Zenith Capital — Interim / Quarterly Report 2021

Mar 5, 2021

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ZENITH CAPITAL CORPORATION
CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JANUARY 31, 2021
AND JANUARY 31, 2020
(UNAUDITED)

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Notice of No Auditor Review of Interim Financial Statements

The accompanying unaudited financial statements have been prepared by management and approved by the Audit Committee.

The Company's independent auditors have not performed a review of these financial statements in accordance with the standards established by the Canadian Institute to Chartered Accountants for a review of interim financial statements by an entity's auditors.

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ZENITH CAPITAL CORPORATION
CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
(Expressed in Canadian dollars)

	January 31, 2021 (Unaudited)	July 31, 2020 (Audited)
ASSETS
CURRENT
Cash	$ 201,329	$ 221,850
Amounts receivable	344	1,838
	$ 201,673	$ 223,688
LIABILITIES
CURRENT
Accounts payable and accrued liabilities	$ 3,027	$ 3,199
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 5)	274,815	274,815
CONTRIBUTED SURPLUS	143,933	143,933
DEFICIT	(220,102)	(198,259)
	198,646	220,489
	$ 201,673	$ 223,688

NATURE OF BUSINESS AND CONTINUING OPERATIONS (Note 1)

Approved and authorized for issue on behalf of the Board on March 5, 2021

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

The accompanying notes are an integral part of these financial statements

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ZENITH CAPITAL CORPORATION
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE LOSS
(Expressed in Canadian dollars)
UNAUDITED

	Three months ended January 31, 2021	Three months ended January 31, 2020	Six months ended January 31, 2021	Six month ended January 31 2020
EXPENSES
Bank Charges	$ 17	$ 26	$ 49	$ 91
Professional fees	5,701	16,240	18,450	43,864
Transfer agent and filing fees	1,184	118	3,344	118
NET LOSS AND COMPREHENSIVE, LOSS	$ 6,902	$ 16,384	$ 21,843	$ 44,073
LOSS PER SHARE (basic and diluted)	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.02)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING	4,500,001	2,500,001	4,500,001	2,500.001

The accompanying notes are an integral part of these financial statements

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ZENITH CAPITAL CORPORATION
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
(Expressed in Canadian dollars)
UNAUDITED

	Common Shares		Contributed Surplus	Deficit	Total
	Number of Shares	Amount
		$	$	$	$
Balance, July 31, 2020	4,500,001	274,815	143,933	(198,259)	220,489
Net loss for the period	–	–	–	(21,843)	(21,843)
Balance, January 31, 2021	4,500,001	274,815	143,933	(220,102)	198,646
Balance, July 31, 2019	2,500,001	150,001	100,000	(110,433)	139,568
Net loss for the period	–	–	–	(44,073)	(44,073)
Balance, January 31, 2020	2,500,001	150,001	100,000	(154,506)	95,495

The accompanying notes are an integral part of these financial statements

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ZENITH CAPITAL CORPORATION
CONDENSED INTERIM STATEMENT OF CASH FLOWS
(Expressed in Canadian dollars)
UNAUDITED

	Three months ended January 31, 2021	Three months ended January 31, 2020	Six months ended January 31, 2021	Six month ended January 31, 2020
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net loss for the period	$ (6,902)	$ (16,384)	$ (21,843)	$ (44,073)
Items not involving cash:
Share based payments	–	–	–	–
	(6,902)	(16,384)	(21,843)	(44,073)
Changes in non-cash working capital balances:
Amounts receivable	725	(983)	1,494	(1,990)
Accounts payable and accrued liabilities	(9,126)	3,638	(172)	14,571
Cash used in operating activities	(15,303)	(13,729)	(20,521)	(31,492)
INCREASE IN CASH DURING THE PERIOD	(15,303)	(13,729)	(20,521)	(31,492)
CASH, BEGINNING OF PERIOD	216,632	106,656	221,850	124,419
CASH, END OF PERIOD	$ 201,329	$ 92,927	$ 201,329	$ 92,927
SUPPLEMENTAL DISCLOSURES
Interest paid	$ –	$ –	$ –	$ –
Income taxes paid	$ –	$ –	$ –	$ –
Shares issued for and evaluation and exploration costs	$ –	$ –	$ –	$ –

