C-COM Satellite Systems Inc.

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INTERIM CONDENSED FINANCIAL STATEMENTS

FIRST QUARTER FINANCIAL REPORT FOR THE THREE-MONTH PERIOD ENDED FEBRUARY 28, 2021 AND FEBRUARY 29, 2020

PREPARED BY MANAGEMENT (Unaudited)

Notice to Reader

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the interim financial statements; they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited interim financial statements of the Corporation have been prepared by and are the responsibility of the Corporation's management. The Corporation's independent auditor has not performed a review of these unaudited interim financial statements in accordance with standards established by CPA Canada for a review of interim financial statements by an entity's auditor.

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INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIOD ENDED FEBRUARY 28, 2021 AND FEBRUARY 29, 2020 UNAUDITED

Management’s Responsibility for Financial Reporting

Management has established processes, which are in place to provide them with sufficient knowledge to support management representations that they have exercised reasonable diligence that (i) the unaudited interim 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 unaudited interim financial statements and (ii) the unaudited interim financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods presented by the unaudited interim financial statements.

The Board of Directors is responsible for reviewing and approving the unaudited interim financial statements together with other financial information of the Company and for ensuring that management fulfills its financial reporting responsibilities. An Audit Committee assists the Board of Directors in fulfilling this responsibility. The Audit Committee meets with management to review the financial reporting process and the unaudited interim financial statements together with other financial information of the Company. The Audit Committee reports its findings to the Board of Directors for its consideration in approving the unaudited interim financial statements together with other financial information of the Company for issuance to the shareholders.

Management recognizes its responsibility for conducting the Company's affairs in compliance with established financial standards, and applicable laws and regulations, and for maintaining proper standards of conduct for its activities.

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February 28, 2021

Financial Statements	Page
Interim Condensed Statements of Financial Position - (unaudited)	1
Interim Condensed Statements of Changes in Equity - (unaudited)	2
Interim Condensed Statements of Net Earnings and Comprehensive Income - (unaudited)	3
Interim Condensed Statements of Cash Flows - (unaudited)	4
Notes To The Unaudited Interim Condensed Financial Statements	5

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Unaudited Interim Condensed Statements of Financial Position

As at February 28, 2021 and November 30, 2020

(Canadian dollars)

			Feb. 28, 2021		Nov. 30, 2020
	Notes		(unaudited)		(audited)
ASSETS
Cash		$	9,048,007	$	6,783,758
Marketable securities			8,129,555		8,074,676
Accounts receivable			486,154		605,651
Non-refundable investment tax credits			-		316,698
Inventory			7,161,193		7,328,642
Prepaid expenses			83,189		41,468
Total current assets			24,908,098		23,150,893
Equipment			74,220		80,092
Application software			7,999		9,944
Total non-current assets			82,219		90,036
TOTAL ASSETS		$	24,990,317	$	23,240,929
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	11	$	967,913	$	825,864
Tax payable / (recoverable)			86,801		(222,201)
Deferred revenue			52,306		74,267
Total current liabilities			1,107,020		677,930
NON-CURRENT LIABILITIES
Deferred revenue			-		1,819
Deferred tax liability			75,417		87,722
Other non-current liabilities			125,555		125,555
Total non-current liabilities			200,972		215,096
TOTAL LIABILITIES			1,307,992		893,026
SHAREHOLDERS' EQUITY
Share capital	9		13,054,327		12,770,526
Contributed surplus			1,307,130		1,229,492
Retained earnings			9,320,868		8,347,885
TOTAL SHAREHOLDERS' EQUITY			23,682,325		22,347,903
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	24,990,317	$	23,240,929

See accompanying notes to the financial statements

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Unaudited Interim Condensed Statements of Changes in Equity

For the three-month period ended February 28, 2021 and February 29, 2020 (Canadian dollars)

