Zenith Capital — Audit Report / Information 2023

Nov 27, 2023

ZENITH CAPITAL CORPORATION
(A Capital Pool Company)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(EXPRESSED IN CANADIAN DOLLARS)

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manning elliott

17th floor, 1030 West Georgia St., Vancouver, BC, Canada V6E 2Y3

Tel: 604.714.3600 Fax: 604.714.3669 Web: manningelliott.com

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Directors of Zenith Capital Corporation

Opinion

We have audited the financial statements of Zenith Capital Corporation (the "Company") which comprise the statements of financial position as at July 31, 2023 and 2022, and the statements of loss and comprehensive loss, cash flows and changes in equity for the years then ended, and the related notes comprising a summary of significant accounting policies and other explanatory information (together, the "Financial Statements").

In our opinion, the accompanying Financial Statements present fairly, in all material respects, the financial position of the Company as at July 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter - Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the accompanying Financial Statements, which describes matters and conditions that indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements for the year ended July 31, 2023. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our report.

Other Information

Management is responsible for the other information, which comprises the information included in the Company's Management Discussion & Analysis to be filed with the relevant Canadian securities commissions.

Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Financial Statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the Financial Statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

In preparing the Financial Statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

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Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are, therefore, the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors' report is Fernando J. Costa.

Manning Elliott LLP

CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, British Columbia
November 27, 2023

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ZENITH CAPITAL CORPORATION
STATEMENTS OF FINANCIAL POSITION
AS AT JULY 31 2023 and 2022
(Expressed in Canadian dollars)

	2023	2022
ASSETS
CURRENT
Cash	$ 79,530	$ 72,427
Amounts receivable	6,717	5,283
	$ 86,247	$ 77,710
LIABILITIES
CURRENT
Accounts payable	$ 3,935	$ 5,670
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 4)	543,311	343,311
CONTRIBUTED SURPLUS (Note 4)	114,479	114,479
DEFICIT	(575,478)	(385,750)
	82,312	72,040
	$ 86,247	$ 77,710

NATURE OF BUSINESS AND CONTINUING OPERATIONS (Note 1)
SUBSEQUENT EVENT (Note 9)

Approved on behalf of the Board November 27, 2023:

"Charalambos (Harry) Katevatis" "Vivian Katsuris"
Director Director

The accompanying notes are an integral part of these financial statements.

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| ZENITH CAPITAL CORPORATION
STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars) | | |
| --- | --- | --- |
| | 2023 | 2022 |
| EXPENSES | | |
| Consulting | $ 41,500 | $ – |
| Office and miscellaneous | 1,504 | 568 |
| Professional fees | 114,565 | 121,306 |
| Rent | 6,100 | 1,500 |
| Transfer agent and filing fees | 23,325 | 21,507 |
| Travel | 2,734 | – |
| NET LOSS AND COMPREHENSIVE LOSS | $ 189,728 | $ 144,881 |
| LOSS PER SHARE (basic and diluted) | $ 0.07 | $ 0.06 |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | 5,972,613 | 4,835,674 |

The accompanying notes are an integral part of these financial statements.

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| ZENITH CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars) | | |
| --- | --- | --- |
| | 2023 | 2022 |
| OPERATING ACTIVITIES | | |
| Net loss for the year | $ (189,728) | $ (144,881) |
| Changes in non-cash working capital balances: | | |
| Accounts payable | (1,735) | 2,736 |
| Amounts receivable | (1,434) | (4,345) |
| Cash used in operating activities | (192,897) | (146,490) |
| FINANCING ACTIVITIES | | |
| Shares issued for cash | 200,000 | 9,042 |
| CHANGE IN CASH | 7,103 | (137,448) |
| CASH, BEGINNING OF YEAR | 72,427 | 209,875 |
| CASH, END OF YEAR | $ 79,530 | $ 72,427 |
| SUPPLEMENTAL INFORMATION | | |
| Interest and income taxes paid | $ – | $ – |

The accompanying notes are an integral part of these financial statements.

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ZENITH CAPITAL CORPORATION
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars)

	Common Shares		Contributed	Deficit	Total
	Number of Shares	Amount	Surplus
Balance, July 31, 2021	4,800,001	$ 328,963	$ 119,785	$ (240,869)	$ 207,879
Exercise of Warrants	90,420	14,348	(5,306)	-	9,042
Net loss	-	-	-	(144,881)	(144,881)
Balance, July 31, 2022	4,890,421	$ 343,311	$ 114,479	$ (385,750)	$ 72,040
Balance, July 31, 2022	4,890,421	$ 343,311	$ 114,479	$ (385,750)	$ 72,040
Shares issued for cash	2,500,000	200,000	-	-	200,000
Net loss	-	-	-	(189,728)	(189,728)
Balance, July 31, 2023	7,390,421	$ 543,311	$ 114,479	$ (575,478)	$ 82,312

The accompanying notes are an integral part of these financial statements.

