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OFFON

DISCOVERY ENERGY CORP.

(DENR)
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DISCOVERY ENERGY : Management's Discussion and Analysis. (form 10-Q)

10/15/2020 | 04:09pm EDT

CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS




This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements are based on current expectations and projections
about future events. These forward-looking statements are subject to known and
unknown risks, uncertainties and assumptions about Discovery that may cause
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, forward-looking statements can be identified by the use of terminology
such as "may," "might," "should," "could," "would," "expect," "plan,"
"anticipate," "believe," "estimate," "continue," or the negative of such terms
or other similar expressions. Factors that might cause or contribute to such a
discrepancy include, but are not limited to, those described in Discovery's
other Securities and Exchange Commission filings. The following discussion
should be read in conjunction with Discovery's financial statements and related
notes thereto included elsewhere in this report.



                                    General



Discovery Energy Corp. (the "Company") was incorporated under the laws of the
state of Nevada on May 24, 2006 under the name "Santos Resource Corp". The
current business of the Company is the exploration and development of the
584,651 gross acres (914 sq. miles) area in South Australia ("Prospect") held
under Petroleum Exploration License PEL 512 ("License"). The Prospect is located
in the "Western Flank" area, which is the southwest Permian edge of the Cooper
and Eromanga Basins, the most prolific producing onshore region in Australia.
There are three separate acreage blocks in the Prospect: West (~400,000 acres),
South (~181,000 acres) and Lycium (~4,000 acres). In May 2012, the Company
incorporated a wholly owned Australian subsidiary, Discovery Energy SA Ltd.
("Subsidiary"), for the purpose of acquiring a 100% working interest in the
License. In May 2016, the Subsidiary's legal entity status changed from public
to private and its name changed to Discovery Energy SA Pty Ltd. The Company is
in the initial exploration phase of determining whether or not the Prospect
contains economically recoverable volumes of crude oil, natural gas and/or
natural gas liquids (collectively "Hydrocarbons"). Although the Company's
current focus is primarily on the Prospect, management from time-to-time
exchanges information with other industry participants regarding additional
investment opportunities in Australia.



                         Recent Developments and Events



Coronavirus Pandemic. In December 2019, a novel strain of coronavirus,
SARS-CoV-2, which causes coronavirus disease 2019 ("COVID-19"), surfaced in
Wuhan, China. Since then, SARS-CoV-2 and COVID-19 spread to many countries,
including the U.S. and Australia. The COVID-19 pandemic led to the
implementation of various responses, including government-imposed quarantines,
travel restrictions and other public health safety measures. It resulted in a
significant spike in unemployment and a concomitant decline in economic activity
in the U.S., Australia and many other countries, and any future outbreak of a
health epidemic or other adverse public health developments may have similar
effects. Although the effects of the COVID-19 pandemic have been lessening in
the U.S. since the middle of the summer of 2020, the rate of the decline of new
cases in the U.S. may be flattening. Moreover, in other parts of the world,
these effects recently started worsening again. Furthermore, even though the
rate of new cases in Australia seems to continue to decline, overall, globally
the improvement in the situation may be stalled. All of these developments
create a renewed uncertainty regarding the future, particularly for those
companies engaged in the exploration and production of Hydrocarbons. The current
COVID-19 pandemic could continue to, and future similar epidemics or pandemics
could also, materially and adversely impact our ability to finance and conduct
our business once it becomes operational, and could materially and adversely
impact our operations, financial condition and results.



Severe Hydrocarbons Price Decline. Another recent development occurring more or
less simultaneously with the COVID-19 pandemic is a Hydrocarbons price war that
began in early March 2020. At the time that this event started on March 8, 2020,
the price of Brent crude was $45.27 per barrel, which was already down from a
recent high of $68.91 on January 6, 2020. Such price declined to a low of $19.33
on April 21, 2020. On October 14, 2020, the posted price of Brent crude was
$43.32. Prices of Hydrocarbons are volatile and entail certain risks. The
Company has no assurance that the price of Hydrocarbons will recover to adequate
levels or that the Company will not be harmed by prolonged low levels of
Hydrocarbon prices.



