Finlay Minerals Ltd. — Management Reports 2023

Apr 28, 2023

ATLAS ONE CAPITAL CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2022

Background

This management discussion and analysis (" MD&A ") for Atlas One Capital Corporation (“ Atlas One ” or the " Company ") is for the financial year ended December 31, 2022 and is dated as of April 28, 2023. We have prepared this MD&A with reference to National Instrument 51-102 – Continuous Disclosure Obligations of the Canadian Securities Administrators. This MD&A should be read in conjunction with the Company's audited financial statements for the period from January 10, 2022 to December 31, 2022, and the related notes thereto. The Company's financial statements have been prepared in accordance with International Financial Reporting Standard (" IFRS "). This MD&A complements and supplements, but does not form part of, the Company's financial statements.

All dollar figures included in the Company’s financial statements therein and in this MD&A are quoted in Canadian dollars unless otherwise expressly indicated. Additional information relevant to the Company's activities can be found on the Company’s SEDAR profile at www.sedar.com.

Company Overview and Overall Performance

The Company was incorporated on January 10, 2022 under the Business Corporations Act (Ontario) (" OBCA ") and is a capital pool company (" CPC ") as defined in TSX Venture Exchange (" TSX-V ") Policy 2.4 (the " CPC Policy "). The principal business of the Company as a CPC is the identification and evaluation of assets or businesses with a view to completing a qualifying transaction, as defined in the CPC Policy (a " Qualifying Transaction "). The registered and head office address of the Company is 20 Holly Street, Suite 300, Toronto, Ontario, M4S 3B1 and its financial year-end is December 31.

The Company has not commenced commercial operations and has no assets other than cash. Until such time that a Qualifying Transaction is completed, the Company will have no significant revenue and will incur expenses primarily for its initial public offering (" IPO "), Qualifying Transaction investigation and implementation, TSX-V listing and filing requirements, professional services and office facilities and administration, subject to certain restrictions under the CPC Policy.

On January 10, 2022, the Company had issued an initial set of 2,660,000 common shares at a price of $0.05 per share for total proceeds of $133,000 (the " Founder Shares ").

On April 7, 2022, the Company became a reporting issuer in the provinces of British Columbia, Alberta and Ontario.

On June 8, 2022, after the close of business, the Company’s common shares were listed on the TSX-V under the symbol " ACAP.P ".

On June 9, 2022, the Company successfully completed its IPO, issuing 2,660,000 common shares at a price of $0.10 per share for total gross proceeds of $266,000. M Partners Inc. (the " Agent ") acted as agent for the IPO. In connection with the IPO, the Agent received a cash commission of $26,660, a corporate finance fee of $20,000 and 266,000 compensation warrants for common shares of the Company with an exercise price of $0.10. per share (the " Agent’s Warrants "). The Agent’s Warrants will expire 24 months from the date the Company’s common shares were listed on the TSX-V. On completion of the IPO, the Company had 5,320,000 common shares issued and outstanding, of which the Founder Shares and 226,500 of the common shares issued in the IPO are being held in escrow pending the completion of a Qualifying Transaction in accordance with the CPC Policy. The Company also granted stock options to acquire an aggregate of 532,000 common shares at an exercise price of $0.10 per share to the directors and officers of the Company, which will expire 10 years from the date of grant. All common shares acquired on the exercise of stock options granted to directors and officers prior to the completion of a Qualifying Transaction must also be deposited in escrow pending the completion of a Qualifying Transaction in accordance with the CPC Policy.

On November 8, 2022, the Company announced that it had entered into a binding letter of intent with Zodiac Gold Inc. (“ Zodiac Gold ”) in respect of a proposed business combination transaction pursuant to which the Company would acquire all of the issued and outstanding securities of Zodiac Gold (the “ Proposed Transaction ”). The binding letter of intent in respect of the Proposed Transaction subsequently expired on November 30, 2022 without the parties entering into a formal extension or definitive agreements in respect of the Proposed Transaction. The parties are continuing discussions with respect to a Proposed Transaction, but on a non-binding basis. See “ Proposed Qualifying Transaction ” below for more detail.

The global outbreak of COVID-19 (coronavirus) has had a significant impact on businesses through the restrictions put in place by the Canadian, provincial and municipal governments regarding travel, business operations and isolation/quarantine orders. Given the ongoing and dynamic nature of the circumstances, the extent to which COVID-19 will impact the Company’s financial results and operations is uncertain. It is possible, however, that the Company’s business operations and financial performance in 2023 and beyond may be materially adversely affected by this global pandemic.

