Zenith Capital — Management Reports 2021

Nov 8, 2021

ZENITH CAPITAL CORPORATION.

Management Discussion and Analysis

For the year ended July 31, 2021

The Management Discussion and Analysis (“MD&A”), prepared November 8, 2021 should be read in conjunction with the audited financial statements and notes thereto for the year ended July 31, 2021 and the notes thereto of Zenith Capital Corporation. (“Zenith”) which were prepared in accordance with International Financial Reporting Standards.

This management discussion and analysis may contain forward-looking statements in respect of various matters including upcoming events. The results or events predicted in these forward-looking statements may differ materially from the actual results or events. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

DESCRIPTION OF BUSINESS

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 July 31, 2021, the Company had no business operations and its only significant asset was cash. The Company reported a deficit of $240,869 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.

The outbreak of the Coronavirus Disease 2019, or COVID-19, has spread across the globe and is impacting worldwide economic activity. This global pandemic poses the risk that the Company or its clients, employees, contractors, suppliers, and other partners may be unable to conduct regular business activities for an indefinite period of time. At this point, the impact on the Company has been minimal. The Company continues to monitor the situation and is taking all necessary precautions in order to follow rules and best practices as set out by the federal and provincial governments.

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SELECTED ANNUAL INFORMATION

($000’s except loss per share)

	July 31, 2021	July 31, 2020	July 31, 2019
Revenue	$ 0	$ 0	$ 0
Net Loss	$ (43)	$ (88)	$ (110)
Basic and Diluted Loss Per Share	$ (0.02)	$ (0.07)	$ (0.01)
Total Assets	$ 211	$ 224	$ 140
Long-Term Debt	$ 0	$ 0	$ 0
Dividends	$ 0	$ 0	$ 0

OPERATIONS

Three month period ended July 31, 2021

During the three months ended July 31, 2021 the Company reported a net loss of $9,174 (2020 - $6,280). Included in the determination of operating loss was $11 (2020 - $29) spent on bank charges, and $5,448 (2020 - $Nil) on professional fees, and $3,216 (2020 - $803) on transfer agent and filing fees, and $500 (2020 - $Nil) for rent.

Year ended July 31, 2021

During the twelve months ended July 31, 2021 the Company reported a net loss of $42,610 (2020 - $87,826). Included in the determination of operating loss was $177 (2020 - $155) spent on bank charges, and $27,819 (2020 - $42,157) on professional fees, $13,615 (2020 - $13,317) on transfer agent and filing fees, and $1,000 (2020 - $Nil) for rent. The Company also incurred a stock based compensation charge of $Nil (2020 - $32,197).

SUMMARY OF QUARTERLY RESULTS

($000’s except earnings per share)

	July 31, 2021	April 30, 2021	January 31, 2021	October 31, 2020
Revenue	$ 0	$ 0	$ 0	$ 0
Net loss	$(9)	$(12)	$(7)	$(15)
Basic and diluted Loss per share	$(0.00)	$(0.00)	$(0.00)	$(0.00)
	July 31, 2020	April 30, 2020	January 31, 2019	October 31, 2019
Revenue	$ 0	$ 0	$ 0	$ 0
Net loss	$ 7	$(51)	$(16)	$(28)
Basic and diluted Loss per share	$ 0	$(0.02)	$(0.01)	$(0.01)

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LIQUIDITY AND CAPITAL RESOURCES

The Company’s cash and cash equivalents at July 31, 2021 were $209,875 compared to $221,850 at July 31, 2020.

OFF-BALANCE SHEET ARRANGEMENTS

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

TRANSACTIONS WITH RELATED PARTIES

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

	2021	, 2020
	$	$
Share-based payments	–	32,197
Rent/Office Fees	$1,000	–

Key management includes directors and key officers of the Company, including the President, Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). During the year ended July 31, 2020, the Company granted 400,000 stock options to directors and officers of the Company. During the year ended July 31, 2021, stock options in the amount of 300,000 were exercised.

COMMITMENTS

There were no material commitments.

SUBSEQUENT EVENTS

On August 3, 2021, the Company entered into a binding letter of intent (“LOI”) with Venda Robotix Ltd. (“Venda”) (the “Transaction”) to acquire all of the issued and outstanding securities of Venda in exchange for the following:

i. The Company will issue to the Venda shareholders 88,314,700 common shares of the Company;
ii. The Company will grant 685,300 stock options of the Company;
iii. The Company will issue 7,123,000 warrants. Each warrant will entitle the warrant to holder to acquire 1 common share of the Company per warrant exercised; and
iv. The Company will issue up to 25,000,000 common shares to the Venda shareholders upon achieving certain performance milestones. An aggregate of 12,500,000 common shares could be issued within 18 months of the closing of the Transaction and the remaining 12,500,000 common shares with in 36 months of closing the Transaction.

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All of Venda stock options and warrants at the time of closing will be terminated and replaced by the ones noted above on the same economic terms as those provided by Venda.

The Company and Venda will also, as a condition of closing, complete certain equity financings to raise $4,000,000 in gross proceeds. The Transaction is subject to the customary conditions of closing, including regulatory approval and the entering into a definitive agreement. As a condition of the LOI, the Transaction was to close on or before October 31, 2021. As of the date of the approval of these financial statements, the transaction had not closed and both parties are continuing to negotiate.

The Transaction is intended to constitute the Company’s Qualifying Transaction pursuant to Policy 2.4 of the TSX Venture Exchange.

NEW ACCOUNTING STANDARDS, INTERPRETATIONS AND AMENDMENTS

The Company did not adopt any new standards in the year ended July 31, 2021, therefore there is no impact from new standards issued.

CRITICAL ACCOUNTING ESTIMATES

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 and inputs used in the accounting for share-based payments. Actual results could differ from these estimates.

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).

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.

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Assets measured at fair value on a recurring basis were presented on the Company’s statements of financial position as at July 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	209,875	–	–	209,875

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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SHARE CAPITAL

Issued

The company has 4,800,001 shares issued and outstanding as at July 31, 2021 and November 8, 2021.

Share Purchase Options

The Company had 100,000 stock options outstanding at July 31, 2021 and November 8, 2021.

Warrants

The Company had 200,000 share purchase warrants outstanding at July 31, 2021 and November 8, 2021.

Escrow Shares

The Company has 2,000,001 shares held in escrow as at July 31, 2021 and November 8, 2021.