Smartset Services Inc. — Management Reports 2024

Oct 30, 2024

0SMARTSET SERVICES INC. (the “Company”)

FORM 51-102F1 MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2024

The following Management’s Discussion and Analysis (“MD&A”), prepared as of October 30, 2024 should be read together with the condensed interim financial statements for the three and six month periods ended September 30, 2024 and the related notes attached thereto. Accordingly, the condensed interim financial statements and MD&A include the results of the financial position, operations, and cash flows of the Company for the three and six month periods ended September 30, 2023. The reader may also wish to refer to the Company’s audited financial statements and MD&A for the years ended March 31, 2023 and 2024 but the reader must be aware that historical results are not necessarily indicative of future performance. All amounts are reported in Canadian dollars. The aforementioned documents can be accessed on the SEDAR website at www.sedar.com.

Unless otherwise stated, financial results are being reported in accordance with International Financial Reporting Standards (“IFRS”).

MD&A contains the term cash flow from operations, which should not be considered an alternative to, or more meaningful than, cash flows from operating activities as determined in accordance with IFRS as an indicator of the Company’s performance. The Company’s determination of cash flow from operations may not be comparable to that reported by other companies. The reconciliation between profit or loss and cash flows from operating activities can be found in the consolidated statement of cash flows.

Certain statements contained in this MD&A may contain words such as "could", "should", "expect", "believe", "will" and similar expressions and statements relating to matters that are not historical facts but are forward-looking statements. Such forward-looking statements are subject to both known and unknown risks and uncertainties which may cause the actual results, performances, or achievements of the Company to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, the receipt of required regulatory approvals, the availability of sufficient capital, the estimated cost and availability of funding for the continued exploration and development of the Company's prospects, political and economic conditions, commodity prices and other factors.

Description of Business

Smartset Services Inc. (the “Company’) was incorporated on May 9, 2013 pursuant to the provisions of the Business Corporations Act (Alberta) and was continued into British Columbia on February 2, 2018. The Company was formed to complete an Initial Public Offering (“IPO”) and became classified as a Capital Pool Company (“CPC”) as defined in the TSX Venture Exchange (“TSXV”) Policy 2.4. The Company will not carry on any business other than the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction (“QT”). The head office and the registered office of the Company is located at Suite 1500, Royal Centre, 1055 West Georgia Street, Vancouver, BC, V6E 4N7.

As a CPC, the Company’s principal business objective will be to identify and evaluate assets, properties, or businesses with a view to a potential acquisition or participation by completing a QT subject, in certain cases, to shareholders’ approval and acceptance by the TSXV. There is no assurance that the Company will identify and successfully acquire businesses or assets that will produce a profit. Moreover, if a potential business or asset is identified which warrants acquisition or participation, additional funds may be required to complete the acquisition or participation and the Company may not be able to obtain such financing on terms which are satisfactory to the Company.

Smartset Services Inc. Management’s Discussion & Analysis September 30, 2024

Description of Business (continued)

Going Concern

These condensed interim financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. For the six month period ended September 30, 2024, the Company has not generated any revenues, and has negative cash flows from operations. As at September 30, 2024, the Company has an accumulated deficit of $924,181. The Company’s continuing operations are dependent upon its ability to identify, evaluate, and negotiate a QT. If the QT is identified or completed, additional funding may be required and there is no assurance that the Company will be able to obtain such financing, if any, on terms that are acceptable to the Company. These factors indicate the existence of a material uncertainty that may cast significant doubt on the ability of the Company to continue as a going concern. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company be unable to continue as a going concern.

Liquidity & Capital Resources

Results of Operations for the three month period ended September 30, 2024

The Company had a net gain of $73,441 for the three month period ended September 30, 2024 compared to a net gain of $29,813 for the three month period ended September 30, 2023. The increased gain was due to the receipt of full payment of the outstanding principal balance of its loan, interest and legal costs.

Results of Operations for the six month period ended September 30, 2024

The Company had a net gain of $71,761 for the six month period ended September 30, 2024 compared to a net gain of $11,184 for the six month period ended September 30, 2023. The increased gain was due to the receipt of full payment of the outstanding principal balance of its loan, interest and legal costs.

Off-balance Sheet Arrangements

The Company has not entered into any off-balance sheet arrangements.

Liquidity & Capital Resources

Cash Flows

During the six month period ended September 30, 2024, the Company gained cash in the amount of $65,106 from operating activities compared to a gain of $10,087 from operating activities during the six month period ended September 30, 2023. As stated above, this gain was due to the receipt of full payment of the outstanding principal balance of its loan, interest and legal costs..

Investing Activities

The Company did not have any investing activities during the six month period ended September 30, 2024 and 2023.