Forward-Looking Statements

Certain statements contained in this MD&A constitute forward-looking statements. These statements relate to future events or the Company's future performance. 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. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon by investors as actual results may vary. These statements speak only as of the date of this MD&A and are expressly qualified, in their entirety, by this cautionary statement.

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The Company's actual results could differ materially from those anticipated in these forwardlooking statements as a result of various risk factors.

Selected Annual Financial Information

The Company was incorporated on January 10, 2022 and, as such, does not have financial information to report prior to that period.

	For the period from the Date of Incorporation (January 10, 2022) to December 31, 2022
	$
	Total Assets 236,705 Total liabilities 25,004 Total shareholders' equity 211,701
	$
	Net loss for the period (167,879) Basic and diluted loss per share (0.04)

Summary of Quarterly Results

The following is a summary of certain financial information relating to the Company for its four most recently completed financial quarters:

	December 31, 2022 Sept 30, 2022 June 30, 2022 **Mar 31, 20221 **
	$ $ $
	Total assets 236,705 267,823 308,294 119,597 Total liabilities 25,004 22,344 45,893 40,197 Total shareholders' equity 211,701 245,479 262,401 79,400
	$ $ $ $
	Net loss for the interim period (167,879) (16,922) (65,079) (52,100) Basic and diluted loss per share (0.04) (0.00) (0.02) (0.20)

Notes:

1. The quarter ended March 31, 2022 was a shorter quarter, encompassing the period from the date of incorporation of the Company on January 10, 2022 to March 31, 2022, and as such readers should exercise caution in comparing these results to the results of other quarters.

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Fourth Quarter

The most significant development for the Company in the fourth quarter was the negotiation, execution and announcement of the binding letter of intent in respect of the Proposed Transaction. Other than as disclosed herein, no other material events or items affected the Company’s financial condition, financial performance, cash flows, year-end, or other adjustments for the quarter ended December 31, 2022.

Results of Operations

At December 31, 2022, the Company had no continuing source of operating revenues and related expenditures. The Company recorded a net loss of $167,879 for the period ended December 31, 2022. Of this, the Company incurred professional fees of $79,720 for legal and accounting services, and $40,076 attributable to listing and transfer agent fees. The legal and accounting fees related primarily to continuous disclosure requirements and the preparation and filing of interim financial reports, as well as to services provided prior to the Company’s IPO.

Financial Condition including Cash Flows, Liquidity and Capital Resources

The Company has financed its operations to date through the issuance of common shares. The Company may seek capital through various means including the issuance of equity and/or debt, subject to applicable restrictions for CPCs under the CPC policy.

As at December 31, 2022, the Company had cash on hand of $236,705. The Company had current liabilities of $25,004 and working capital of $211,701.

As a CPC, the Company's routine expenses are limited to general administrative costs such as TSX-V listing and filing fees, audit fees, legal fees, and accounting fees. In the process of identifying potential Qualifying Transactions, and in furtherance of the Proposed Transaction, additional legal or other transaction-related costs have been or may be incurred, regardless of whether or not the subject transaction is ultimately completed.

There can be no assurance as to how long it will take for the Company to complete a Qualifying Transaction, however, management is satisfied that the Company's current cash balance is sufficient to pay its existing accounts payable and accrued liabilities, to maintain routine on-going operations for the next 12 months.

Related Party Transactions

On January 10, 2022, 2,660,000 common shares were issued at a price of $0.05 per share to shareholders who are also directors of the Company.

On June 9, 2022, an aggregate of 13,500 common shares were issued at a price of $0.10 per share to directors of the Company, and an aggregate of 532,000 options to acquire common shares of the Company at a price of $0.10 per share were granted to directors of the Company. The following is a breakdown of the stock options received by related parties:

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• Maurice Kagan: 66,500 common share purchase options.

• Tracy Graf: 66,500 common share purchase options.

• Illana Prussky: 199,500 common share purchase options.

• David Rosenkrantz: 199,500 common share purchase options.

As at the date of this MD&A, these stock options remain outstanding.

There was no other remuneration paid to key management personnel during the period ended December 31, 2022 and no other related party transactions have occurred during this period.

Proposed Qualifying Transaction

On November 8, 2022, the Company announced that it had entered into a binding letter of intent with Zodiac Gold dated November 7, 2022 (the “ Letter of Intent ”), in respect to the Proposed Transaction pursuant to which the Company would acquire all of the issued and outstanding securities of Zodiac Gold.