Balance December 1, 2020 Net income and comprehensive income Dividends declared Exercised options Stock based compensation expense Reclassification of contributed surplus on exercised options Balance February 28, 2021 Balance December 1, 2019 Net loss and comprehensive loss Dividends declared Exercised options Stock based compensation expense Reclassification of contributed surplus on exercised options Balance February 29, 2020	Share Contributed Retained Total Capital Surplus Earnings Equity
	12,770,526 $ 1,229,492 $ 8,347,885 $ 22,347,903 $ - - 1,466,580 1,466,580 - - (493,597) (493,597) 283,801 - - 283,801 - 77,638 - 77,638 - - - -
	13,054,327 $ 1,307,130 $ 9,320,868 $ 23,682,325 $
	Share Contributed Retained Total Capital Surplus Earnings Equity
	10,302,261 $ 1,640,714 $ 10,364,684 $ 22,307,659 $ - - (186,573) (186,573) - - (474,586) (474,586) - - - - - 17,031 - 17,031 - - - -
	10,302,261 $ 1,657,745 $ 9,703,525 $ 21,663,531 $

See accompanying notes to the financial statements

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Unaudited Interim Condensed Statements of Net Earnings and Comprehensive Income

For the three-month period ended February 28, 2021 and February 29, 2020 (Canadian dollars)

			Three Months	Three Months	Ended:
		Feb. 28, 2021		Feb. 29, 2020
	Notes	(unaudited)		(unaudited)
REVENUE	8	$	4,719,279	$	1,240,630
COST OF SALES			1,569,020		575,914
GROSS PROFIT			3,150,259		664,716
EXPENSES
General and administrative			392,355		378,266
Research and development			293,012		334,546
Sales and marketing			308,344		231,362
			993,711		944,174
INCOME/(LOSS) BEFORE OTHER INCOME AND INCOME TAX			2,156,548		(279,458)
OTHER INCOME
Investment income			18,159		82,023
Foreign exchange loss			(233)		(15,045)
			17,926		66,978
INCOME/(LOSS) BEFORE INCOME TAX			2,174,474		(212,480)
INCOME TAX			707,894		(25,907)
NET INCOME/(LOSS) AND COMPREHENSIVE INCOME/(LOSS)		$	1,466,580	$	(186,573)
Basic earnings per share		$	0.04		$0.00
Basic weighted average number of common shares outstanding	10		39,567,188		37,966,900
Diluted earnings per share		$	0.03		$0.00
Diluted weighted average number of common shares outstanding	10		41,902,914		39,841,362

See accompanying notes to the financial statements

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Unaudited Interim Condensed Statements of Cash Flows

For the three-month period ended February 28, 2021 and February 29, 2020 (Canadian dollars)

		Three Months Ended:	Three Months Ended:	Three Months Ended:
	Feb. 28, 2021		Feb. 29, 2020
		(unaudited)	(unaudited)
OPERATING ACTIVITIES
Net Income / (Loss)	$	1,466,580	$	(186,573)
Items not affecting cash:
Investment income		(18,159)		(82,023)
Income tax expense		707,894		(25,907)
Scientific research and experimental development tax credit		(94,500)		(88,750)
Amortization		7,817		6,829
Unrealized foreign exchange loss		840,164		358,702
Stock-based compensation		77,638		17,031
		2,987,434		(691)
Changes in non-cash working capital:
Accounts receivable		(222,719)		426,614
Inventory		167,449		(539,185)
Prepaid expenses		(41,721)		(118,881)
Accounts payable and accrued liabilities		(534,931)		(215,834)
Deferred revenue		(23,780)		(22,154)
		(655,702)		(469,440)
Investment income received		59,390		96,658
Income taxpaid		-		(293,639)
Cash flowprovided by/(used in)operatingactivities		2,391,122		(667,112)
INVESTING ACTIVITY
Acquisition of marketable securities		3,229,156		(2,718,161)
Disposal of marketable securities		(3,228,461)		3,161,076
Acquisition of capital assets		-		(1,716)
Cash flow from investingactivities		695		441,199
FINANCING ACTIVITY
Dividends paid to owners of Company		(493,597)		(474,586)
Options exercised		283,801		-
Cash flow used in financingactivities		(209,796)		(474,586)
Foreign exchangegain/(loss)on cash		82,228		(13,443)
INCREASE / (DECREASE) IN CASH FLOW		2,264,249		(713,942)
CASH - beginning ofperiod		6,783,758		5,322,102
CASH - end ofperiod	$	9,048,007	$	4,608,160

