. However, some differences exist in
certain matters of recognition, measurement
The Company has consistently applied the same accounting policies in its opening IFRS statement of financial
position at February 1, 2010 and throughout all periods presented, as if these policies had always been in effect.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
BASIS OF PREPARATION AND FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS (continued)
There was no material impact of transitioning to IFRS on the Company’s reported financial position at February 1,
2010 or January 31, 2011. Also there was no material impact on the statements of operations, or statements of cash
flows for the year ended January 31, 2011, and as a result no reconciliation statements for the statement of financial
position, statement of operation or statement of cash flows are presented.
The financial statements are prepared on a going concern basis, which assumes that the Company will be able to
meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially
different from carrying values as shown and these consolidated financial statements do not give effect to
adjustments that would be necessary to the carrying values and classification of assets and liabilities should the
Company be unable to continue as a going concern.
Critical Estimates
The preparation of financial statements in conformity with IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period.
Information about critical judgments in applying accounting policies that have the most significant effect on the
amounts recognized in the consolidated financial statements is included in the following notes:
i)
Exploration and evaluation expenditure
The application of the Company’s accounting policy for exploration and evaluation expenditure requires
judgment in determining whether it is likely that future economic benefits will flow to the Company,
which may be based on assumptions about future events or circumstances. Estimates and assumptions
made may change if new information becomes available. If, after expenditure is capitalized, information
becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalized is
written off in the statement of operations in the period the new information becomes available.
ii) Impairment
At each reporting period, assets, specifically exploration & evaluation are reviewed for impairment
whenever events or changes in circumstances indicate that their carrying amounts exceed their recoverable
amounts. The assessment of the carrying amount often requires estimates and assumptions such as
discount rates, exchange rates, commodity prices, future capital requirements and future operating
performance.
iii) Share-based payment transactions
The Company measures the cost of equity-settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted.
Estimating fair value for share-based payment transactions requires determining the most appropriate
valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires
determining the most appropriate inputs to the valuation model including the expected life of the share
option, volatility and dividend yield and making assumptions about them. The assumptions and models
used for estimating fair value for share-based payment transactions are disclosed in Note 7 to the financial
statements.
iv) Title to mineral property interest
Although the Company has taken steps to verify title to mineral properties in which it has an interest, these
procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or
transfers and title may be affected by undetected defects.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
BASIS OF PREPARATION AND FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS (continued)
Critical Estimates (continued)
v) Income taxes
Significant judgment is required in determining the provision for income taxes. There are many
transactions and calculations undertaken during the ordinary course of business for which the ultimate tax
determination is uncertain. The Company recognizes liabilities and contingencies for anticipated tax audit
issues based on the Company’s current understanding of the tax law. For matters where it is probable that
an adjustment will be made, the Company records its best estimate of the tax liability including the related
interest and penalties in the current tax provision. Management believes they have adequately provided for
the probable outcome of these matters; however, the final outcome may result in a materially different
outcome than the amount included in the tax liabilities.
In addition, the Company recognizes deferred tax assets relating to tax losses carried forward to the extent
there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation
authority and the same taxable entity against which the unused tax losses can be utilized. However,
utilization of the tax losses also depends on the ability of the taxable entity to satisfy certain tests at the
time the losses are recouped.
vi) Rehabilitation provision
The application of the Company’s accounting policy for rehabilitation is based on internal estimates.
Assumptions, based on the current economic environment, have been made which management believes
are a reasonable basis upon which to estimate the future liability. These estimates take into account any
material changes to the assumptions that occur when reviewed regularly by management. Estimates are
reviewed annually and are based on current regulatory requirements. Significant changes in estimates will
result in changes to provisions from period to period. Actual rehabilitation costs will ultimately depend on
future market prices for the rehabilitation costs which will reflect the market conditions at the time of the
rehabilitation costs are actually incurred.
ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIED
IFRS 9: Financial Instruments was issued in November 2009. It addresses classification and measurement of
financial assets and replaces the multiple category and measurement models in IAS 39 for debt instruments with a
new mixed measurement model having only two categories: Amortized cost and fair value through profit or loss.
IFRS 9 also replaces the models for measuring equity instruments and such instruments are either recognized at fair
value through profit or loss or at fair value through other comprehensive income. Where such equity instruments
are measured at fair value through other comprehensive income, dividends, to the extent not clearly representing a
return of investment, are recognized in profit or loss; however, other gains and losses (including impairments)
associated with such instruments remain in accumulated comprehensive income indefinitely. This standard is
required to be applied for accounting periods beginning on or after January 1, 2013, with earlier adoption
permitted. The company has not yet assessed the impact of the standard or determined whether it will adopt the
standard early.
The following new standards, amendments and interpretations, that have not been early adopted in these interim
financial statements, will not have an effect on the Company’s future results and financial position:

IFRS 10 Establishes principles for the presentation and preparation of consolidated financial statements
when an entity controls one or more other entities (Effective for annual periods beginning on or after
January 1, 2013)

IFRS 11 Establishes principles for financial reporting by parties to a joint arrangement (Effective for
annual periods beginning on or after January 1, 2013)
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIED (continued)

IFRS 12 Applies to entities that have an interest in a subsidiary, a joint arrangement, an associate or an
unconsolidated structured entity (Effective for annual periods beginning on or after January 1, 2013)

IFRS 13 Defines fair value, sets out in a single IFRS framework for measuring value and requires
disclosures about fair value measurements (Effective for annual periods beginning on or after January 1,
2013)

IAS 12 Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12 (Effective for periods
beginning on or after January 1, 2012))

IAS 27 Contains accounting and disclosure requirements for investments in subsidiaries, joint ventures
and associates when an entity prepares separate financial statements (Effective for periods beginning on or
after January 1, 2013)

IAS 28 Sets out the requirements for the application of the equity method when accounting for
investments in associates and joint ventures (Effective for periods beginning on or after January 1, 2013)

Amendments to IFRS 9: Financial Instruments (Effective for periods beginning on or after January 1,
2013)

OUTSTANDING SHARE DATA
The following details the common shares, stock options, and warrants outstanding as of the date of this MD&A
Common Shares
a)
Authorized
Unlimited common shares, without par value
b) Issued
i)
During the period from December 14, 2009 to January 31, 2010, the Company issued 2,000,000
common shares at a price of $0.05 per share and 1,880,000 common shares at a price of $0.10 per
share for total proceeds of $288,000.
2,450,000 common shares will be held in escrow, and will be released pro-rata to the shareholders as
to 10% of the escrow shares upon issuance of notice of final acceptance of a Qualifying Transaction
by the TSX-V and as to the remainder in 6 equal tranches of 15% every 6 months thereafter for a
period of 36 months. These escrow shares may not be transferred, assigned or otherwise dealt with
without the consent of the regulatory authorities.
ii) On July 7, 2010, the Company completed its Initial Public Offering and issued 2,000,000 common
shares at $0.10 per share for gross proceeds of $200,000.
The Company paid cash finder’s fees of $42,440 and issued 200,000 agent’s warrants exercisable at
$0.10 each into 200,000 common shares until July 7, 2012. The agent’s warrants have a fair value of
$10,500, estimated using the Black-Scholes option pricing model.
iii) On January 28, 2011, the Company issued 50,000 common shares upon the exercise of stock options
for gross proceeds of $5,000.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
OUTSTANDING SHARE DATA (Continued)
Common Shares (Continued)
b) Issued (Continued)
iv) On January 31, 2011, the Company issued 50,000 common shares upon the exercise of agent’s
warrants for gross proceeds of $5,000.
v) On November 30, 2011, the Company issued 5,062,500 units at a price of $0.13 per unit pursuant to a
private placement for gross proceeds of $658,060. Each unit consists of one common share and one
non-transferable share purchase warrant, which entitles the holder to acquire one additional common
share at a price of $0.175 until November 30, 2013.
In connection with the private placement the Company paid cash finder’s fees of $29,068 and issued
151,600 finders compensation warrants exercisable at $0.175 each into 151,600 common shares until
November 30, 2013. The finders compensation warrants have a fair value of $5,700, estimated using
the Black-Scholes option pricing model. The Company also incurred other share issue costs
comprising legal and regulatory fees aggregating $18,040.
vi) On November 30, 2011, the Company issued 1,000,000 common shares pursuant to the Brownell
Lake mineral property option agreement. These shares are subject to an escrow arrangement.
c)
Shares held in Escrow
As mentioned above, as at January 31, 2010, 2,450,000 shares were held in escrow.
Pursuant to the qualifying transaction, 1000,000 shares issued to the vendors of the Brownell Lake mineral
property and an additional 40,000 shares held by the wife of a Director became subject to the escrow
agreement, resulting in a total of 3,490,000 shares being subject to escrow agreements.
During the year ended January 31, 2012, 349,000 common shares were released from escrow upon the
regulatory approval of the qualifying transaction, resulting in 3,141,000 common shares still being held in
escrow to be released in 6 equal tranches of 15% every 6 months thereafter for a period of 36 months.
These escrow shares may not be transferred, assigned or otherwise dealt with without the consent of the
regulatory authorities.
Stock Options
The Company has adopted a stock option plan under which it is authorized to grant options to officers, directors,
employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the
Company. The options can be granted for a maximum of 5 years and vest as determined by the board of directors.
The exercise price of each option may not be less than the fair market value of the common shares.
On July 7, 2010, upon the closing of the Initial Public Offering (“IPO”) the Board of Directors granted 588,000
stock options to directors and officers of the Company, exercisable at a price of $0.10 per share until July 2, 2013.