13






Suspension of Work Commitment. On August 13, 2020, the Company received from the
Government of South Australia, Department of Energy and Mining, confirmation
that such agency had approved the Company's application for an additional
12-month suspension of the work commitment relating to the License. Prior to
this further suspension, the Company's remaining work commitments were due to be
completed by October 29, 2022. The deadlines for the Company's remaining work
commitments are detailed in the section captioned "Current Primary Activity"
below.



                             Historical Milestones


To date, the Company has achieved the following milestones:

* On October 26, 2012, the License was granted to the Subsidiary. After the

License grant, the Company's primary focus was on completing a financing to

raise sufficient funds so that the Company could undertake a required

proprietary seismic acquisition program. After exploring a number of possible

financings, the precipitous decline in crude oil prices starting in the summer

of 2014 delayed the Company's ability to successfully complete a financing of

the type being sought.

* In May 2016, the Company completed its first closing under a financing

arrangement pursuant to which the Company issued to two investors Senior

Secured Convertible Debentures due May 27, 2021 (each a "Debenture" and

collectively the "Debentures"). To date, the Company has issued a total of 14

Debentures having an aggregate original principal amount of $6,850,000. The

Debentures are due and payable on or before May 27, 2021. Interest on the

Debentures to date has been accrued and added to principal, thereby increasing

the outstanding balance on the Debentures to approximately $9,323,000 as of

September 30, 2020. Interest will be accrued until such time as the Debentures

are repaid or converted. Among other uses, the proceeds from the Debentures

enabled the Company to undertake required seismic work. In conjunction with

certain issuances of Debentures, warrants ("Warrants") were issued that grant

the holder the right to purchase up to a maximum of 19,125,000 common shares

at an initial per-share exercise price of $0.20. For more information about

the Debentures and the Warrants, see the section captioned "Liquidity and

Capital Resources - Financing History and Immediate, Short-Term Capital Needs

- Debenture Financing" below.

* On October 30, 2016, fieldwork was completed on the Company's proprietary Nike

3D seismic survey (the "Nike Survey") covering an approximately 69 sq. mile

(179 sq. km.) section of the western portion of the South Block of the

Prospect and directly on trend and in close proximity to mature producing

oilfield and recent discoveries on the blocks to the north. The Nike Survey

was completed at a "turnkey price" of approximately $2.4 million.

* The raw data from the Nike Survey was converted to analytical quality

information, processed and interpreted by the Company's geophysical advisor.

Interpretation of the processed data included advanced technical analysis by

specialized consultants. This technical work identified an inventory of more

than 30 leads judged to be potential areas of crude oil accumulations. The

Company has prioritized these initial prospective locations for presentation

to potential sources of significant capital. Technical analysis is on-going.

* In June 2017, the Company completed the archeological and environmental field

surveys of seven prospective drilling locations as required by applicable laws

and regulations. It subsequently filed reports on these surveys with the South

Australian government; no material issues were identified at any of the

prospective drill sites.

* In addition to the amounts raised pursuant to the Debentures arrangements,

since the Company adopted its current business plan, the Company has raised

funds totaling approximately $4.6 million through private placements of the

Company's common shares.

* In several transactions to date, the Company (through the Subsidiary)

purchased portions of an original 7.0% royalty interest relating to the

Prospect retained by the party that, in effect, transferred and sold the

License to the Company. As a result, the Company (through the Subsidiary) now

owns an aggregate 5.0% royalty interest, while the previous holder of the

original 7.0% royalty interest continues to hold a 2.0% royalty interest. The

aggregate purchase price for the aggregate 5.0% royalty interest was $540,500.




14






                            Current Primary Activity



Discovery's current primary activity is to complete a major financing and/or
enter into a suitable joint venture relationship, so that it can execute the
remaining work on the Prospect's five-year work commitment (the "Commitment") as
described below, and develop the Prospect.



The License is subject to a Commitment, which imposes certain financial obligations on the Company. In management's view, the geotechnical work completed in Years 1 and 2 of the Commitment was sufficient to satisfy the License requirements for those two years. Required reports in connection with these activities were timely filed.