See accompanying notes to the financial statements

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NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS For the three-month periods ended February 28, 2021 and February 29, 2020 (expressed in Canadian Dollars)

1. DESCRIPTION OF INCORPORATION AND OPERATIONS

C-COM Satellite Systems Inc. (the “Company”) was federally incorporated under the Canadian Business Corporations Act on December 9, 1997. On July 24, 2000, the Company's stock began trading on TSX Venture Exchange. The Company is engaged in the development of high quality, cost effective, satellite - based technology that allows the delivery of high-speed internet access for fixed, transportable and mobile end-users. The address of its registered office and principal place of business is 2574 Sheffield Road, Ottawa, Ontario K1B 3V7.

These unaudited interim condensed financial statements for the three-month period ended February 28, 2021 were authorized for issuance by the Board of Directors on April 19, 2021.

2. BASIS OF PRESENTATION

These unaudited interim condensed financial statements are expressed in Canadian dollars, which is the Company’s functional currency, and have been prepared in accordance with International Accounting Standard (“IAS”) IAS34 – Interim financial reporting, as issued by the International Accounting Standard Board (“IASB”). These unaudited interim condensed financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (“IFRS”) and in accordance with the accounting policies the Company adopted in its annual financial statements for the year ended November 30, 2020 and should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report for the year ended November 30, 2020. These unaudited interim condensed financial statements do not include all of the information required in annual financial statements.

Some of the fiscal 2020 comparative figures have been reclassified to conform to the current period's presentation.

These unaudited interim condensed financial statements have been prepared on a going concern basis using historical cost conventions.

3. CHANGES IN ACCOUNTING POLICIES

IFRS 16 Leases

In January 2016, the IASB released IFRS 16 Leases which replaced IAS 17 Leases. IFRS 16 set out a single lessee accounting model that requires a lessee to recognize assets and liabilities for all lease agreements unless the underlying asset has a low value or the lease term is twelve months or less. A lessee is required to recognize a right-of-use asset for the underlying leased asset and a lease liability representing the present value of payment obligations for the lease term. IFRS 16 is effective for the Company’s annual periods beginning on December 1, 2019, and then presented on a modified retroactive basis.

The Company assessed the new standard and reviewed its portfolio of lease contracts in order to identify leases under the scope of IFRS 16. The Company’s lease on its premises was renewed for a one-year period. Accordingly, the Company has opted for using the standard’s practical expedient method of reporting and does not recognize right-of-use assets that have a lease term of 12 months or less.

The Company did not adopt any new accounting policies in Q1, 2021.

There are no other required or contemplated future changes in the Company’s accounting policies.

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NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS For the three-month periods ended February 28, 2021 and February 29, 2020 (expressed in Canadian Dollars)

4. CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of financial statements in conformity with IFRS requires the Company’s management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from those estimates.

There were no significant changes in estimates or approaches to determining estimates in the periods presented when compared to the estimates or approaches used in the annual financial statements for the year ended November 30, 2020.

5. IMPACT OF THE COVID-19 PANDEMIC

On March 11, 2020, the World Health Organization declared the Coronavirus COVID-19 outbreak a pandemic. This has resulted in significant financial, market and societal impacts in Canada and around the world.

