Zonetail Inc. — Management Reports 2024

Nov 29, 2024

Zonetail

ZONETAIL INC.
Management’s Discussion and Analysis
Three and nine months ended September 30, 2024

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ZONETAIL INC.
Management's Discussion & Analysis
Three and nine months ended September 30, 2024

Introduction

The following Management Discussion and Analysis ("MD&A") of the financial condition and results of operations of Zonetail Inc. ("Zonetail" or the "Company") has been prepared by management as of November 29, 2024 and was reviewed and approved by the Audit Committee, and is intended to supplement and complement the condensed unaudited interim consolidated financial statements and notes thereto, prepared in accordance with International Accounting Standard 34 Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board ("IASB"), for the three and nine-months ended September 30, 2024 (collectively, the "Financial Statements"). The following discussion of performance, financial condition and prospects should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 and the MD&A for the year ended December 31, 2023. The information provided herein supplements but does not form part of the financial statements. All amounts are stated in Canadian dollars unless otherwise indicated.

Further information about the Company and its operations can be obtained from the Company's website www.zonetail.com or on SEDAR at www.sedar.com.

Description of business

Zonetail is an emerging company focused on transforming the way high and mid-rise apartment and condo residents manage their homes by connecting people to products, amenities and services through a powerful mobile platform creating a distinct market and channel advantage. The Company is integrated with Yardi, North America's largest property management software company ("PMS") and Shiftsuite, a major condominium property management software company in Canada and is currently planning several other key integrations.

The Zonetail platform is addressing the needs of the large and growing population of residents of multi-family residential buildings, planned communities, condominium communities, and housing cooperatives. Increasing population growth and urban densification continue to grow this segment which in 2020 was estimated to be 26% of all U.S. residents¹. This mobile and technology-savvy audience have proven to be active adopters of Zonetail's range of solutions as all key indicators, property management companies signing on, downloads and monthly active users, all continue to increase at a steady pace.

The Zonetail user base, and immediate addressable market also proves to be an attractive audience for businesses participating on the platform in Zonetail's unique "Marketplace", who wish to connect with this large, lucrative, and growing market of high-rise residents.

Currently, Zonetail is live in over 175,000 households and onboarding approximately 2,400,000 additional units, and as a direct result of the early success of the Yardi rollout, the Company is in various stages of negotiations with dozens more property management companies and property management software companies across Canada and the U.S. representing over 20 million units.

Throughout 2023 and 2024 the Company was focused exclusively on increasing the number of buildings that we have access to and launching the platforms in the buildings that we have signed. This is done in a series of phases, in conjunction with our client PMCs.

Zonetail: the first super-app

The definition of a super-app according to Wikipedia is a mobile or web application that can provide multiple services including payment and financial transaction processing, effectively becoming an all-encompassing self-contained commerce and communication online platform that embraces many aspects of personal and commercial life.

¹ https://foundation.cainline.org/publications/factbook/statistical-review/

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ZONETAIL INC. Management's Discussion & Analysis Three and nine months ended September 30, 2024

"By now, there are over 435,000 app downloads per minute for a total of 230 billion per year. In this context, super apps have become a popular topic, and have been named one of Gartner Top 10 Strategic Technology Trends for 2023"

https://www.thoughtworks.com/en-ca/insights/blog/mobile/super-apps-global-trend

The Zonetail app was designed to be a super-app before the term 'super-app' was coined.

People no longer want an app to do one specific task. They prefer an app that can do everything they need all wrapped up in one. That's exactly what Zonetail has been doing well before the rest of the world caught on. Not only are we the first to market in the residential industry, but we're also the only one that can claim the title of being a super app.

Interacting with your building and streamlining the communication process between property management and resident/tenant is only half the battle. People need much more.

Having access to home services, grocery delivery, home decor, travel options, retail shopping, health and beauty, automotive, you name it and it's there, right in the palm of your hand.

Building out a marketplace for an industry the size of the North American high-rise residential segment does not happen overnight. To better explain the success that Zonetail has achieved it is important to revisit Zonetail's unique business model.