The Company has received a number of suspensions, extensions and modifications of the Commitment. The current remaining Commitment is as follows:

* Year 3 ending October 28, 2021 - Shoot 2D seismic data totaling approximately

62 miles (100 km.) and shoot 3D seismic data totaling approximately 77 sq.

miles (200 sq. km.) and drill two wells.

* Year 4 ending October 29, 2022 - Shoot 3D seismic data totaling approximately

    77 sq. miles (200 sq. km.) and drill two wells.
  * Year 5 ending October 29, 2023 - Drill three wells.




Discovery needs a significant additional amount of capital to fulfill its
obligations under the Commitment. Moreover, the Debentures mature in May 2021,
and the Company will need to raise additional funds or generate sufficient
revenues through Hydrocarbons production to timely repay the Debentures, if they
are not converted into common shares in accordance with their terms. The
Company's capital requirements and financing activities are described in the
section captioned "Liquidity and Capital Requirements" below. The success of the
initial phase of the Company's plan of operations depends upon the Company's
ability to obtain additional capital or enter into a suitable joint venture
arrangement in order to acquire additional seismic data and successfully drill
Commitment wells. Failure to obtain required additional capital or enter into a
suitable joint venture arrangement will materially and adversely affect the
Company and its stockholders in ways that are discussed in the section captioned
"Liquidity and Capital Resources - Consequences of a Financing Failure" below.
The Company cannot provide assurance that it will obtain the necessary capital
and/or enter into a suitable joint venture agreement.



                             Results of Operations


Results of operations for the three- and six-month periods ended August 31, 2020 and 2019 are summarized in the table below:



                                 Three Months          Three Months           Six Months            Six Months
                                     Ended                 Ended                 Ended                 Ended
                                August 31, 2020       August 31, 2019       August 31, 2020       August 31, 2019
Revenue                        $               -     $               -     $               -     $               -
Operating expenses                    (1,157,619 )            (760,075 )          (1,565,357 )          (2,416,636 )
Other income/(expenses)                 (602,523 )            (555,658 )          (1,192,596 )          (1,100,419 )
Net income/(loss)              $      (1,760,142 )   $      (1,315,733 )   $      (2,757,953 )   $      (3,517,055 )




15





Operating expenses for the three- and six-month periods ended August 31, 2020 and 2019 are summarized in the table below:



                                 Three Months          Three Months           Six Months            Six Months
                                     Ended                 Ended                 Ended                 Ended
                                August 31, 2020       August 31, 2019       August 31, 2020       August 31, 2019
Stock-based compensation       $               -     $          62,500     $               -     $         802,500
General and administrative               363,981               326,561               768,869               851,514
Warrant modification expense             769,888               371,014     
         769,888               735,697
Exploration costs                         23,750                     -                26,600                26,925
Total Operating Expenses       $       1,157,619     $         760,075     $       1,565,357     $       2,416,636



Results of Operations for the Three-Month Periods Ended August 31, 2020 and 2019




Revenues. The Company did not earn any revenues in either of the comparative
three-month periods ended August 31, 2020 and August 31, 2019. Sales revenues
are not anticipated until such time as the Prospect has commenced commercial
production of Hydrocarbons. As the Company is presently in the exploration stage
of its operations, no assurance can be provided that commercially exploitable
levels of Hydrocarbons on the Prospect will be discovered, or if such resources
are discovered, that the Prospect will commence commercial production.



Operating Expenses. Total operating expenses incurred during the three months
ended August 31, 2020 increased by $397,544 (52%), compared to those incurred
during the three months ended August 31, 2019. The increase is primarily due to
an increase of $398,874 (108%) in warrant modification expense for the three
months ended August 31, 2020.



Net Income (Loss). The Company had a net loss of $1,760,142 for the three months
ended August 31, 2020, compared to a net loss of $1,315,733 for the three months
ended August 31, 2019. The primary driver of this change is attributable to the
increase in warrant modification expense. Loss per common share, on both a basic
and fully diluted basis, was $0.01 for the three months ended August 31 of each
of fiscal 2021 and fiscal 2020.



