MD&A Sept. 30, 2023

Management Discussion and Analysis

For the nine months ended September 30, 2023 (expressed in United States dollars)

Introduction

The following management discussion and analysis ("MD&A") has been prepared as of November 21, 2023 and is related to the unaudited consolidated financial results of Starrex International Ltd ("Starrex" or the "Company") and its wholly owned subsidiaries, Property Interlink. LLC, Reliable Valuation Service, LLC, MFI Credit Solutions, LLC, Starrex Holdings, Inc., Starrex Insurance Holdings, Inc., Starrex Technical Services, LLC and All American Title Co., Inc., collectively referred to as the ("Group") for the nine-month period ended September 30, 2023. The condensed interim unaudited consolidated financial statements for the nine-month period ended September 30, 2023 have been prepared in accordance with International Financial Reporting Standards ("IFRS"). This MD&A should be read in conjunction with the unaudited consolidated financial statements and related notes for the nine-month period ended September 30, 2023. Other pertinent information about the Group is available on SEDAR at www.sedar.com as well as on the Company's website at www.starrexintl.com.For the purpose of preparing our MD&A, the Company considers the materiality of information. Information is considered material if in the opinion of management: (i) such information results in, or would reasonably be expected to result in, a significant effect in the market price or value of our shares; (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. We evaluate materiality with reference to all relevant circumstances. All dollar amounts are stated in Unites States dollars unless otherwise indicated.

Certain information included in this MD&A contains forward-looking statements within the meaning of applicable securities laws, including, among other things, statements concerning our objectives and our strategies to achieve those objectives, statements with respect to management's beliefs, plans, estimates and intentions and statements concerning anticipated future events, circumstances, expectations, results, operations or performance that are not historical facts. Forward-looking statements can be identified generally by the use of forward-looking terminology, such as "indicators", "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans", "continue" or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management.

The forward-looking statements in this MD&A are not guarantees of future results, operations or performance and are based on estimates and assumptions that are subject to risks and uncertainties, including those described below in this MD&A under "Risks and Uncertainties", which could cause actual results, operations or performance to differ materially from the forward-looking statements in this MD&A. Those risks and uncertainties include risks associated with property ownership, tenant termination and financial stability, liquidity, competition for real property investments, general uninsured losses and environmental matters. Historical results and percentage relationships contained in the Company's financial statements and MD&A, including trends that might appear, should not be taken as indicative of our future results, operations or performance.

Although the forward-looking statements contained in this MD&A are based on what management believes are reasonable assumptions, there can be no assurance that actual results, operations or performance will be consistent with these statements. All forward-looking statements in this MD&A are qualified by this forward-looking disclaimer. These statements are made as of September 30, 2023 and, except as required by applicable law, we undertake no obligation to update publicly or revise any such statements to reflect new information or the occurrence of future events or circumstances.

Business Overview

Starrex was established in 1982, pursuant to the provisions of the Canada Business Act under the name Starrex Mining Corporation Ltd. Effective May 1, 2014, the Company amended its name to Starrex International Ltd. Since that time, the strategic direction of the Company focused on development and acquisitions in the real estate and housing sectors. We are committed to investing in our employees, delivering value to our customers, ethically managing our suppliers and professional networks, and supporting the outside communities within which we work. While each of our subsidiaries serves its own corporate purpose, they share a fundamental commitment to all of our shareholders - to deliver value, service and growth.

Credit Reporting Services

MFI Credit Solutions, LLC ("MFI") (www.mfidata.com) is a full-service credit reporting agency, with resources from all three national credit agencies - TransUnion, Equifax and Experian. MFI has been providing consumer credit reports to Mortgage Lenders, Mortgage Brokers, and Credit Unions for homebuyers considering the purchase or refinance of a home for more than 17 years. We are nationally recognized as a trusted provider of not only credit services, but risk mitigation, flood and verification services. MFI Credit Solutions, LLC is governed by the Fair Credit Reporting Act (FCRA) and has the ability to provide credit reports to borrowers in all states.

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Management Discussion and Analysis

For the nine months ended September 30, 2023 (expressed in United States dollars)

Title Insurance

The Company acquired four title insurance entities in Minnesota which consolidated into one newly formed entity effective March 17, 2023. All American Title Co., Inc. has been in the title insurance business for more than 24 years and is a leading provider of title insurance services in Minnesota and Wisconsin. Revenue is recognized at the time of closing of the underlying transaction as the earning process is then complete. Regulation of title insurance rates varies by state. Premiums are charged to customers based on rates predetermined in coordination with each states' respective Department of Insurance. Cash associated with such revenue is typically collected at closing of the underlying real estate transaction. Premium revenues from agency title operations are recognized when the underlying title insurance order and transaction closing, if applicable, are complete.