Some notable highlights

• In 2023, Zonetail signed agreements with three very large property management companies representing just shy of approximately 2.3 million units.
• This represents over 1800% increase in Zonetail's property portfolio since the start of 2023.
• The Company has an additional 20 million units in its immediate pipeline.
• The Company now reports that once rollouts are complete, and these units go 'live' it has enough scale to focus on monetization.
• Late in 2023, Zonetail completed its payment processing technology project, and is now an accredited payment processor for Yardi. This is expected to drive very meaningful revenue as PMCs adopt and launch Zonetail's payment solutions.
• In early 2024, Zonetail finalized and executed an agreement with Equifax to include rent reporting in its suite of services. This agreement provides a new and potentially substantial revenue stream for the Company. Details can be found here: https://zonetail.com/2024/01/30/zonetail-has-signed-a-reporting-agreement-with-equifax-canada-enabling-tenants-to-build-their-credit-rating-when-paying-their-monthly-rent/
• In December of 2023, Zonetail reached a settlement regarding its litigation with Belgravia Hartford that can be found here: https://zonetail.com/2024/01/04/zonetail-and-belgravia-hartford-complete-settlement-agreement-and-mutual-release/
• The result of this settlement allowed for Zonetail to write off all indebtedness to Belgravia in the amount of approximately $571,000 and the termination of all obligations under previous agreements with Belgravia.
• This settlement marks the end of four and a half years of litigation that caused significant damage to the Company's growth and hindered its ability to raise capital. Management could not be more pleased to have this finally concluded.

Zonetail's business model (simplified)

• Zonetail partners and integrates with leading PMS (Property Management Software) companies like Yardi, Shiftsuite and more recently MRI Software. This gives us access to their clients – the PMCs (Property Management Companies).

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ZONETAIL INC.
Management's Discussion & Analysis
Three and nine months ended September 30, 2024

• The PMCs sign on as Zonetail comes at no cost and adds incredible value, saving them considerable operational costs and introducing a new auxiliary revenue stream.
• Once uploaded onto the platform, the PMCs promote the downloading to their residents via email, so the Company's user acquisition cost is $0.
• The residents download the app, (after all if you lived in a high rise building and the building told you there was a new app, you'd download it too).
• With the downloads, the businesses that want to reach roughly 30% of the North American population pay to be on the platform. Thus, recurring revenue.
• In some circumstances, Zonetail's PMC partners already have an app. In these cases, Zonetail builds in some of our unique offerings, such as the Zonetail marketplace, or our more recent rent reporting feature, into these existing applications. The key benefit is these platforms are mature with an existing a high user base providing Zonetail and Zonetail's clients, an instant market to capitalize on.

To execute against this model Zonetail needed to forge relationships with the PMS companies, which we have done with great success, and we will continue to forge more.

Revenue

Zonetail has made several signings over the past few months as we continue to add more and more businesses to the Marketplace. The Company is actively introducing the Zonetail platform to some of the largest companies in North America and it is being very well received. Some of the industries the Company is focusing on include credit card, retail chains, restaurant chains, travel (airline and hotel chains), home improvement, technology, media giants, banks, home furnishings, among others. As the Company continues to expand, it is expected that more and more businesses will participate in the Marketplace, generating both transactional revenue as well as advertising revenue. Zonetail is in the process of deploying an automated system to attract and sign small businesses in local communities surrounding the buildings we are live in. This is expected to drive meaningful revenues and will launch in the coming weeks.

The launch of the payment processing feature is also expected to add significant revenue as PMCs sign on.

Zonetail's Rent Reporting

Zonetail in partnership with Equifax announced on January 30th of 2024 a new service for apartment tenants that may help their credit score, simply by paying their rent on time: https://zonetail.com/2024/01/30/zonetail-has-signed-a-reporting-agreement-with-equifax-canada-enabling-tenants-to-build-their-credit-rating-when-paying-their-monthly-rent/

• Through Zonetail, tenants can sign up and authorize Zonetail to pass their rent payment history to Equifax.
• Zonetail verifies rent payments through the PMC's accounting software, such as Yardi, where Zonetail is an accredited payment processor for Yardi.
• There is no cost to the PMC.
• Small monthly fee of $8.95 for the tenants that wish to sign up, where Zonetail would receive $5.00/tenant/month.
• Easy onboarding process, no integration required.
• This is an à la carte service offered from Zonetail, PMCs are not required to use any other Zonetail product, although there are added benefits in doing so.

How it works:

• Zonetail provides instructions on how a PMC can download the Zonetail software package from Yardi and implement it in their Yardi environment. This gives Zonetail access to rent payment history.
• Zonetail provides PMC with marketing material that can be electronically sent to tenants to inform them of the service.