The accompanying notes are an integral part of these financial statements

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ZENITH CAPITAL CORPORATION
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JANUARY 31, 2021 AND 2020
(Expressed in Canadian dollars)
(UNAUDITED)

1. NATURE OF OPERATIONS

Zenith Capital Corporation (the "Company") was incorporated on March 11, 2019 under the Business Corporation Act in the province of British Columbia. The Company is seeking to obtain a Capital Pool Company ("CPC") status as defined in the TSX Venture Exchange (the "Exchange") Policy 2.4 and accordingly, its planned principal activity is to use its capital to investigate and acquire a business or group of assets (the "Qualifying Transaction"). The address of the Company's registered office and head office is 400 – 725 Granville Street, Vancouver, British Columbia V7Y 1G5.

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 has not identified a business or asset that warrants acquisition or participation. As at January 31, 2021, the Company had no business operations and its only significant asset was cash. The Company reported a deficit of $220,102 to date. 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. SIGNIFICANT ACCOUNTING POLICIES

a) Statement of compliance

These unaudited condensed interim financial statements of the Company have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" ("IAS 34") and International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and Interpretations of the Financial Reporting Interpretations Committee ("IFRIC"). These interim financial statements do not include all the information required for full annual financial statements and should be read in conjunction with the audited financial statements and notes thereto as of and for the period ended July 31, 2020.

These unaudited condensed interim financial statements were authorized for issue in accordance with a resolution from the Board of Directors on March 5, 2021.

b) Basis of presentation

These interim financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. These financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information. These unaudited condensed interim financial statements follow the same accounting policies and methods of application as the annual audited financial statements for the period ended July 31, 2020. The adoption of new accounting standards has had no material impact on the financial statements.

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ZENITH CAPITAL CORPORATION
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JANUARY 31, 2021 AND 2020
(Expressed in Canadian dollars)
(UNAUDITED)

3. NEW ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

The Company adopted the following new standards effective August 1, 2019:

IFRS 16 – Leases

IFRS 16 replaces IAS 17, “Leases” and the related interpretative guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-balance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for short-term leases or leases of low value assets. Lessor accounting is not substantially changed. The standard is effective for periods beginning on or after January 1, 2019, with early adoption permitted for entities that have adopted IFRS 15, “Revenue from Contracts with Customers”.

The adoption of IFRS 16 did not have a material impact on the Company’s future results and financial position.

IFRIC 23 – Uncertainty over Income Tax Treatments

IFRIC 23 provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty over income tax treatments. The Interpretation is applicable for annual periods beginning on or after January 1, 2019. Earlier application is permitted. The Interpretation requires: (a) an entity to contemplate whether uncertain tax treatments should be considered separately, or together as a group, based on which approach provides better predictions of the resolution; (b) an entity to determine if it is probable that the tax authorities will accept the uncertain tax treatment; and (c) if it is not probable that the uncertain tax treatment will be accepted, measure the tax uncertainty based on the most likely amount or expected value, depending on whichever method better predicts the resolution of the uncertainty.

The adoption of IFRIC 23 did not have a material effect on the Company’s future results and financial position.

4. SHARE CAPITAL

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

b) Escrow shares: As at January 31, 2021, there were no common shares held in escrow. Upon completion of the Company’s IPO described in Note 8, all the issued and outstanding shares will be subject to escrow restrictions. The escrow shares will be released from escrow in tranches over a 36 month period. From the date The Company completed a qualifying transaction.

c) Issued and outstanding as at January 31, 2021: 4,500,001 common shares

During the period ended to July 31, 2020, the Company had the following share capital transactions:

(i) The Company closed its initial public offering (“IPO”) and issued 2,000,000 common shares at a price of $0.10 per share for gross proceeds of $200,000. Pursuant to the IPO, the Company incurred cash share issuance costs of $63,450 and issued 200,000 warrants as finders’ fees, exercisable at a price of $0.10 per share for a period of two years. The fair value of the warrants was estimated to be $11,736.