Selected Financial Information

The following table provides selected balance sheet information as at the date indicated:

Trade and Other Receivables

As reflected in the selected balance sheet information above, between December 31, 2022 and September 30, 2023, the Company's trade and other receivables increased from $479,346 to $882,984. These receivables are normal course receivables associated with the two operating segments, MFI Credit Solutions and All American Title Co., Inc. Outstanding receivables for MFI Credit Solutions, LLC comprises $457,582 of the outstanding total while All American reported $242,744 in receivables associated with recoverable title expenses and outstanding escrow recovery. The remaining $182,658 are associated with receivables in the corporate segment.

The Company entered into four agreements effective October 17, 2022, to provide operating capital through a revolving promissory note to title insurance companies. The promissory notes carry a 6% per annum interest rate with a maturity date of June 23, 2023. At the option of the Company, the note will become immediate due and payable. For the nine- month period ended September 30, 2023, the Company recorded interest income of $118,346 (September 30, 2022 - $Nil).

The Company measures loss allowances based on an expected credit loss impairment ("ECL") model for all financial instruments measured at amortized cost or fair value through other comprehensive income with recycling into income. Application of the model depends on the following credit stages of the financial assets.

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Management Discussion and Analysis

For the nine months ended September 30, 2023 (expressed in United States dollars)

Significant judgement is required in making assumptions and estimates used to calculate the ECL, including movements between the three stages and the use of forward looking information. The measurement of ECL for each stage and the criteria used to determine a significant increase in credit risk uses information about past events and current conditions as well as reasonable and supportable projections of future events.

ECLs are measured as the probability-weighted present value of expected cash shortfalls over the remaining expected life of the financial instrument and consider reasonable and supportable information about past events, current conditions, and forecasts of future events and economic conditions that impact the Company's credit risk assessment.

As at September 30, 2023, the loans receivable have been classified Stage 2 based on the default date of June 23, 2023. The notes are secured with the underlying assets of the entities which are valued at approximately $3,800,000 as at September 30, 2023.

The following table reconciles the carrying value of the loans receivable:

Property and equipment remained materially unchanged while intangible assets increased to $2,305,053 at September 30, 2023 from $575,648 at December 31, 2022, due to the acquisition of All American Title Co., Inc. Customer relationships and non-competition intangible assets of $1,934,000 were reported in connection with the new operating segment.

Liabilities

The balance in notes payable increased from $850,000 at December 31, 2022 to $9,195,486 at September 30, 2023. This amount is comprised of a short-term note payable to the Sellers of All American Title Co., Inc. in the amount of $4,345,486, along with the outstanding balance on the line of credit.

On November 16, 2018, the Company entered into a promissory note with Agents National Title Insurance Company to be utilized as a revolving line of credit in support of acquisition activity. The note is collateralized by the assets of the Company and carries an interest rate equal to the prime rate less 0.50%, which is paid monthly. At the option of the lender, the loan amount shall be convertible into common shares of the Company, with the conversion price based on the quoted market price at the time of conversion. As the conversion price is not fixed, the entire convertible instrument has been classified as a liability. As at September 30, 2023, the Company had an outstanding balance of $4,850,000 (December 31, 2022 - $850,000) and incurred interest expense of $175,729 (September 30, 2022 - $nil). The lender exercised its option to terminate the credit facility effective October 17, 2023 and issued a demand for repayment. Subsequent to the issuance for repayment, the lender filed suit against Starrex for the entire amount. The company is currently in negotiations with the lender to resolve the matter.

Review of Cash Flows

The following section provides an overview analysis of cash flows for the respective periods as indicated:

Cash used in Operating Activities

Cash used in operating activities at September 30, 2023 was $1,110,554 higher than the cash utilization of $532,912 at September 30, 2022. Cash used in operating activities for discontinued operations in 2022 was $126,112 and is

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Management Discussion and Analysis

For the nine months ended September 30, 2023 (expressed in United States dollars)

included in the total of $532,912. Income taxes were paid during the first quarter of 2023 and represent $1,458,607 of the cash flows used in operations.

Cash used in Investing Activities

The company used $1,800,000 as a cash down payment associated with the acquisition of All American Title Co., Inc. Loans in the amount of $3,051,239 were also advanced associated with the promissory notes in support of a potential acquisition, which expired on June 23, 2023. A demand for repayment was issued on September 8, 2023. The Company is currently pursuing collection efforts.