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ZONETAIL INC.
Management's Discussion & Analysis
Three and nine months ended September 30, 2024

• PMCs send an email to tenants announcing the service with a link to an online landing page managed by Zonetail.
• Tenants fill out a simple form which includes authorization to pass their rent history to Equifax and includes payment information for the small fee that can be drawn from their credit card or bank account monthly via Zonetail's payment processing capabilities
• Zonetail, an accredited payment processor for Yardi, verifies rent payments via Yardi
• Zonetail formats the information from Yardi and provides it to Equifax
• Zonetail processes the tenant's small monthly payment through direct withdrawal (ACH) or credit card
• We can take history of rental payments of up to two years for only the initial reporting file
• Tenants can opt-out at any time

Benefits for the PMCs:

• Many PMCs have a mandate to actively support environmental, social, and governance standards.
• This new service from Zonetail is designed to go to the heart of ESG by assisting some of the most vulnerable people in society.
• This new program also encourages tenants to pay their rent on time (PMCs can require tenant sign up for all new leases).
• Can assist in attracting new tenants and decreasing vacancies by helping tenants build credit history
• Reduce turnover
• Significant revenue share
• Keeping ahead of potential and expected upcoming legislation: (Excerpt from the Canadian Federal Budget 2024)

Canadian Federal Budget 2024 Chapter One: More Affordable Homes

"Every month, millions of Canadian renters pay their rent in full and on-time. The government thinks that should count towards their credit worthiness... For young Canadians and newcomers to Canada, this is even more important as they have a more difficult time establishing credit history. Budget 2024 announces that the government is calling on banks, fintechs, and credit bureaus to prioritize launching tools to allow renters to opt-in to reporting their rent payment history to credit bureaus, to strengthen their credit scores and unlock pathways for more renters to become Homeowners."

Coming Legislation: Federal Budget 2024

It is expected that the provinces will support the Federal Government's position on rent reporting and implement legislation mandating that PMCs offer this service.

Example of Potential Revenue from Rent Reporting:

Market research and consultation with market insiders indicate that Zonetail can reasonably expect anywhere from 20 to 50% tenant adoption (depending on demographics of the buildings). If you take a PMC that has 60,000 units, as an example, and achieve 20% adoption at $5.00/month that translates to $60,000/month in revenue. The Company believes that we can meet or even surpass these projections as we can promote the benefits of rent reporting directly to tenants via the Zonetail marketplace.

Zonetail is currently pitching over 30 PMCs in Canada and several in the U.S. Signing just a handful of these can represent hundreds of thousands of dollars in recurring monthly revenue, if not more. Several contracts are out and the expectation is some of these should come back signed this fall.

Capital management

The Company manages its capital with the following objectives:

• to ensure sufficient financial flexibility to achieve the ongoing business objectives including funding of future

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ZONETAIL INC.
Management's Discussion & Analysis
Three and nine months ended September 30, 2024

growth opportunities, and pursuit of accretive acquisitions; and
- to maximize shareholder return through enhancing the share value.

The Company monitors its capital structure and adjusts according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting capital spending, or disposing of assets. The capital structure is reviewed by management and the Board of Directors on an ongoing basis.

The Company manages capital through its financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on operating expenditures, and other investing and financing activities. Selected information is provided to the Board of Directors of the Company. The Company is not subject to any capital requirements imposed by a lending institution or regulatory body.

Commitments and contingencies

From time to time, the Company may be subject to legal proceedings and claims related to matters arising in the ordinary course of business. We do not believe the Company is currently subject to any material matters where there is at least a reasonable possibility that a material loss may be incurred. See "dispute" below related to the Belgravia dispute.

Off-balance-sheet arrangements

As of the date of this MD&A, the Company does not have any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company, including, and without limitation, such considerations as liquidity and capital resources.