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ZENITH CAPITAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars)

1. NATURE OF BUSINESS AND CONTINUING OPERATIONS

Zenith Capital Corporation (the "Company") was incorporated on March 11, 2019 under the Business Corporation Act in the province of British Columbia. During the year ended July 31, 2020, the Company completed its Initial Public Offering to be classified as a Capital Pool Company ("CPC") as defined by the TSX Venture Exchange ("TSXV"). The Company trades its shares on the TSXV under the trading symbol ZENI.P. The address of the Company's head office is 318 - 1199 West Pender Street, Vancouver, BC, V6E 2R1.

The principal activity of the Company is the identification and evaluation of assets or a business and once identified or evaluated, to negotiate an acquisition of, or participation in, a business subject to receipt of shareholders' approval, if required, and acceptance by regulatory authorities (the "Qualifying Transaction"). Where an acquisition or participation is warranted, additional funding may be required. The ability of the Company to fund its potential future operations and commitments is dependent upon the ability of the Company to identify, evaluate and negotiate an acquisition, participate in or invest in an interest in a Qualifying Transaction, and obtain additional financing. The Company reported an accumulated deficit of $575,478 for the year ended July 31, 2023 which has been funded by issuance of common shares. These factors create a material uncertainty that raises significant doubt upon the Company's ability to continue as a going concern.

These financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these financial statements.

2. BASIS OF PREPARATION

Statement of Compliance

These financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

Approval of the Financial Statements

The financial statements of the Company for the year ended July 31, 2023 were reviewed by the Audit Committee and approved and authorized for issuance by the Board of Directors on November 27, 2023.

Basis of Measurement

The financial statements have been prepared on the historical cost basis, with the exception of financial instruments which are measured at fair value, as explained in the accounting policies set out below. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

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ZENITH CAPITAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.

a) Cash equivalents include short term deposits with an original maturity of three months or less, which are readily convertible into a known amount of cash. As of July 31, 2023, the Company held no cash equivalents.

b) Significant Accounting Estimates and Judgements

The preparation of these financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses for the periods reported. Significant areas requiring the use of management estimates are the measurement of deferred income tax assets and liabilities. Actual results could differ from these estimates.

Critical accounting judgements are accounting policies that have been identified as being complex or involving subjective or assessments with a significant risk of material adjustment. Significant areas requiring critical accounting judgements include the Company's ability to carry on as a going concern and the determination of financial assets and liabilities.

c) Income Taxes

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the financial statements date, and includes any adjustments to tax payable or receivable in respect of previous years.

Deferred income taxes are recorded using the liability method whereby deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is not recognized for temporary differences which arise on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting, nor taxable profit or loss.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

d) Loss Per Share

The Company presents basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive. Basic and diluted loss per share excludes all of the Company's common shares from the weighted average shares calculation that are contingently returnable.

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ZENITH CAPITAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

e) Share Issuance Costs

Professional, consulting, regulatory and other costs directly attributable to financing transactions are recorded as deferred financing costs until the financing transactions are completed, if the completion of the transaction is considered likely; otherwise they are expensed as incurred. Share issue costs are charged to share capital when the related shares are issued. Deferred financing costs related to financing transactions that are not completed are charged to operations.

f) Share-based payments

The fair value of equity settled stock options awarded to employees defined under IFRS 2 Share-based payments (i.e. employees for legal and tax purpose, directors and certain consultants), determined as of the date of grant, and awarded to non-employees defined under IFRS 2, as of the date of delivery of service, is recognized as share-based payments, included in general and administrative expenses in the statement of comprehensive loss, over the vesting period of the stock options based on the estimated number of options expected to vest, with a corresponding increase to equity.

g) Financial Instruments

On initial recognition financial assets are classified as measured at:

i. Amortized cost;
ii. Fair value through other comprehensive income ("FVOCI"); and
iii. Fair value through profit and loss ("FVTPL").

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Financial assets are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Subsequent measurement of financial assets depends on their classification:

i. Amortized cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included as finance income using the effective interest rate method.

The Company does not have any assets classified at amortized cost.

ii. FVOCI

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains and losses, interest revenue, and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains (losses). Interest income from these financial assets is included as finance income using the effective interest rate method.

The Company does not have any assets classified at FVOCI.

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ZENITH CAPITAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

g) Financial Instruments (continued)

iii. FVTPL

Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL. A gain or loss on an investment that is subsequently measured at FVTPL is recognized in profit or loss and presented net as revenue in the Statement of Loss and Comprehensive Loss in the period in which it arises.

The Company's cash is classified at FVTPL.