Results of Operations for the Six-Month Periods Ended August 31, 2020 and 2019




Revenues. The Company did not earn any revenues in either of the comparative
six-month periods ended August 31, 2020 and August 31, 2019. Sales revenues are
not anticipated until such time as the Prospect has commenced commercial
production of Hydrocarbons. As the Company is presently in the exploration stage
of its operations, no assurance can be provided that commercially exploitable
levels of Hydrocarbons on the Prospect will be discovered, or if such resources
are discovered, that the Prospect will commence commercial production.



Operating Expenses. Total operating expenses incurred during the six months
ended August 31, 2020 decreased by $851,279 (35%), compared to those incurred
during the six months ended August 31, 2019. The decrease is primarily due to
the absence of stock-based compensation for the six months ended August 31,
2020, while the Company had such expense of $802,500 for the six months ended
August 31, 2019. Additionally, a decrease of $78,967 in travel related expense,
a result of the COVID pandemic, offset by an increase of $34,191 in warrant
modification expense, also contributed to the overall decrease in operating
expenses.



Net Income (Loss). The Company had a net loss of $2,757,953 for the six months
ended August 31, 2020, compared to a net loss of $3,517,055 for the six months
ended August 31, 2019. The primary driver of this change is attributable to the
absence of stock-based compensation expense during the six months ended August
31, 2020. Loss per common share, on both a basic and fully diluted basis, was
$0.02 for the six months ended August 31 of each of fiscal 2021 and fiscal 2020.



16






       Cash Flow for the Six-Month Periods Ended August 31, 2020 and 2019


Cash Used in Operating Activities: Operating activities for the six months ended
August 31, 2020 used cash of $262,589, compared to $550,782 for the six months
ended August 31, 2019, primarily due to a decrease in travel and use of
third-party providers.



Cash Used in Investing Activities: No cash was used for investing activities during the six months ended August 31, 2020 and August 31, 2019.




Cash Provided by Financing Activities: Financing activities totaled $218,750
during the six months ended August 31, 2020, resulting from the private
placement of 500,000 common shares at $0.20 per common share for gross proceeds
of $100,000, and proceeds from a Paycheck Protection Program loan in the amount
of $118,750. Financing activities totaled $250,000 during the six-month period
ended August 31, 2019, resulting from the gross proceeds of the private
placement sale of 1,000,000 shares of common stock at a price of $0.25 per
common share.



                         Off-Balance Sheet Arrangements


Discovery has no off-balance sheet arrangements.



                        Liquidity and Capital Resources


Financing History and Immediate, Short-Term Capital Needs




Early Financings. From January 2012 through May 27, 2016, business activities
were financed primarily through private placements of common shares. During that
period, several rounds of equity financing were conducted which raised total
"seed" capital in the amount of $2,723,750 resulting in the issuance of
19,657,501 common shares. Moreover, from time to time, officers and directors of
the Company provided short-term bridge funding. These advances were repaid out
of proceeds from the Debentures financing described below.



Debentures Financing. Beginning in May 2016 and continuing through August 2018,
the Company relied on a series of placements of Debentures (debt instruments
convertible into common shares). The 14 Debentures comprising this series were
issued pursuant to a Securities Purchase Agreement executed on May 27, 2016.
Debentures having an aggregate original principal amount of $6,850,000 have been
placed. In conjunction with certain Debentures, warrants ("Warrants") were
issued that grant to the holder the right to purchase from the Company up to a
maximum of 19,125,000 common shares at an initial per-share exercise price
of
$0.20.


Each of the Debentures includes the following features:

* The Debentures bear interest at the rate of eight percent (8%) per annum,

compounded quarterly. However, upon the occurrence and during the continuance

of a stipulated event of default, the Debentures will bear interest at the

rate of twelve percent (12%) per annum.

* Interest need not be paid on the Debentures until the principal amount of the

Debentures becomes due and payable. Instead, accrued interest is added to the

outstanding principal amount of the Debentures quarterly. Nevertheless, the

Company may elect to pay accrued interest in cash at the time that such

interest would otherwise be added to the outstanding principal amount of the

Debentures.