Summary of quarterly results

For the eight most recent quarters:

	September 30	June 30	March 31	December 31
	2024	2024	2024	2023
	$	$	$	$
Total revenue	9,919	10,280	8,280	8,387
Net income (loss) for the period	(232,716)	(184,676)	(178,988)	189,726
Net loss per share (basic and diluted)	0.00	0.00	0.00	0.00
Total assets	73,865	76,148	124,290	156,566
	September 30	June 30	March 31	December 31
	2023	2023	2023	2022
	$	$	$	$
Total revenue	8,355	10,790	11,730	15,525
Net loss for the period	(315,343)	(352,772)	(327,257)	(457,650)
Net loss per share (basic and diluted)	0.00	0.00	0.00	0.00
Total assets	102,639	98,128	85,337	296,666

Variations in net loss and comprehensive loss primarily result in changes to software development expense, professional fees, share based compensation, changes in salaries from 2023 to 2024 and general and administrative costs. The net income for the three months ended December 31, 2023 results from the write-off of the promissory note payable in the amount of $571,625 (see below).

Discussion of operations

Sales for the three months ended September 30, 2024, were $9,919 ($8,355 for the three months ended September 30, 2023). The Company is in early-stage revenue and is focused on growing its user base and user activity,

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ZONETAIL INC.
Management's Discussion & Analysis
Three and nine months ended September 30, 2024

consequently sales are variable quarter to quarter. The sales during the periods have remained relatively the same as a result. The Company is focused on developing its user base and rent reporting, payment processing and Marketplace features, where it earns revenue from transactions and referrals. As more customers and property management companies are signed to this model, revenues should begin to grow substantially.

The Company's net loss and comprehensive loss for the three months ended September 30, 2024, totalled $232,716, compared to $315,343 for the three months ended September 30, 2023. The decrease in net loss and comprehensive loss is the result of the following:

• Software development expense decreased by $45,920, due to reduced activity.
• Salaries decreased by $35,717, a reduction in sales staff in 2024 compared to 2023.
• Investor relations increased by $26,000, due to a previous prepaid investor relations contract being written off during the quarter.
• Share based compensation decreased by $1,296.

The Company's net loss and comprehensive loss for the nine months ended September 30, 2024, totalled $596,380, compared to $995,262 for the nine months ended September 30, 2023. The decrease in net loss and comprehensive loss is the result of the following:

• Software development expense decreased by $83,255, due to reduced activity.
• Professional fees decreased by $25,182, due to higher audit costs, but lower legal fees.
• Salaries decreased by $213,930, a reduction in sales staff in 2024 compared to 2023.
• Investor relations decreased by $17,483, due to a previous prepaid investor relations contract being written off during the quarter.
• Advertising and promotion decreased by $30,000 due to reduced costs related to development of the Marketplace.
• Share based compensation decreased by $7,489.
• The Company also wrote-off $20,000 in government loans at the end of its term.

Liquidity and financial position

Cash used in operating activities was $443,324 for the nine months ended September 30, 2024, compared to cash used in operating activities of $704,624 in the nine months ended September 30, 2023.

As at September 30, 2024, Zonetail had $51,770 in cash and $14,791 in trade and other receivables (December 31, 2023 - $3,342 and $117,057).

Accounts payable and accrued liabilities were $571,500 at September 30, 2024, (December 31, 2023 - $612,546).

As of September 30, 2024, and to the date of this MD&A, the cash resources of Zonetail are held with Canadian chartered banks. Trade and other payables are short-term and non-interest-bearing.

The Company has an accumulated deficit of $14,738,926 as at September 30, 2024 (December 31, 2023 - $14,148,576). The Company's ability to continue as a going concern is dependent upon its ability to attain profitable operations and generate funds therefrom, and to continue to obtain equity investment and borrowings sufficient to meet current and future obligations. The Company had a net loss and comprehensive loss for the nine months ended September 30, 2024, of $596,380 (nine months ended September 30, 2023 - $995,262). During the nine months ended September 30, 2024, the Company received $372,324 in common share subscriptions and $130,000 in promissory notes. During the year ended December 31, 2023 the Company has issued 36,012,863 common shares for gross proceeds of $720,257, closed a debenture financing totaling $203,800, and issued promissory notes of $70,000 to provide additional working capital to the Company and fund the continued operations.

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ZONETAIL INC.
Management's Discussion & Analysis
Three and nine months ended September 30, 2024

On September 27, 2024, the Company completed the first, tranche of a private placement (the "Offering") of shares issued at a price of $0.02 per share. The Company issued an aggregate of 8,250,000 shares, for gross proceeds of $165,000.