The fair value of the stock options, estimated using the Black-Scholes stock option pricing model was $36,400. On
January 28, 2010, 50,000 stock options were exercised resulting in 538,000 remaining outstanding.
Agents Warrants
On July 7, 2010, upon the Closing of the IPO 200,000 Agents warrants were issued exercisable at a price of $0.10
per warrant into 200,000 Common shares until July 7, 2012. The fair value of the warrants, estimated using the
Black-Scholes stock option pricing model was $10,500. On January 31, 2010, 50,000 agents’ warrants were
exercised resulting in 150,000 remaining outstanding.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
OUTSTANDING SHARE DATA (Continued)
Finders Compensation Warrants
On November 30, 2011, upon the closing of a private placement, 151,600 finders compensation warrants were
issued exercisable at price of $0.175 into one common share until November 30, 2012. . The fair value of the
warrants, estimated using the Black-Scholes stock option pricing model was $5,700.
RISKS AND UNCERTAINTIES
Limited Operating History
The Company was a Capital Pool Company until December 2, 2011 when it closed its qualifying transaction.
Given the Company’s minimal operating history, it is difficult to evaluate the Company’s prospects, and its future
success is more uncertain than if it has a proven history of operations.
History of Losses
The Company has incurred net losses every period since inception and as of January 31, 2012, had an accumulated
deficit of $298,559.
No History of Dividends
Since incorporation, the Company has not paid any cash or other dividends on its common stock and does not
expect to pay such dividends in the foreseeable future, as all available funds will be invested primarily to finance
its mineral exploration programs. The Company will need to achieve profitability prior to any dividends being
declared.
Dilution
The Company does not generate any revenues from operating and does not have sufficient financial resources to
undertake by itself all of its planned activities. The Company has limited financial resources and has financed its
operations primarily through the sale of securities such as common shares. The Company will need to continue its
reliance on the sale of such securities for future financing, resulting in dilution to the Company’s existing
shareholders.
Capital and Liquidity Risk
The amount of financial resources available to invest for the enhancement of shareholder value is dependant upon
the size of the treasury, profitable operations, and a willingness to utilize debt and issue equity. Due to the size of
the Company, financial resources are limited and if the Company exceeds growth expectations or finds investment
opportunities it may require debt or equity financing. There is no assurance that the Company will be able to
obtain additional financial resources that may be required to successfully finance transactions or compete in its
markets on favourable commercial terms.
Acquisition and Expansion Risk
The Company intends to expand its operations through organic growth and depending on certain conditions, by
identifying a proposed qualifying transaction. There can be no assurance that the Company will be able to identify,
acquire or profitably manage additional properties or businesses.
Dependence on Key Personnel
Loss of certain members of the executive team or key operational leaders of the company could have a disruptive
effect on the implementation of the Company’s business strategy and the efficient running of day-to-day operations
until their replacement is found. Recruiting personnel is time consuming and expensive and the competition for
professionals is intense. The Company may be unable to retain its key employees or attract, assimilate, retain or
train other necessary qualified employees, which may restrict its growth potential.
GALAXY CAPITAL CORP.
Year Ended January 31, 2012
Management’s Discussion and Analysis
MD &A PREPARATION
This MD&A was prepared as April 20, 2012. This MD&A should be read in conjunction with our latest audited
financial statements as at January 31, 2012. This MD&A is intended to assist the reader’s understanding of Galaxy
Capital Corp. and its’ operations, business, strategies, performance and future outlook from the perspective of
management. The documents mentioned above, as well as news releases and other important information may be
viewed through the SEDAR website at www.sedar.com
This MD&A may contain management estimates of anticipated future trends, activities, or results; these are not a
guarantee of future performance, since actual results may vary based on factors and variables outside of
management’s control. Management is responsible for the preparation and integrity of the financial statements,
including the maintenance of appropriate information systems, procedures and internal controls. Management is
also responsible to ensure that information disclosed externally, including the financial statements and MD&A, is
complete and reliable.
Management has evaluated the effectiveness of the Company’s disclosure controls and procedures and has
concluded that they are operating effectively.
The Company’s Board of Directors follows recommended corporate governance guidelines for public companies to
ensure transparency and accountability to shareholders. The Board’s Audit Committee meets with management
Fiscal Yearly to review the financial statement results, including the MD&A, and to discuss other financial,
operating and internal control matters. The Audit Committee receives a report from the independent auditors
annually, and is free to meet with them throughout the year.