Financial Liabilities and Equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the group entities are recorded at the proceeds received, net of direct issue costs.

Financial liabilities are classified as measured at (i) FVTPL; or (ii) amortized cost.

A financial liability is classified as at FVTPL if it is classified as held-for-trading or is designated as such on initial recognition. Directly attributable transaction costs are recognized in profit or loss as incurred. The amount of change in the fair value that is attributable to changes in the credit risk of the liability is presented in OCI and the remaining amount of the change in the fair value is presented in profit or loss.

The Company does not classify any financial liabilities at FVTPL.

Other non-derivative financial liabilities are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method.

The Company classifies its accounts payable at amortized cost.

A financial liability is derecognized when the contractual obligation under the liability is discharged, cancelled or expires or its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

h) Adoption of new accounting standards, interpretations and amendments

The Company has performed an assessment of new standards issued by the IASB that are not yet effective. The Company has assessed that the impact of adopting these accounting standards on its financial statements would not be significant.

1. SHARE CAPITAL

a) Authorized: Unlimited number of common shares without par value.

b) Escrow shares: As at July 31, 2023, there were 3,175,001 (2022 – 2,300,001) common shares held in escrow.

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ZENITH CAPITAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars)

4. SHARE CAPITAL (Continued)

c) Issued and outstanding as at July 31, 2023: 7,390,421 (2022 – 4,890,421) common shares

(i) During the year ended July 31, 2023, the Company issued 2,500,000 common shares pursuant to a private placement at a price of $0.08 per share for a total gross proceeds of $200,000.

(ii) During the year ended July 31, 2022, the Company issued 90,420 common shares upon the exercise of 90,420 warrants at an exercise price of $0.10 for gross proceeds of $9,042. The Company reclassified $5,306 from contributed surplus related to the warrants.

d) Warrants

A continuity of the warrants outstanding as at July 31, 2023 and 2022 is as follows:

	Number of warrants	Weighted average exercise
Balance, July 31, 2021	200,000	$ 0.10
Exercised	(90,420)	–
Expired	(109,580)	–
Balance, July 31, 2022 and 2023	–	$ –

e) Options

During the year ended July 31, 2020, the Company adopted a Stock Option Plan ('Plan') for directors and officers of the Company. The Company may grant options to individuals, options are exercisable over periods of up to five years, as determined by the Board of Directors of the Company, to buy shares of the Company at the fair market value on the date the option is granted. The maximum number of shares which may be issuable under the Plan cannot exceed 10% of the total number of issued and outstanding shares on a non-diluted basis.

A continuity of the options outstanding and exercisable as at July 31, 2023 is as follows:

	Number of options	Weighted average exercise
Balance, July 31, 2021	100,000	$ 0.10
Exercised	–	–
Balance, July 31, 2022 and 2023	100,000	$ 0.10

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ZENITH CAPITAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars)

5. RELATED PARTY BALANCES AND TRANSACTIONS

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

The Company had incurred the following key management personnel cost from related parties:

	2023	2022
	$	$
Rent/Office Fees	1,100	1,500

Key management includes directors and key officers of the Company, including the President, Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO").

6. MANAGEMENT OF CAPITAL

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern and to maintain a flexible capital structure which will allow it to pursue the completion of a Qualifying Transaction as defined in TSXV Policy 2.4. Therefore, the Company monitors the level of risk incurred in its expenditures relative to its capital structure.

The Company considers its capital structure to include shareholders' equity. The Company monitors its capital structure and makes adjustments in light of changes in economic conditions and the risk characteristics of the potential underlying assets. To maintain or adjust the capital structure, the Company may issue new equity if available on favorable terms and approved by the TSXV.

As a CPC, the Company will be subject to externally imposed capital requirements as outlined in the TSXV Policy 2.4 and summarized below:

(a) No salary, consulting, management fees or similar remuneration of any kind may be paid directly or indirectly to a related party of the Company or a related party of a QT;
(b) Gross proceeds realized from the sale of all securities issued by a CPC may only be used to identify and evaluate assets or businesses and obtain shareholder approval for a QT;
(c) No more than the lesser of $210,000 and 30% of the gross proceeds from the sale of securities issued by a CPC may be used for purposes other than to identify and evaluate a QT; and
(d) After the completion of its IPO and until the completion of a QT, a CPC may not issue any securities unless written acceptance of the TSXV is obtained before the issuance of the securities.

There were no changes in the Company's approach to capital management during the year ended July 31, 2023.