On April 22, 2024, April 29, 2024, and May 3, 2024, the Company completed the first, second, and third tranches of a private placement (the "Offering") of shares issued at a price of $0.02 per share. The Company issued an aggregate of 6,327,425, 2,702,375, and 1,363,600 shares, for gross proceeds of $207,868. Included in the amount was $44,548 received prior to September 30, 2024. The Company paid cash compensation as finders fees of $840 and issued 42,000 finders warrants of the Company to such eligible finders ("Finders Warrants"). Each Finder Warrant entitles the holder to purchase one Share of the Company at an exercise price of $0.05, for a period of thirty-nine months from the closing date of the Offering.

On October 12, 2023, October 19, 2023, November 28, 2023 and December 29, 2023, the Company completed the first, second, third and fourth tranches of a private placement (the "Offering") of shares issued at a price of $0.02 per share. The Company issued an aggregate of 11,250,000, 6,019,925, 3,000,000 and 2,000,000 shares, for gross proceeds of $445,399. The Company paid cash compensation as finders fees of $4,800 and issued 240,000 finders warrants of the Company to such eligible finders ("Finders Warrants"). Each Finder Warrant entitles the holder to purchase one Share of the Company at an exercise price of $0.05, for a period of thirty-nine months from the closing date of the Offering.

On June 2 and September 8, 2023, the Company completed the first and second tranches of a private placement (the "Offering") of shares issued at a price of $0.02 per share. The Company issued an aggregate of 6,600,000 and 7,142,938 shares, for gross proceeds of $132,000 and 142,859 respectively. The Company paid cash compensation as finders fees of $5,820 and issued 291,000 finders warrants of the Company to such eligible finders ("Finders Warrants"). Each Finder Warrant entitles the holder to purchase one Share of the Company at an exercise price of $0.05, for a period of thirty-nine months from the closing date of the Offering.

On April 25, 2023, the Company closed a non-brokered private placement of convertible debenture securities generating aggregate gross proceeds of $203,800. The private placement involved the issuance of secured convertible notes bearing interest at 20% per annum, with a 24-month term from issuance and providing for a conversion price of $0.05 per share. The notes are convertible by the holder at any time. The notes are convertible at the option of the Company, if the Company's shares trade in excess of $0.125 over any period of 10 trading days during the term, whether or not consecutive. The Company also issued 4,076,000 warrants (the "Warrants") with each Warrant exercisable into one common share of the Company for one year from the closing date at an exercise price of $0.05 per warrant. The notes may also be extended for an additional 12 months by the Company or may be prepaid, subject in each case to certain bonus payments. The Company may, at its option, make payment of such interest and bonus amounts due in cash or in common shares, subject to the receipt of any required regulatory or stock exchange approvals.

The Company paid eligible finders cash compensation as finders fees of $1,698 and has issued an aggregate of 33,960 finders warrants of the Company ("Finders Warrants"). Each Finder Warrant entitles the holder to purchase one Share of the Company at an exercise price of $0.05, for a period of twelve months from the closing date of the Offering.

The Company believes it has working capital, equity and debt financing opportunities and future income prospects to continue operations for the next 12 months.

Related party transactions

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company. Remuneration of directors and key management personnel of the Company was as follows:

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ZONETAIL INC.
Management's Discussion & Analysis
Three and nine months ended September 30, 2024

	For the three months ended September 30		For the nine months ended September 30
	2024	2023	2024	2023
	$	$	$	$
Salaries and benefits	85,970	89,470	261,410	268,410
Share based compensation		1,006	-	1,006

Due to related parties includes $102,727 (December 31, 2023 - $74,232) accrued for director's fees which have no terms of repayment and are unsecured.

On April 4, 2023, three directors subscribed for $115,500 of the convertible debentures as described in note 7 above. On November 21, 2023 and December 20, 2023, an officer and director of the Company subscribed for $40,000 of the private placement described in note 9 above.

Outstanding share capital

As at the date of this MD&A the following equity instruments are outstanding:

	Range of Exercise Prices	Number of shares issued or issuable
Common shares		265,039,147
Warrants	$0.05 - $0.06	14,630,335
Stock options	$0.05 - $0.09	7,750,000

Dispute

On June 27, 2019, Belgravia Hartford Capital Inc. ("Belgravia") brought a frivolous insolvency application against the Company. Belgravia took no further steps in this application. This application was dismissed with prejudice on August 17, 2020. On December 19, 2019, the Company served Belgravia with a statement of claim in the aggregate amount of $6,173,000 and also seeking a declaration that the promissory note owed to Belgravia in the amount of $325,000 is not due or owing. Zonetail has asserted a right of off-set based on its position that Belgravia has, among other things, breached the parties' management services agreements, for which Belgravia was paid by Zonetail. The Company has also claimed that Belgravia's wrongful bankruptcy application has caused substantial consequential damages to the Company. On September 28, 2020, Belgravia filed a statement of defense and counterclaim in the amount of $2,500,000. On January 8, 2024, Belgravia and the Company executed a settlement agreement and mutual release, on a without cost basis, resulting on the Company writing off all indebtedness to Belgravia in the amount of $571,625.