Cash used in Financing Activities

Proceeds in the amount of $4,000,000 were borrowed from the credit facility with Agents National Insurance Company. These funds were used in support of potential acquisition targets. This amount is directly associated with the cash used in investing activities through loans advanced.

Capital Resources and Liquidity

As at September 30, 2023, Starrex held $5,181,664 in cash with current assets of $10,040,431 and current liabilities of $10,562,680.

On November 16, 2018, the Company entered into a promissory note with Agents National Title Insurance Company to be utilized as a revolving line of credit in support of acquisition activity. The note is collateralized by the assets of the Company and carries an interest rate equal to the prime rate less 0.50%, which is paid monthly. At the option of the lender, the loan amount shall be convertible into common shares of the Company, with the conversion price based on the quoted market price at the time of conversion. As the conversion price is not fixed, the entire convertible instrument has been classified as a liability. As at September 30, 2023, the Company had an outstanding balance of $4,850,000 (December 31, 2022 - $850,000) and recorded interest expense of $175,729 (September 30, 2022 - $nil). The lender exercised its option to terminate the credit facility effective October 17, 2023 (See Note 18 - Subsequent Events).

On March 17, 2023, the Company entered into a convertible promissory note in the amount of $2,700,000 in connection with the acquisition of All American Title Co., Inc. The note bears an interest rate of 6% per annum, accruing monthly and payable semi-annually commencing October 1, 2023. Payment of this convertible note is conditional upon eaout provisions based on a target EBITDA for the entities acquired. To the extent annual EBITDA targets are met, the holders will be entitled to receive a pro-rated payment. If the annual targets are not met the holders are not entitled to receive a prepayment. At the end of the three year term, the principal amount of the notes outstanding will be adjusted downwards by an amendment to the notes or by cancellation depending on the average performance achieved by the entities over the term of the notes. Interest is payable in cash semi-annually in arrears unless such interest amount is converted at the option of the holder and payable in common shares of Starrex based on the closing price of Starrex shares on the trading day prior to the conversion date. In addition, the holder of the notes may elect to convert all or any part of the principal amount into Starrex shares at a price of $2.09 (See Note 15). These notes are secured pursuant to a Pledge and Security Agreement whereby the membership interests represented by the amount of the note are pledged as security until the particular promissory note is pain in full. The proportion of membership interests that were represented by the cash amount have not been pledged as security for these notes. In addition, the indebtedness has been guaranteed by Starrex. For the period ended September 30, 2023, the Company incurred $86,850 in interest expense associated with the notes (September 30, 2022 - $nil).

The liability portion of this financial instrument was elected to be measured using FVTPL through profit or loss. On initial recognition, the Company valued the entire financial instrument at a fair value of $1,948,743. The financial liability was initially recognized at a value of $1,232,670 and the residual amount of $716,073 was allocated to the conversion feature which has been recorded as contributed surplus. The following assumptions were used to calculate the fair value of the convertible note as at March 17, 2023:

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Management Discussion and Analysis

For the nine months ended September 30, 2023 (expressed in United States dollars)

As at September 30, 2023, the Company remeasured the liability of the convertible note resulting in a fair value of $1,115,468. The following assumptions were used to calculate the fair value of the convertible note as at September 30, 2023:

The Company also entered into a secured promissory note in the amount of $4,500,000 effective March 17, 2023, in connection with the acquisition of All American Title Co, Inc. The note is non-interest bearing and carries a maturity date of March 17, 2024.

The loan is valued at the present value of anticipated future repayments of the funds at each reporting date using a discount rate of 7%. The Company incurred $148,860 accretion expense for the period ended September 30, 2023 (September 30, 2022 - $nil). As at September 30, 2023, the Company had an outstanding balance of $4,345,486 (December 31, 2022 - $nil).

Share Capital

As at September 30, 2023, the share capital of the Company continued to be comprised exclusively of common shares. There are minimal dilutive securities outstanding or committed for issue, including, without limitation, options issued requiring the future issuance of new share capital by the Company.

The Company is authorized to issue an unlimited number of common shares.

On March 17, 2023, 250,000 common shares valued at $300,000, based on the quoted market price of the Company's common shares at the time of issuance, were issued in connection with the acquisition of All American Title Co., Inc.

Share-based payments

The Company has a Plan that enables its directors, officers, employees, consultants and advisors to acquire common shares of the Company. Options are granted at the discretion of the Board of Directors. Under the terms of the Plan, options totaling up to 10% of the common shares outstanding from time to time are issuable. The exercise price, vesting period and expiration period are fixed at the time of grant at the discretion of the Board of Directors.