* The principal amount of and accrued interest on the Debentures are due and

payable in a single balloon payment on or before May 27, 2021.

* The Company is not entitled to prepay the Debentures.

* The Debentures are convertible, in whole or in part, into the Company's common

shares at the option of holders, at any time and from time to time. The

conversion price for Debentures having an aggregate original principal amount

of $5,887,500 is $0.16, while the conversion price for Debentures having an

aggregate original principal amount of $962,500 is $0.20. All conversion

prices are subject to certain adjustments that are believed to be customary in

transactions of this nature, including so-called "down round" financing

adjustments. The Company is subject to certain liabilities and liquidated

damages for its failure to honor timely a conversion of the Debentures, and

these liabilities and liquidated damages are believed to be customary in

    transactions of this nature.




17

* The holders of the Debentures are entitled to have them redeemed completely or

partially upon certain events (such as a change of control transaction

involving the Company or the sale of a material portion of the Company's

assets) at a redemption price equal to 120% of the then outstanding principal

amount of the Debenture and 100% of accrued and unpaid interest on the

outstanding principal amount of this Debenture, plus all liquidated damages

and other amounts due thereunder in respect of the Debenture.

* The Debentures feature negative operating covenants, events of default and

remedies upon such events of default that are believed to be customary in

transactions of this nature. One of the remedies upon an event of default is a

Debenture holder's ability to accelerate the maturity of the Debenture such

that all amounts owing under the Debenture would become immediately due and

payable. The Debenture holders would then be able to resort to the collateral

securing the Debentures, if the Company did not pay the amount outstanding,

which is likely to be the case.

* The Debentures are secured by virtually all of the Company's assets owned

directly or indirectly but for the License, which is held by the Subsidiary.

Moreover, the Company has separately guaranteed the Debentures and has pledged

all of its stock in the Subsidiary to secure such guarantee. The essential

effect of these security arrangements is that, if the Company defaults on or

experiences an event of default with respect to the Debentures, the holders of

the Debentures could exercise the rights of a secured creditor, which could

result in the partial or total loss of nearly all of the Company's assets, in

which case its business could cease and all or substantially all of

stockholders' equity could be lost. For more information about this, see the

    section captioned "Consequences of a Financing Failure" below.



Each of the Warrants includes the following features:

* The initial per-share exercise price of the Warrants is $0.20 and is subject

to certain adjustments that are generally believed to be customary in

transactions of this nature. Subject to certain exceptions, the exercise price

of the Warrants involves possible adjustments downward to the price of any

common shares or their equivalents sold by the Company during the term of the

Warrants for less than the then applicable exercise price of the Warrants.

Upon the adjustment of the exercise price, the number of shares issuable upon

exercise of the Warrants is proportionately adjusted so the aggregate exercise

price of the Warrants remains unchanged.

* All of the Warrants are currently exercisable and remain so until their

extended expiration date of February 28, 2021.

* The Company is subject to certain liabilities and liquidated damages for

failure to honor timely an exercise of the Warrants, and these liabilities and

    liquidated damages are believed to be customary in transactions of this
    nature.



The largest holder of the Debentures has the right to have elected to the Company's Board of Directors one nominee, but this holder has not yet exercised the right to nominate or have one director elected.

Moreover, persons holding a majority of the outstanding Debentures have the
right to require the Company to register with the SEC the resale of the shares
into which Debentures can be converted, the shares that can be acquired upon the
exercise of the Warrants and possibly other shares owned by such persons as
well.



The proceeds from the Debentures placements were generally used to fund the
acquisition, processing and interpretation of the Nike Survey data and payment
of the Company's and the Debenture holders' expenses associated with the
placements. A portion of these proceeds were used to retire all of the then
outstanding indebtedness (including the amounts owed to Liberty Petroleum for
allowing the Subsidiary to be issued the License in its place, and loans made by
management), and to acquire a 5.0% overriding royalty interest relating to the
Prospect. Funds were also used for payment of general and administrative
expenses. In addition to the preceding, a portion of the proceeds was used
to
pay a geophysical advisor.