Subsequent events

On October 30, 2024, 1,000,000 stock options expired unexercised.

Risk factors

The information provided in this document is not intended to be a comprehensive review of all matters concerning the Company. The users of this information, including but not limited to investors and prospective investors, should read it, in conjunction with all other disclosure documents provided including but not limited to all documents filed on SEDAR (www.sedar.com).

An investment in the securities of the Company is highly speculative and involves numerous and significant risks. Such investment should be undertaken only by investors whose financial resources are sufficient to enable them to assume these risks and who have no need for immediate liquidity in their investment. Prospective investors should carefully consider the risk factors that have affected, and which in the future are reasonably expected to affect, the Company and its financial position.

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ZONETAIL INC.
Management's Discussion & Analysis
Three and nine months ended September 30, 2024

Due to the nature of Zonetail's business, the legal and economic climate in which it operates and its present stage of development, Zonetail is subject to significant risks. Zonetail's future development and operating results may be very different from those expected as of the date of this MD&A. Risk factors include, but are not limited to, the following:

• Zonetail is a development stage business and has not reported significant revenues from incorporation;
• uncertainty of profitability in the future;
• Zonetail's history of losses;
• no assurance that any of the contemplated products will generate sustainable earnings or provide a return on investment in the future;
• no market for the securities of Zonetail;
• limited operating history as a development stage company;
• shares in Zonetail are not freely tradable during a restricted period under securities laws;
• dependence on certain entities for advertisement placement;
• competition within Zonetail's markets;
• the requirement to develop the "Zonetail" brand in order for Zonetail to be successful;
• possible defects in products and services delivered by Zonetail;
• risks associated with loss or theft of user data gathered by Zonetail;
• risks associated with entering new business areas and geographic markets;
• risks associated with building Zonetail's operations and financial infrastructure as it scales its business;
• defects in Zonetail's information technology infrastructure;
• Zonetail's reliance on communications networks owned and operated by third parties;
• the Zonetail app's reliance on third-party platforms;
• risks from potential failure of Zonetail's systems;
• risks associated with displaying third party content;
• risk related to Zonetail's dependence on key personnel;
• government regulation of digital data;
• risks from periodic litigation involving Zonetail;
• risks related to increasing competition in the hotel industry;
• payments-related and fraud risks;
• risks associated with potential intellectual property actions;
• Zonetail's ability to raise adequate capital;
• Zonetail's management and conflicts of interest;
• dependence on the internet and cellular data networks;
• the additional regulatory burden as a public company;
• changes in accounting and tax rules (whether expected or unexpected).

Caution regarding forward-looking statements

This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as "forward-looking statements"). These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this MD&A speak only as of the date of (i) this MD&A or (ii) as of the date specified in such statement. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A.

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ZONETAIL INC.
Management's Discussion & Analysis
Three and nine months ended September 30, 2024

Inherent in forward-looking statements are risks, uncertainties and other factors beyond the Company's ability to predict or control. Please also refer to those risk factors referenced in the "Risk Factors" section below.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking statements. All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law.

Disclosure of internal controls

Management has established processes to provide it with sufficient knowledge to support representations that it has exercised reasonable diligence to ensure that (i) the condensed interim consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the condensed interim consolidated financial statements, and (ii) the condensed interim consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flow of the Company, as of the date of and for the periods presented.

In contrast to the certificate required for non-venture issuers under National Instrument 52-109, Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109"), the Venture Issuer Basic Certificate filed by the Company does not include representations relating to the establishment and maintenance of disclosure controls and procedures ("DC&P") and internal control over financial reporting ("ICFR"), as defined in NI 52-109. In particular, the certifying officers filing such certificate are not making any representations relating to the establishment and maintenance of:

(i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's generally accepted accounting principles (IFRS).

The Company's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in such certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost-effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

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