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ZENITH CAPITAL CORPORATION
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JANUARY 31, 2021 AND 2020
(Expressed in Canadian dollars)
(UNAUDITED)

4. SHARE CAPITAL (continued)

During the period ended January 31, 2021 the Company did not have any share capital transactions.

d) Stock 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 can not exceed 10% of the total number of issued and outstanding shares on a non-diluted basis.

On March 6, 2020, the Company granted 400,000 stock options to the directors and officers of the Company. The options vested on grant date and are exercisable at $0.10 per share until March 6, 2025. The fair value of these options was calculated to be $32,197 or $0.08 per option.

A continuity of the options outstanding and exercisable as at January 31, 2021 is as follows:

	Number of options	Weighted average exercise
Balance, July 31, 2020	400,000	$ 0.10
Granted	–	–
Balance, January 31, 2021	400,000	$ 0.10

The inputs used in Black-Scholes calculation for the 2020 options are as follows:

	2020	2019
Share price	$0.10	$ -
Risk-free dividend rate	1.00%	-
Expected life	5 years	-
Dividend rate	-%	-
Annualized volatility	115%	-
Fair value per option	$0.08	-

e) Warrants

A continuity of the warrants outstanding as at January 31, 2021 is as follows:

	Number of warrants	Weighted average exercise
Balance, July 31, 2020	200,000	$ 0.10
Issued	–	–
Balance, January 31, 2021	200,000	$ 0.10

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ZENITH CAPITAL CORPORATION

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTH PERIOD ENDED JANUARY 31, 2021 AND 2020

(Expressed in Canadian dollars)

(UNAUDITED)

4. SHARE CAPITAL (continued)

e) Warrants (continued)

As at January 31, 2021, the Company had the following outstanding warrants:

Number of warrants	Weighted average exercise price	Weighted average years outstanding	Expiry date
200,000	$0.10	1.11	March 6, 2022

The inputs used in Black-Scholes calculation for the 2020 warrants are as follows:

	2020	2019
Share price	$0.10	$ -
Risk-free dividend rate	0.72%	-
Expected life	2 years	-
Dividend rate	-%	-
Annualized volatility	115%	-
Fair value per warrant	$0.058	-

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.

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

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

	Three months period ended January 31, 2021	Three months period ended January 31, 2020
	$	$
Share-based payments	–	–
Total	–	–

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ZENITH CAPITAL CORPORATION
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JANUARY 31, 2021 AND 2020
(Expressed in Canadian dollars)
(UNAUDITED)

6. MANAGEMENT OF CAPITAL

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the sourcing and exploration of its resource property. The Company does not have any externally imposed capital requirements to which it is subject.

The Company considers the aggregate of its share capital, contributed surplus and deficit as capital. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or dispose of assets or adjust the amount of cash.

7. FINANCIAL INSTRUMENTS AND FINANCIAL RISK

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).

Fair Value of Financial Instruments

The Company's financial assets include cash and are 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 statement of financial position as at January 31, 2021 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	201,329	–	–	201,329

Fair value

The fair value of the Company's financial instruments approximates their carrying value as at January 31, 2021 because of the demand nature or short-term maturity of these instruments.

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.

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ZENITH CAPITAL CORPORATION

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTH PERIOD ENDED JANUARY 31, 2021 AND 2020

(Expressed in Canadian dollars)

(UNAUDITED)

7. FINANCIAL INSTRUMENTS AND FINANCIAL RISK (continued)

(i) Currency risk

The Company's expenses are denominated in Canadian dollars. The Company's corporate office is based in Canada and current exposure to exchange rate fluctuations is minimal.

The Company does not have any significant foreign currency denominated monetary liabilities. The principal business of the Company is the identification and evaluation of assets or a business and once identified or evaluated, to negotiate an acquisition or participation in a business subject to receipt of shareholder approval and acceptance by regulatory authorities.

(ii) 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.

(iii) 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.

(iv) Liquidity risk

In the management of 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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