18






More Recent Equity Placements. Subsequent to the start of the Debentures
placements, the Company continued certain private capital raising transactions
involving the Company's common shares. Beginning in November 2016 and continuing
from time to time, the Company closed on a series of private placements of its
common shares in which an aggregate of 9.05 million shares were issued for an
aggregate purchase price of $1,880,000.



Paycheck Protection Program Loan. In connection with the Payroll Protection
Program established by the Coronavirus Aid, Relief, and Economic Security Act,
the Company borrowed the sum of $118,750. In due course, the Company intends to
apply for the forgiveness of this indebtedness to the maximum extent permitted
by then applicable law.



Available Cash. As of October 13, 2020, the Company had cash of approximately
$25,000, and had negative working capital of about $3,900,000. Management
believes that the cash on hand, as of the preceding date, will be sufficient to
finance general and administrative expenses through December 31, 2020 although
no assurance of this can be provided. However, this amount of cash will be
insufficient to allow the Company to fulfill work commitment obligations in a
timely manner. A plan for financing these obligations is discussed below.
Management intends to finance all general and administrative expenses beyond
available cash on hand by undertaking to raise funds through private placements
of common shares. However, no assurance can be given that the amounts will be
adequate. Moreover, no assurance can be provided of successfully raising any
additional funds for this purpose.



Long-Term Capital Needs



The five-year work commitment relating to the License imposes certain
obligations on the Company. The work requirements of the first two years, which
included geotechnical studies and the Nike Survey, have been completed and
reports and certain work materials have been submitted as required by the South
Australian government. Going forward, additional funds will be required to meet
the seismic and drilling obligations of License Years 3, 4 and 5. Working
capital will also be needed to satisfy general and administrative expenses.
Between October 2020 and October 2023 (the month in which the Company's work
commitments are currently required to be completed), the Company estimates that
it will need to raise an additional $20.0 million to have sufficient capital to
meet the remaining work commitments specified in the License and to fund
operations. Net revenues produced from successful oil wells could provide some
of the funds required to meet these capital needs. However, no assurance can be
given that this or any other amount of financing will be obtained or that any
Hydrocarbons revenue will be earned.



If successful with the early wells, work will continue with a full development
plan, the scope of which is now uncertain but will be based on technical
analysis of seismic data, field drilling and log reports, production history and
cost estimates. However, all of the preceding plans are subject to the
availability of sufficient funding and the receipt of all governmental
approvals. Without sufficient available funds to undertake these tasks,
additional financings or a joint venture partner will be required.



Failure to procure a joint venture partner or raise additional funds will
preclude the Company from pursuing its business plan, as well as exposing the
Company to the loss of the License, as discussed below. Moreover, if the
business plan proceeds as just described, but the initial wells do not prove to
hold producible reserves, the Company could be forced to cease its initial
exploration efforts on the Prospect.



Major Financing Efforts and Other Sources of Capital




The Company's capital strategy for most of its past four fiscal years has been,
and continues to be, to attempt to engage in a single major capital raising
transaction to provide sufficient funds to satisfy its capital needs for a
number of years to come. While management has not completely abandoned this
strategy, the Company shifted its emphasis in an effort to try to engage in one
or more smaller capital raising transactions to provide sufficient funds to
satisfy ongoing and future capital needs. During a two-year period beginning in
May 2016, the Company completed a series of placements of its Debentures having
an aggregate original principal amount of $6,850,000. The Company's plan for
financing its general and administrative expenses is described in the section
captioned "Financing History and Immediate, Short-Term Capital Needs" above. The
Company's plan for financing its work commitments is described in the following
paragraph.



19





The interpretation and analysis of the Nike Survey resulted in an inventory of
more than 30 leads judged to be potential areas of Hydrocarbons accumulations.
These initial prospective locations were prioritized and the results are being
presented to prospective investors with a view to securing the capital required
to commence the Company's initial drilling program. The Company needs to
complete one or more major capital raising transactions to continue moving its
business plan forward. In the interim, the Company is continuing efforts to
raise comparably smaller amounts of capital to cover general and administrative
expenses. The Company has no assurance that it will be able to raise any
required funds. The Company has been and is also exploring efforts to secure one
or more joint venture partners.