COVID-19 has caused heightened uncertainty and volatility in the global economy. If economic growth slows further or if a recession develops, customers may not have the financial means to purchase the Company’s products, thereby potentially having a negative impact on the Company’s financial performance. Since the impact of COVID-19 is ongoing, the effect of the COVID19 outbreak and the related impact on the global economy may not be fully reflected in the Company’s financial statements until future periods. Further, volatility in the capital markets may continue, which may cause declines in the price of the Company’s shares and may also affect its ability to raise working capital through equity or debt transactions.

The ultimate duration and magnitude of the COVID-19 pandemic’s impact on the Company’s operations and financial position is not known at this time. An estimate of the financial effect of the pandemic on the Company is not practicable at this time.

6. GOVERNMENT GRANTS

During 2020, the Company commenced a contribution agreement with the National Research Council Canada (NRC) – Industrial Research Assistance Program (IRAP) to reduce the cost of a specific research and development project undertaken in 2020. The Contribution agreement started July 1, 2020 and is to be completed June 30, 2023. NRC-IRAP has agreed to contribute up to a maximum of $423,597 over the period of the agreement with specific maximum contribution amounts allocated to each fiscal year. In Q1, 2021 the Company received $61,534 from NRC (Q1, 2020 – Nil), which was credited to research and development expense. NRC – IRAP reserves the right to claim back all or part of the grant plus interest from the Company under certain circumstances. No repayment has been requested for and no contingent liability has been accrued at year end.

The Company also commenced a non-repayable contribution agreement with the Canadian Space Agency (CSA) in fiscal 2020 to help fund the cost of a specific research and development project. The Contribution agreement started July 10, 2020 and is to be completed by December 31, 2022. The CSA has agreed to contribute up to a maximum of $1,000,000 over the period of the agreement with specific maximum contribution amounts allocated to each fiscal year. The Company did not invoice the CSA during Q1, 2021.

In addition, the Company applied for the following financial support from the Canadian Government related to COVID-19 relief:

i) The Canadian Emergency Wage Subsidy (“CEWS”) program: during Q1 2021, the Company applied for and received a total of $117,664 in CEWS funding – all of which has been applied to the Company’s General & Administrative and R&D expense categories. No CEWS payment amounts were booked in Q1, 2020.

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NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS For the three-month periods ended February 28, 2021 and February 29, 2020 (expressed in Canadian Dollars)

6. GOVERNMENT GRANTS (CONTINUED)

ii) The Canadian Emergency Rent Subsidy (“CERS”) program: during Q1, 2021, the Company applied for and accrued a total of $14,407 in CERS funding – all of which has been credited to general and administration expenses. No CERS payment amounts were booked in Q1, 2020.

7. SEASONALITY

The results of operations for the interim periods are not necessarily indicative of the results of operations for the full year. The Company’s revenues and earnings have historically been subject to some quarterly seasonality due to the timing of vacation periods and statutory holidays.

8. OPERATING SEGMENT INFORMATION

IFRS 8 “Operating Segments” defines an operating segment as (a) a component of an entity that engages in business activities from it which may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), (b) whose operating results are regularly reviewed by the entity’s chief decision maker to make decisions about resources to be allocated to the segment and to assess its performance and (c) for which discrete financial information is available.

For managements purposes the Company’s activities are attributable to a single operating segment, engaged in the design and manufacture of auto-deploying mobile satellite antennas. Consequently, the group does not present any operating segment information.

Revenue by Geographic area

The location of the customer determines the geographic areas for revenue.

	3 months ended	3 months ended
	February 28, 2021	February 29, 2020
	$	$
Canada	53,931	102,031
Japan	3,577,493	38,018
Europe & Russian Federation	485,012	339,044
United States	349,198	279,837
Rest of the World	253,645	481,700
	4,719,279	1,240,630

Capital assets

The location of capital assets determines the geographic areas.

All capital assets are located in Canada.

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NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS For the three-month periods ended February 28, 2021 and February 29, 2020 (expressed in Canadian Dollars)

8. OPERATING SEGMENT INFORMATION (CONTINUED)

Major Customers

For the quarter ended February 28, 2021, the Company had one customer who accounted for more than 10% of revenues with $3,565,662, or 75.6% of total revenues (for the quarter ending February 29, 2020 – the Company had one customer account for more than 10% of revenues, generating $142,255).