Financing Activities

During the six month period ended September 30, 2024, the Company received $nil from financing activities compared to $15,000 from the issuance of 300,000 common shares pursuant to a private placement less share issuance costs of $1,379 during the six month period ended September 30, 2023

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Smartset Services Inc. Management’s Discussion & Analysis September 30, 2024

Performance Summary

Selected Annual Information

The following table provides a brief summary of the Company’s financial operations for the three most recently completed financial years ended March 31:

	2024	2023	2022
	$	$	$
Total revenue	–	–	–
Net income (loss) for the year	57,955	(480,519)	(367,212)
Basic and diluted earnings (loss) per share	0.00	(0.03)	(0.02)
Total assets	270,900	196,680	700,180
Total long-term liabilities	–	–	–

Summary of Quarterly Results

The following is a summary of the Company’s financial results for the eight most recently completed quarters:

	September 30,	June 30,		December 31,
	2024 $	2024 $	March 31, 2024	2023 $
			$
Net income (loss) for the period	73,441	(1,680)	(13,203)	59,974
Basic and diluted loss per share	0.00	0.00	0.00	0.00
	September 30,	June 30,	March 31,	December 31,
	2023	2023	2023	2022
	$	$	$	$
Net gain (loss) for the period	29,813	(18,629)	(283,726)	(19,373)
Basic and diluted loss per share	0.00	(0.00)	(0.02)	(0.00)

This information has been prepared in accordance with IFRS and is presented in Canadian dollars, which is the functional currency of the Company.

Financial Instruments and Risks

The Company is exposed in varying degrees to a variety of financial instruments and related risks. Those risks and management’s approach to mitigating those risks are as follows:

• (a) Fair Values

The fair values of financial instruments, which include cash and cash equivalents, accrued interest receivable, and accounts payable and accrued liabilities, approximate their carrying values due to the relatively short-term maturity of these instruments.

Fair value measurements are classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The fair value hierarchy has the following levels:

• Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 - valuation techniques using inputs for the asset or liability that are not based on

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observable market data (unobservable inputs). Smartset Services Inc. Management’s Discussion & Analysis September 30, 2024

Financial Instruments and Risks (continued)

• (b) Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consists of cash and cash equivalents. The Company will limit its exposure to credit loss by placing its cash and cash equivalents with high credit quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure.

• (c) Foreign Exchange Rate Risk

Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the functional currency of the relevant company. The Company has no foreign exchange rate risk.

• (d) Interest Rate Risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Company will realize such a loss is limited because the Company has no liabilities with variable rates.

• (e) 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 plans on settling its financial obligations out of cash. The ability to do this relies on the Company raising debt and equity financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs. There is no assurance that financing will be available or, if available, that such financing will be on terms acceptable to the Company.

Share Capital

Authorized: unlimited common shares

As at September 30, 2024 there are 15,800,000 common shares issued and outstanding and 1,580,000 stock options issued and outstanding.

On July 20, 2023, the Company issued 300,000 common shares at $0.05 per share to officers and directors of the Company for proceeds of $15,000. As part of the issuance, the Company incurred share issuance costs of $1,379.

Stock Options

Stock Options
		Weighted average
	Number of	exercise price
	options	$
Outstanding, March 31, 2024	1,580,000	0.10
Granted (cancelled)	–	–
Balance at September30,2024	1,580,000	0.10

Additional information regarding stock options outstanding as at September 30, 2024, is as follows:

		Weighted average
Range of exercise		remaining contracted life
prices	Stock options	(years)
$	outstanding
0.10	1,580,000	6.67

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Smartset Services Inc. Management’s Discussion & Analysis September 30, 2024

Capital Management

The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of cash and cash equivalents and equity comprised of issued share capital and share-based payment reserve.

The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company and its Board of Directors will balance its overall capital structure through share issuances or by undertaking other activities as deemed appropriate under the specific circumstances. The Company is subject to externally imposed capital requirements under TSX-V Policy 2.4 for Capital Pool Companies and the Company’s overall strategy with respect to risk management remains unchanged from the year ended March 31, 2024.

Qualifying Transaction

On June 17, 2021, the Company entered into binding letter of intent to acquire a portfolio of five gold and copper exploration projects located in Eastern Australia of which one is held with GBM Resources Ltd. (“GBM”) and four properties are held with GSG as a proposed QT. To acquire the interests, the Company would: (i) consolidate its issued and outstanding common shares on a basis of 0.75 new common shares for every 1 old common share; (ii) issue 20,079,545 split-adjusted common shares to GBM for the one gold and copper exploration property; and (iii) issue 10,568,182 split-adjusted common shares to acquire a 100% interest in GSG. On July 8, 2021, the Company entered into an amending agreement whereby it would acquire an additional exploration claim from GBM. The Company would compensate GBM with an option payment of $32,500, other transaction costs of up to a maximum of $10,000 and issue 380,000 split-adjusted shares in compensation of shares issued by GBM to acquire the exploration claim. During the year ended March 31, 2024, the proposed QT was cancelled.

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