On November 30, 2022, the Letter of Intent expired without the execution of definitive agreements or a formal extension. It remains the parties’ intention to continue to perform due diligence and negotiate the terms of a definitive agreement with a view to completing the Proposed Transaction and, as such, the terms of the Proposed Transaction as set out in the Letter of Intent are described below. However, in the absence of a binding agreement, the parties may cease discussions at any time and there can be no assurance that the Proposed Transaction will be implemented, or that it will be implemented on the terms previously announced.

Letter of Intent - Proposed Transaction

Pursuant to the Letter of Intent, the Proposed Transaction was to be structured as a three-cornered amalgamation, plan of arrangement or other structure based on the advice of the parties’ respective advisers and taking into account various securities, tax, operating and other considerations, with the resulting company following completion of the Proposed Transaction (the “ Resulting Issuer ”) continuing the business of Zodiac Gold under a name to be determined (the “ Name Change ”). It was expected that the transaction would constitute the Qualifying Transaction for the Company.

The business of the Resulting Issuer would be primarily focused on the exploration of the “Mount Coffee Project”, a mineral exploration license covering 418 km[2] in the Montserrado and Bomi Counties in the Republic of Liberia and two separate reconnaissance licenses covering 2,200 km[2] in Grand Bassa, Bomi and Grand Cape Mount counties, for a total of 2,618 km[2] .

Certain Atlas One Shares to be issued pursuant to the Proposed Transaction would be subject to restrictions on resale or escrow under the policies of the TSX-V, including the securities to be issued to principals (as defined under the TSX-V policies), which would be subject to the escrow requirements of the TSX-V.

The completion of the Proposed Transaction would be subject to a number of terms and conditions, including, without limitation, the following: negotiation and execution of the definitive agreements; there being no material adverse changes in respect of either the Company or Zodiac Gold; the parties obtaining all necessary consents, orders, regulatory and shareholder approvals, including the conditional approval of the TSX-V; completion of the Name Change and any other required corporate changes requested by Zodiac Gold, acting reasonably; completion of the Concurrent Financing (as defined below); completion of a NI 43-101 compliant technical report

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for the Mount Coffee Project; satisfactory completion of due diligence by each party on the other party; and other standard conditions of closing for a transaction in the nature of the Proposed Transaction. The Proposed Transaction would not constitute a Non-Arm's Length Qualifying Transaction (as that term is defined in CPC Policy) and, accordingly, would not be expected to require the approval of Atlas One's shareholders.

In connection with the closing of the Transaction, a success fee of 1,200,000 common shares of the Resulting Issuer at a deemed price per share equal to the price per share at which shares are issued in the Concurrent Financing, and cash payment of $30,000 would be payable to M Partners Inc., an arm’s length party to Zodiac Gold.

Upon completion of the Proposed Transaction, it was anticipated that the Resulting Issuer would be listed as a Tier 2 mining issuer on the TSXV, with Zodiac Gold as its primary operating subsidiary.

In connection with the Proposed Transaction, the parties also intended to complete a concurrent financing (the “ Concurrent Financing ”) of securities of Zodiac Gold for gross proceeds of at least $3 million, to be priced in the context of the market at a mutually agreeable price per security. The Concurrent Financing would be structured as either a common share offering, a subscription receipt offering, or such other security offering as determined by Zodiac Gold and Atlas One based on discussions with investors. Other than in connection with the Concurrent Financing, neither party was to issue any shares or rights exchangeable or exercisable into shares of such party prior to closing of the Proposed Transaction.

The proceeds of the Concurrent Financing were to be used to finance exploration and other expenses relating to the Mount Coffee Project and the working capital requirements of the Resulting Issuer.

Further particulars regarding the Concurrent Financing, if any, will be disclosed in subsequent news releases relating to the Proposed Transaction. An agent may be engaged to act as agent on a "commercially reasonable efforts" basis for the Concurrent Financing and in connection therewith may be paid a commission in an amount to be determined.

In accordance with the policies of the TSXV, the Atlas One shares are currently halted from trading and will remain so until such time as the TSXV determines, which, depending on the policies of the TSXV, may not occur until completion of the Proposed Transaction.

