Zenith Capital — Management Reports 2023

Nov 27, 2023

ZENITH CAPITAL CORPORATION.

Management Discussion and Analysis

For the year ended July 31, 2023

The Management Discussion and Analysis (“MD&A”), prepared November 27, 2023 should be read in conjunction with the audited financial statements and notes thereto for the year ended July 31, 2023 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. 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 registered office and head office is 318 – 1199 West Pender Street, Vancouver, British Columbia 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 has not identified a business or asset that warrants acquisition or participation. As at July 31, 2023, the Company had no business operations and its only significant asset was cash. The Company reported a deficit of $575,478 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

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SELECTED ANNUAL INFORMATION

($000’s except loss per share)

	July 31, 2023	July 31, 2022	July 31, 2021
Revenue	$ 0	$ 0	$ 0
Net Loss	$ (190)	$ (145)	$ (43)
Basic and Diluted Loss Per Share	$ (0.07)	$ (0.06)	$ (0.02)
Total Assets	$ 86	$ 78	$ 211
Long-Term Debt	$ 0	$ 0	$ 0
Dividends	$ 0	$ 0	$ 0

OPERATIONS

Three month period ended July 31, 2023

During the three months ended July 31, 2023 the Company reported a net loss of $22,922 (2022 - $9,094). Included in the determination of operating loss was $777 (2022 - $675) recovery on office and miscellaneous, $14,558 (2022 - $7,795) spent on professional fees, $3,149 (2022 - $Nil) recovery on travel, $Nil (2022 - $Nil) on consulting, $2,500 (2022 - $300) on rent, and $6,190 (2022 - $624) on transfer agent and filing fees.

Twelve month period ended July 31, 2023

During the twelve months ended July 31, 2023 the Company reported a net loss of $189,728 (2022 - $144,881). Included in the determination of operating loss was $1,504 (2022 - $568) spent on office and miscellaneous, $114,565 (2022 - $121,306) on professional fees, $2,734 (2022 - $Nil) on travel and promotion, $41,500 (2022 - $Nil) on consulting, $6,100 (2022 - $1,500) on rent, and $23,325 (2022 - $21,507) on transfer agent and filing fees.

SUMMARY OF QUARTERLY RESULTS

($000’s except earnings per share)

	July 31, 2023	April 30, 2023	January 31, 2023	October 31, 2022
Revenue	$ 0	$ 0	$ 0	$ 0
Net loss	$(23)	$(103)	$(47)	$(17)
Basic and diluted Loss per share	$(0.01)	$(0.02)	$(0.01)	$(0.00)
	July 31, 2022	April 30, 2022	January 31, 2022	October 31, 2021
Revenue	$ –	$ –	$ –	$ –
Net income (loss)	$(9)	$(33)	$(47)	$(56)
Basic and diluted Loss per share	$(0.00)	$(0.02)	$(0.02)	$(0.02)

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LIQUIDITY AND CAPITAL RESOURCES

The Company’s cash and cash equivalents at July 31, 2023 were $79,530 compared to $72,427 at July 31, 2022.

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 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”).

COMMITMENTS

There were no material commitments.

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

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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.

NEW ACCOUNTING STANDARDS, INTERPRETATIONS AND AMENDMENTS

The Company did not adopt any new standards in the year ended July 31, 2023, 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, 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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SHARE CAPITAL

Issued

The company has 7,390,421 shares issued and outstanding as at July 31, 2023 and November 27, 2023.

Share Purchase Options

The Company had 100,000 stock options outstanding at July 31, 2023 and November 27, 2023.

Warrants

The Company had Nil share purchase warrants outstanding at July 31, 2023 and November 27, 2023.

Escrow Shares

The Company has 3,175,001 shares held in escrow as at July 31, 2023 and November 27, 2023.