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ZENITH CAPITAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars)

7. INCOME TAXES

The following table reconciles the amount of income tax recoverable on application of the combined statutory Canadian federal and provincial income tax rates:

	2023	2022
Canadian statutory income tax rate	27%	27%
Income tax recovery at statutory rate	$ (51,225)	$ (39,119)
Effect of income taxes of:
Change in deferred tax assets not recognized	51,225	39,119
Deferred income tax recovery	$ –	$ —

Significant components of the Company's deferred income tax assets are shown below:

	2023	2022
Non-capital loss carry forwards	$133,391	$ 78,738
Shares issuance cost	3,426	6,854
Deferred tax assets not recognized	(136,817)	(85,592)
	$ –	$ –

As at July 31, 2023, the Company had approximately $494,041 in non-capital loss carry forward available to reduce taxable income for future year. The non-capital losses expire in 2043.

8. FINANCIAL INSTRUMENTS

International Financial Reporting Standards 7, Financial Instruments: Disclosures, establishes a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

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

Level 2 - 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 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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ZENITH CAPITAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars)

8. FINANCIAL INSTRUMENTS (continued)

Fair Value of Financial Instruments

The Company's financial assets include cash and is classified as Level 1. The carrying value of these instruments approximates their fair values due to the relatively short periods of maturity of these instruments.

Assets measured at fair value on a recurring basis were presented on the Company's statements of financial position as at July 31, 2023 are as follows:

Fair Value Measurements Using
	Quoted Prices in Active Markets For Identical Instruments (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
	$	$	$	$
Cash	79,530	–	–	79,530

Financial risk management objectives and policies

The Company's financial instruments include cash and accounts payable. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

a) 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. To minimize the credit risk, the Company places these instruments with a high quality financial institution.

b) Interest rate risk

The Company is exposed to interest rate risk on the variable rate of interest earned on bank deposits. The fair value interest rate risk on bank deposits is insignificant as the deposits are short-term.

The Company has not entered into any derivative instruments to manage interest rate fluctuations.

c) Currency risk

The Company does not have significant foreign exchange risk as all of its transactions are in Canadian dollars.

d) Liquidity Risk

In managing the liquidity risk of the Company, the Company maintains a balance between continuity of funding and the flexibility through the use of borrowings. Management closely monitors the liquidity position and expects to have adequate sources of funding to finance the Company's projects and operations.

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ZENITH CAPITAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2023 AND 2022
(Expressed in Canadian dollars)

9. SUBSEQUENT EVENT

On March 8, 2023, the Company entered into a binding letter of agreement ("LOI") with Grand Samsara Consulting LLC ("Grand Samsara") and CBGB Ventures Corp. ("Fundco"), where the Company will acquire all of the issued and outstanding securities of each of Grand Samsara and Fundco, which is expected to result in a reverse take-over of the Company by the shareholders of Grand Samsara and Fundco (the "Proposed Transaction").

The Proposed Transaction involves a securities exchange, where Grand Samsara and Fundco security holders will swap their securities for the Company's common shares, resulting in Grand Samsara and Fundco becoming wholly-owned subsidiaries of the resulting issuer. Subsequent to the Proposed Transaction, existing shareholders of Grand Samsara and Fundco will hold a majority of the resulting issuer's outstanding shares. The Proposed Transaction is intended to constitute the Company's Qualifying Transaction pursuant to Policy 2.4 of the TSX Venture Exchange.

The final valuations of Grand Samsara, Fundco, and the resulting issuer are undetermined. The valuation will depend on the pricing of concurrent private placements: Fundco and the Company will complete certain equity financings to raise a minimum of $1,200,000 and $1,000,000 respectively.

In connection with the Proposed Transaction, the Company, Fundco and Grand Samsara will enter into a bridge loan agreement. The Company will provide up to $25,000 to Grand Samsara for a technical report on the Tsagaan Zalaa Silica Project, and Fundco will make advances to support exploration and development activities on the project. Grand Samsara holds a 100% undivided interest in the Tsagaan Zalaa Silica Project, an advanced exploration silica property in a prolific silica producing region of Mongolia.

Subject to TSXV approval, the Company will grant the current shareholders of Grand Samsara an anti-dilution right (the "AD Right") for a period ending on the earlier of: (i) completion of an aggregate total of $4,000,000 in equity financing by the Company and Fundco collectively following the date of execution of the LOI, and (ii) two years from the closing date of the Proposed Transaction. Pursuant to the AD Right, to the extent dilution results from any equity financing which causes the total number of the Company's securities issued to the current shareholders of Grand Samsara to represent less than 40% of the then-issued and outstanding common shares of the Company on or after the closing, the Company will issue such additional number of common shares to the shareholders of Grand Samsara as is necessary to increase the aggregate number of common shares issued to such Grand Samsara shareholders to represent 40% of the outstanding common shares following such equity financing.

During the year ended July 31, 2023, the LOI had been amended multiple times amending certain terms of the LOI and extending the closing of the transaction until November 30, 2023. As of the date of the approval of these financial statements, the transaction had not closed and both parties are continuing to negotiate.