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Management Discussion and Analysis

For the nine months ended September 30, 2023 (expressed in United States dollars)

Acquisitions

Effective March 17, 2023, the Company entered into a Purchase and Sale Agreement to purchase all of the member interests of All American Title Co., Inc., AmeriFirst Title, LLC, AAT Holdings, LLC, Ameripine, LLC and Amcap Title, LLC ("AAT") for an aggregate amount of $9,245,369 comprised of:

1. a cash payment of $1,800,000;
2. secured non-interest bearing promissory notes in the aggregate amount of $4,500,000 due and payable 12 months following the closing date. These notes are secured pursuant to a Pledge and Security Agreement whereby the membership interests represented by the amount of the note are pledged as security until the particular promissory note is paid in full (See note 15). The proportion of membership interests that were represented by the cash amount have not been pledged as security for these notes. In addition, the indebtedness has been guaranteed by Starrex;
3. secured convertible notes in the amount of $2,700,000 (See Note 15) bearing interest at 6% per annum and due 36 months from the closing date conditional upon eaout provisions based on a target EBITDA for the entities acquired. To the extent annual EBITDA targets are met, the holders will be entitled to receive a pro-rated payment. If the annual targets are not met the holders are not entitled to receive a prepayment. At the end of the three year term, the principal amount of the notes outstanding will be adjusted downwards by an amendment to the notes or by cancellation depending on the average performance achieved by the entities over the term of the notes. Interest is payable in cash semi-annually in arrears unless such interest amount is converted at the option of the holder and payable in common shares of Starrex based on the closing price of Starrex shares on the trading day prior to the conversion date. In addition, the holder of the notes may elect to convert all or any part of the principal amount into Starrex shares at a price of $2.09 (See Note 15). These notes are secured pursuant to a Pledge and Security Agreement whereby the membership interests represented by the amount of the note are pledged as security until the particular promissory note is pain in full. The proportion of membership interests that were represented by the cash amount have not been pledged as security for these notes. In addition, the indebtedness has been guaranteed by Starrex.;
4. the issuance of 250,000 shares of Starrex common stock $1.20 per share (See Note 13); and.
5. Starrex also provided $1,000,000 of working capital as of the closing date of the transaction.

All American Title Co., Inc. was acquired due to its accretive value and the alignment of corporate vision in the mortgage and real estate space in which Starrex operates. Since 2014, Starrex has operated consumer credit reporting agencies, staff appraisal and appraisal management subsidiaries, all of which are in the same market space as mortgage title insurance.

The following table sets forth the final allocation of the purchase price to assets acquired, based on estimates of fair value, including a summary of major classes of consideration transferred, and the recognized amounts of assets acquired at the acquisition date:

The following table sets forth the final allocation of the purchase price to assets acquired, based on estimates of fair value, including a summary of major classes of consideration transferred, and the recognized amounts of assets acquired at the acquisition date:

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Management Discussion and Analysis

For the nine months ended September 30, 2023 (expressed in United States dollars)

Results of Operations, Overall Performance and Trends

As at September 30, 2023, All American Title has been proudly serving Minnesota and WesteWisconsin for more than 24 years. The Company has 7 strategically positioned locations throughout the Twin Cities allowing it to service the entire metro area. All American has also been a leading provider of title services in Northeast and Central Minnesota through it Hibbing, Virginia and Perham offices. The acquisition of All American Title Co., Inc. closed on March 17, 2023 for total consideration of $9,245,369 (See Note 4 of the Interim Consolidated Financial Statements).

Revenue associated with All American Title Co., Inc, from the date of acquisition through September 30, 2023, was $4,680,717 and is derived from title insurance settlement fees and premiums. The company paid $371,012 in commissions for the title insurance activities and operating expenses of $3,887,486 (including interest expense), resulting in net income of $422,219. Depreciation and amortization expenses through September 30, 2023, were $293,712.

The title division continued to outperform the overall market and remained profitable despite record high U.S. interest rates, minimal refinance activity and the lowest volume of housing sales in years. Management appropriately right sized the business operations in preparation for the seasonality of the mortgage industry, which historically reports lower activity in the winter months, while remaining well positioned to capitalize on new opportunities or improved market conditions.

Since the acquisition of All American Title Co., Inc., the Company reported a 92% client retention rate, which is significantly higher than the historical average of 80%. In addition, All American outperformed overall market trends with a minor decrease in sales volume of 16.41% from March 2023 through September 30, 2023, when compared to the same period last year. Home sales in the United States has declined by 30% year over year for the first three quarters of 2023 compared to 2022.