As noted above, the Letter of Intent expired on November 30, 2022 without the parties entering into a formal extension or definitive agreements in respect of the Proposed Transaction. In the absence of a binding agreement between the parties, there can be no assurance that the Proposed Transaction will be completed, or that it will be completed on the terms set out above. While the parties are continuing discussions with respect to the Proposed Transaction, they may cease such discussions at any time. Even if discussions continue and the parties enter into definitive agreements in respect of the Proposed Transaction, there can be no assurance that all of the necessary regulatory and shareholder approvals will be obtained or that all conditions of closing will be met.

Capital Management

The Company's objective when managing capital is to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders.

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The Company includes equity, comprised of share capital, reserves, and deficit, in the definition of capital.

The Company's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund the identification and evaluation of potential acquisitions. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional funds through the issuance of equity or by securing strategic partners.

The proceeds raised from the issuance of common shares may only be used to identify and evaluate assets or businesses for future investment, with the exception of reasonable costs related to the completion of the Company’s IPO and Qualifying Transaction; agents’ and finders’ fees, costs, and commissions; assurance and audit fees; escrow and transfer agent fees; regulatory filing fees; and reasonable general and administrative expenses, not exceeding $3,000 per month. These restrictions apply until completion of a Qualifying Transaction by the Company.

Excluding current liabilities, which relate to standard operating accounts payable, the Company's current capital is the result of the sale of common shares. The net proceeds raised to date are sufficient to identify and evaluate a limited number of assets and businesses for the purpose of identifying and completing a Qualifying Transaction. However, additional funds may be required in the longer-term should the Company be unable to source and/or complete a Qualifying Transaction on a timely basis.

Financial Instruments and Risk Management

Recognition

The Company recognizes financial assets and financial liabilities on the date the Company becomes a party to the contractual provisions of the instruments.

Classification

The Company classifies its financial assets and financial liabilities in the following measurement categories i) those to be measured subsequently at fair value through profit or loss (" FVTPL "); ii) those to be measured subsequently at fair value through other comprehensive income; and iii) those to be measured at amortized cost. The classification of financial assets depends on the business model for managing the financial assets and the contractual terms of the cash flows. Financial liabilities are classified as those to be measured at amortized cost unless they are designated as those to be measured subsequently at FVTPL (irrevocable election at the time of recognition). For assets and liabilities measured at fair value, gains and losses are either recorded in profit or loss or other comprehensive income.

The Company reclassifies financial assets when and only when its business model for managing those assets changes. Financial liabilities are not reclassified.

The Company has implemented the following classifications:

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1. Cash held in trust is classified as assets at fair value and any period change in fair value is recorded in profit or loss.

2. Accounts payable and accrued liabilities are classified as other financial liabilities and measured at amortized cost using the effective interest rate method.

Measurement

All financial instruments are required to be measured at fair value on initial recognition, plus, in case of a financial asset tor financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction costs of financial assets and financial liabilities carried at FVTPL are expensed in profit or loss.

Financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments or principal and interest on the principal outstanding are generally measured at amortized cost at the end of the subsequent accounting periods. All other financial assets including equity investments are measured at their fair values at the end of subsequent accounting periods, with any changes taken through profit and loss or other comprehensive income (irrevocable election at the time of recognition).

Additional fair value measurement disclosure includes classification of financial instrument fair values in a fair value hierarchy comprising three levels reflecting the significance of the inputs used in making the measurements which are as follows:

Level 1: Valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Valuations based on directly or indirectly observable inputs in active markets for similar assets or liabilities, other than Level 1 prices, such as quoted interest or currency exchange rates; and

Level 3: Valuations based on significant inputs that are not derived from observable market data, such as discounted cash flow methodologies based on internal cash flow forecasts.

Cash held in trust is a level 1 financial instrument measured at fair value on the statement of financial position

Impairment

Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Trade receivables are reviewed qualitatively on a case-by-case basis to determine whether they need to be written off.

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Expected credit losses are measured as the difference in the present value of the contractual cash flows that are due to the Company under the contract, and the cash flows that the Company expects to receive. The Company assesses all information available, including past due status, credit ratings, the existence of third-party insurance, and forward looking macro-economic factors in the measurement of the expected credit losses associated with its assets carried at amortized cost.

The Company measures expected credit loss by considering the risk of default over the contract period and incorporates forward-looking information into its measurement.

The Company's risk exposures and the impact on the Company's financial instruments are summarized below:

Credit Risk

Credit risk is the risk of loss associated with the counterparty's inability to fulfill its payment obligations. Financial instruments that potentially subject the Company to concentrations of credit risks consist principally of cash held in trust.