Sales from production as a result of successful drilling efforts would provide
the Company with incoming cash flow. The proved reserves associated with
production would most likely increase the value of the Company's rights in the
Prospect. This, in turn, should enable the Company to obtain bank financing
(after the wells have produced for a period of time to satisfy the lenders
requirements). Both of these results would enable the Company to continue with
its development activities. Positive cash flow is a critical success factor for
the Company's plan of operation in the long run. Management believes that, if
the Company's plan of operation successfully progresses (and production is
realized) as planned, sufficient cash flow and debt financing will be available
for purposes of properly pursuing its plan of operation, although the Company
can make no assurances in this regard.



Finally, to reduce its cash requirements, the Company might attempt to satisfy
some of its obligations by issuing common shares, which would result in dilution
in the percentage ownership interests of the Company's existing stockholders and
could result in dilution of the net asset value per share of the Company's
existing stockholders.



Consequences of a Financing Failure




If required financing is not available on acceptable terms, the Company could be
prevented from satisfying its work commitment obligations or developing the
Prospect to the point that the Company is able to repay the Debentures, which
become due in May 2021. Failure to satisfy work commitment obligations could
result in the eventual loss of the License and the total loss of the Company's
assets and properties. Failure to timely pay the Debentures could result in the
eventual exercise of the rights of a secured creditor and the possible partial
or total loss of the Company's assets and properties. Failure to procure
required financing on acceptable terms could prevent the Company from developing
the Prospect. If any of the preceding events were to occur, the Company could be
forced to cease its operations, which could result in a complete loss of
stockholders' equity. If additional financing is not obtained through an equity
or debt offering, the Company could find it necessary to sell all or some
portion of the Prospect under unfavorable circumstances and at an undesirable
price. However, no assurance can be provided that the Company will be able to
find interested buyers or that the funds received from any such partial sale
would be adequate to fund additional activities. Future liquidity will depend
upon numerous factors, including the success of the Company's exploration and
development program, satisfactory achievement of License commitment's and
capital raising activities.



COVID-19



The Company has experienced no obvious impact from the COVID-19 pandemic with
respect to Liquidity and Capital Resources. However, the result of the pandemic
may create greater uncertainty or challenges in the Company's ability to raise
capital. For further risk discussion, see the risk factor captioned "PANDEMICS
OR DISEASE OUTBREAKS (SUCH AS THE NOVEL CORONAVIRUS, ALSO KNOWN AS THE COVID-19
VIRUS) COULD MATERIALLY AND ADVERSELY AFFECT US IN A VAREITY OF WAYS" in the
Company's Annual Report on Form 10-K for the Company's fiscal year ended
February 29, 2020.



20

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01/14DISCOVERY ENERGY : Management's Discussion and Analysis. (form 10-Q)
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01/14Discovery Energy Corp. Reports Earnings Results for the Third Quarter Ended N..
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2020DISCOVERY ENERGY : Management's Discussion and Analysis. (form 10-Q)
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2020Discovery Energy Corp. Reports Earnings Results for the Second Quarter Ended ..
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2020DISCOVERY ENERGY : Management's Discussion and Analysis. (form 10-Q)
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Financials (USD)
Sales 2021 - - -
Net income 2021 -6,08 M - -
Net Debt 2021 5,50 M - -
P/E ratio 2021 -3,23x
Yield 2021 -
Capitalization 23,9 M 23,9 M -
EV / Sales 2020 -
EV / Sales 2021 -
Nbr of Employees 3
Free-Float 33,5%
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Income Statement Evolution
Managers and Directors
Keith J. McKenzie Chief Executive Officer & Director
William E. Begley President, COO, CFO & Director
Keith D. Spickelmier Chairman
Sean J. Austin Secretary & Treasurer
Woody Leel Exploration Manager
Sector and Competitors
1st jan.Capi. (M$)
DISCOVERY ENERGY CORP.0.00%24
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