9. ISSUED CAPITAL

Stock options

The Company has an established stock option plan, which provides that the Board of Directors may grant stock options to eligible directors, officers and employees. Under the plan, eligible directors, officers and employees are granted the right to purchase shares of common stock at a price established by the Board of Directors on the date the options are granted but in no circumstances below fair market value of the shares at the date of grant. On May 1, 2020, the Company reset the option pool to 20% of the issued and outstanding common shares on that date. Formal approval for the reset was received from the TSXV on May 20, 2020. A total of 7,618,320 common shares are authorized for issuance under the plan, of which 1,481,870 are available to be granted. No consideration is payable on the grant of an option with options generally vesting after one year from the date of grant.

As at February 28, 2021 there were 4,615,300 options outstanding, of which 3,400,800 were exercisable.

Outstanding share capital

At February 28, 2021 there were 39,612,750 common shares of the Company outstanding. (February 29, 2020 – 37,966,900)

10. NET EARNINGS PER SHARE

The diluted weighted average number of shares has been calculated as follows:

	3 months ended	3 months ended
	February 28, 2021	February 29, 2020
Weighted average number of shares – basic	39,567,188	37,966,900
Addition to reflect the dilutive effect of employee stock options	2,335,726	1,874,462
Weighted average number of shares – diluted	41,902,914	39,841,362

Options that are anti-dilutive because the exercise price was greater than the average market price of the common shares are not included in the computation of diluted earnings per share. For the three-month period ending February 28, 2021, no options were excluded from the above calculation (February 29, 2020 – no anti-dilutive options were excluded from the above calculation). Net income represents the measure of profit and loss used to calculated earnings per share.

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NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS For the three-month periods ended February 28, 2021 and February 29, 2020 (expressed in Canadian Dollars)

11. RELATED PARTY TRANSACTIONS AND BALANCES

The Company regards the members of the Board of Directors, the partners of LaBarge Weinstein LLP, and the senior managers and their immediate families of the following entities as related parties: C-COM Satellite Systems Inc., Triton Inc., 718133 Ontario Inc., and Art Slaughter, CPA Professional Corporation.

The Company had the following transactions and balances with related parties during the period:

		3 months ended	3 months ended
		February 28, 2021	February 29, 2020
		$	$
Board of Directors:
Board of Director fees	(i)	24,000	24,000
Transactions with 718133 Ontario Inc.:
Rental of office and warehouse space	(ii)	91,015	102,294
Transactions with Art Slaughter, CPA Professional Corp.:
Purchase of consulting services	(iii)	20,850	Nil
Transactions with other parties:
Legal fees and expenses	(iv)	3,772	3,600
		As At	As At
		February 28, 2021	February 29, 2020
		$	$
Balances with related parties
Amounts due to LaBarge Weinstein LLP		1,600	1,612
Amounts due to 718133 Ontario Inc.		5,4893	Nil

Balances with related parties are due upon demand and included with accounts payable and accrued liabilities.

i. The Board of Directors instituted a Board of Directors fee of $24,000 per annum per board member commencing December 2, 2012 and is paid quarterly.
ii. The Company has a 1-year lease commitment with 718133 Ontario Ltd. which ends July 31[st] , 2021 for office and warehouse space. The Company and 718133 Ontario Ltd. have common ownership.
iii. The Company purchases financial consulting services from Art Slaughter CPA Professional Corporation. The Company’s Chief Financial Officer is a director of this company.
iv. The Company retains a business law firm in Ottawa, Canada to provide legal services and advice. The Company’s secretary is a partner of this firm.

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C-COM Satellite Systems Inc. — Interim / Quarterly Report 2021

44993_rns_2021-04-20_407eefe4-a3e3-473c-9cd4-72e4904089d6.pdf