Our credit reporting segment, MFI Credit Solutions, LLC, continues to see a decline in activity as interest rates increase. The subsidiary reported $2,160,688 in revenue associated with credit reporting activity for the nine months ended September 30, 2023 compared to $3,137,602 for the nine months ended September 30, 2022. Operating expenses for the six months ended September 30, 2023, were $2,318.267, which includes transaction fees, resulting in a net operating loss of $157,679 (September 30, 2022 - net operating income of $98,530).

The Corporate segment generated $490,991 in consulting income through the first nine-months ended September 30, 2023 (September 30, 2022 - $87,500). Starrex provides management consulting and support services to third parties in the same market space.

Revenue

Consolidated revenue increased by $4,293,791 over the same period in 2022 is primarily attributable to the acquisition of All American Title Co., Inc. The corporate CGU contributed $559,142 in management, consulting and other miscellaneous income (September 30, 2022 - $87,500) along with $118,346 in interest income (September 30, 2022 - $nil).

Expenses

Consolidated operating expenses for the nine months ended September 30, 2023, were $8,297,401 and include commissions paid for title insurance activity along with costs associated with providing credit reports to consumers (September 30, 2022 - $3,513,808). The Company also reported $148,860 in accretion expense along with $1,007,394 in expected credit loss associated with the notes receivable. A fair value adjustment of $117,202 was also recognized on the convertible note payable as it is measured at fair value at the end of each reporting period.

See Liquidity and Capital Resources.

Depreciation and Amortization

Most of the Company's assets, which consist of property and equipment, software, customer relationships and non- compete agreements, are amortized over 4-5 years for equipment and 5-10 years for customer relationships. For the nine months ended September 30, 2023, the Company reported $416,565 in depreciation and amortization (September 30, 2022 - 216,953). The large increase in depreciation and amortization expense is attributed to the acquisition of All American Title Co., Inc.

Income Taxes

Net income taxes of $1,458,607 were accrued as at December 31, 2022, and paid in full in April 2023. These amounts were attributable to the gain on sale associated with the sale of assets in Property Interlink, LLC and Reliable Valuation Service, LLC effective November 7, 2022.

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Management Discussion and Analysis

For the nine months ended September 30, 2023 (expressed in United States dollars)

Trends

Mortgage interest rates have been experiencing an upward trend, primarily influenced by the Federal Reserve's monetary policy actions aimed at curbing inflation. The Federal Reserve has been increasing the federal funds rate, which leads to higher mortgage rates. This trend was consistent with efforts to reduce the overheated housing market and broader economy following the stimulus measures during the COVID-19 pandemic.

As rates increase, mortgage application volume typically declines, since higher borrowing costs often deter potential homebuyers and make refinancing less attractive. In addition, the housing market has cooled due to the higher rates, which contributes to the reduction in the number of applications.

Net income (loss)

The consolidated loss reported for continuing operations for the first nine months of 2023 was $778,508 (September 30, 2022 - net loss of $288,706. The company reported the following other expenses (See note 10 and 15 of September 30, 2023 Interim Consolidated Financial Statements), which resulted in a net comprehensive loss as at September 30, 2023 of $1,817,560.

Net income (loss) per weighted average share, basic and diluted

Basic and diluted net loss per share has been calculated based on the weighted average number of common shares outstanding as at September 30, 2023, of 16,431,045 (December 31, 2022 - 15,832,968).

Discontinued Operations

Starrex International Ltd. reached an agreement to divest substantially all the related assets of Property Interlink, LLC, an appraisal management company, and Reliable Valuation Service, LLC, a staff appraisal company, effective September 30, 2022. The transaction closed on November 7, 2022. These amounts have been classified as discontinued operations.

As a result, the operating results of Property Interlink, LLC and Reliable Valuation Service, LLC for the periods ended September 30, 2023 and 2022 have been classified as net income from discontinued operations in the consolidated statements of income (loss) and comprehensive income (loss).

The purchase price paid by the purchaser to the Company for Property Interlink, LLC and Reliable Valuation Service, LLC comprised of (i) a cash payment of $9,450,000 (subject to standard working capital adjustments); and (ii) amounts held escrow by the purchaser of $300,000 (the "purchase price escrowed amount") and $50,000 (the "retention escrow amount"). The Buyers will release an amount equal to all of the remaining funds in the Retention Escrow account minus any pending indemnification claim amount on November 7, 2023. The Purchase Price Escrow amount will be released upon receipt of Joint Direction from both Sellers and Buyers upon mutual agreement that trialing expenses and revenues have been reconciled and closed. As at September 31, 2023, the purchase price escrowed funds of $300,000 were paid in full.

To conform with the current period classification of the discontinued operations, prior year results have been reclassified to discontinued operations.

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