Interest Rate Risk

The Company is not exposed to any significant interest rate risk.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company currently settles its financial obligations out of cash. The ability to do this relies on the Company raising equity financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs and to meet the Company's liabilities. The $25,004 of accounts payable and accrued liabilities are due within one year.

Outstanding Share Data

As at December 31, 2022 and as at the date of this MD&A, the Company had issued and outstanding: (a) 5,320,000 common shares, (b) 532,000 options to acquire common shares, and (c) 266,000 warrants to acquire common shares.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Critical Accounting Estimates and Judgments

The Company's significant accounting policies are summarized in Note 2 to the audited financial statements for the period ended December 31, 2022.

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Future Changes in Accounting Policies

The Company has reviewed future changes in accounting policies and determined that none have any impact on the Company at present nor are expected to on adoption.

Risks and Uncertainties

The Company's objective is to identify and complete a Qualifying Transaction and until such time as it does so, the Company will not have a source of recurring income, commercial operations, significant assets other that cash and shall not generate earnings or pay dividends. Until the completion of a Qualifying Transaction, the Company is not permitted to carry on any other business other than the identification and evaluation of potential Qualifying Transactions.

The closing of any proposed Qualifying Transaction is subject to a number of terms and conditions, including completion of due diligence procedures by parties to the transaction and receipt of all required regulatory approvals, and there is no assurance that a transaction will be completed.

Should the Company be unable to complete a Qualifying Transaction before its existing cash has been spent, it will require additional capital financing and there is no assurance that it will be able to obtain adequate financing in the future or that the terms of such financing will be favourable. If the Company does not complete a Qualifying Transaction within the time permitted by the TSX-V, its common shares could be delisted.

The Company's success depends to a certain degree upon key members of its management to identify a potential Qualifying Transaction. The loss of the service of members of the management team or certain key employees could have a material adverse effect on the Company.

The proposed business of the Company and the completion of a Qualifying Transaction involves a high degree of risk and there is no assurance that the Company will identify an appropriate business for acquisition or investment, and even if so identified and warranted, it may not be able to finance such an acquisition or investment within the requisite time period.

These factors indicate the existence of a material uncertainty that may cast doubt about the Company's ability to continue as a going concern. Should the Company be unable to continue as a going concern, the net realizable value of its assets may be materially less than the amounts on its statement of financial position.

Risks Related to the Proposed Transaction

The Proposed Transaction is subject to normal commercial risk that it may not be completed on the terms negotiated or at all. The closing of the Proposed Transaction is subject to the completion of other agreements, closing conditions and conditions precedent. There is no guarantee that such agreements will be reached or closing conditions and conditions precedent will be met, obtained or waived and there is no definitive assurance that the Proposed Transaction will be completed as anticipated.

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Zodiac Gold may have current or future liabilities of which the Company is unaware, including liabilities such as potential liability claims that the Company may not or did not identify in the course of its due diligence. The Company may not be indemnified for all liabilities of this nature. In addition, there may be required capital expenditures that the Company did not identify or accurately quantify in the course of its due diligence.

Undisclosed liabilities or unexpected required capital expenditures may materially adversely affect the business, results of operations and financial condition of the combined businesses of Zodiac Gold and the Company.

Conflict of Interest

There are potential conflicts of interest to which all of the directors, officers, insiders and promoters of the Company will be subject in connection with the operations of the Company. All of the directors, officers, insiders and promoters are engaged in and will continue to be engaged in corporations or businesses which may be in competition with the search by the Company for businesses or assets in order to close a Qualifying Transaction. Accordingly, situations may arise where all of the directors, officers, insiders and promoters will be in direct competition with the Company. Conflicts, if any, will be subject to the procedures and remedies as provided under the OBCA.

Corporate Governance

TSX-V Policy 3.1 requires that the Company have an audit committee of at least three directors, the majority of whom are not employees, control persons or officers of the Company or any of its associates or affiliates. The audit committee will be responsible for overseeing the accounting and financial reporting processes of the Company and audits of the financial statements of the Company.

Given the current prescribed nature of the Company and its principal business being limited to identifying and evaluating assets or businesses with a view to completing a Qualifying Transaction, it is anticipated that, prior to the Completion of the Qualifying Transaction, the only committee of the board of directors will be the audit committee.

The Company has appointed an audit committee consisting of the following three directors: David Rosenkrantz, Tracy Graf, and Maurice Kagan.

Subsequent Events

There have been no material events affecting the Company since December 31, 2022.

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