CardioComm Solutions, Inc. — Audit Report / Information 2020

May 1, 2021

==> picture [73 x 30] intentionally omitted <==

CardioComm Solutions, Inc.

Financial Statements

For the years ended 31 December 2020 and 31 December 2019

==> picture [517 x 93] intentionally omitted <==

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of CardioComm Solutions, Inc.

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of CardioComm Solutions, Inc. (the “Company”), which comprise the statements of financial position as at December 31, 2020 and 2019, and the statements of loss and comprehensive loss, statements of changes in shareholders’ deficiency and statements of cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

Without qualifying our opinion, we draw attention to Note 2 to the financial statements which indicates the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

Information other than the Financial Statements and the Auditor’s Report thereon

Management is responsible for the other information. The other information comprises the information, other than the financial statements and our auditor’s report thereon, included in Management’s discussion and analysis report.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management’s discussion and analysis report prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

==> picture [612 x 64] intentionally omitted <==

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes an opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control;

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern;

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charge with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirement regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor’s report is Geoffrey Dodds.

==> picture [181 x 47] intentionally omitted <==

Vancouver, British Columbia April 30, 2021

Harbourside CPA LLP Chartered Professional Accountants

CardioComm Solutions, Inc. Statements of loss and comprehensive loss For the years ended 31 December 2020 and 2019 Expressed in Canadian dollars

		Note		31 December 2020	31	December 2019
ASSETS
	Current assets
	Cash and cash equivalents	3	$	121,962	$	81,167
	Trade receivables	4		110,404		126,555
	Inventory	5		86,518		65,284
	Prepaid expenses and deposits	6		7,922		8,296
				326,806		281,302
	Non-current assets
	Property and equipment	7		18,917		7,330
	Right of use assets	8		14,894		34,752
			$	360,617	$	323,384
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
	Current
	Trade and other payables and accrued liabilities	9, 11	$	474,115	$	426,573
	Short-term notes payable	10, 11		-		500,000
	Lease liabilities	8		16,271		19,887
	Deferred revenue			250,549		256,462
				740,935		1,202,922
	Non-current
	Long-term debt	10		290,000		-
	Lease liabilities	8		-		16,271
				1,030,935	-	1,219,193
	Shareholders' equity (deficiency)
	Share capital	12		29,727,046		29,683,246
	Shares to be issued	12		250,000		11,300
	Other equity reserve	12		4,355,074		4,348,477
	Warrant reserve			149,690		149,690
	Deficit			(35,152,128)		(35,088,522)
				(670,318)		(895,809)
			$	360,617	$	323,384

Nature of operations (note 1) Going concern assumption (note 2) Subsequent events (note 19)

Approved on 30 April 2021 on behalf of the Board of Directors:

/s/ Etienne Grima

Etienne Grima, President and CEO

/s/ Robert Caines Robert Caines, Chairman

The accompanying notes are an integral part of these financial statements.

CardioComm Solutions, Inc. Statements of loss and comprehensive loss For the years ended 31 December 2020 and 2019 Expressed in Canadian dollars

	Note	2020		2019
Revenue
Software licensing	$	460,722	$	495,415
Hardware sales		240,910		208,805
Support		98,445		130,423
Services		34,708		40,245
		834,785		874,888
Cost of sales		100,189		181,655
Gross margin		734,596		693,233
Operating expenses
Advertising and promotion		12,575		49,321
Audit and accounting fees		17,000		31,800
Bad debt expense		-		453,581
Contractors	11	69,621		40,000
Depreciation, property and equipment	7	4,411		10,242
Depreciation, ROU	8	19,858		19,859
Director fees	11	41,625		35,100
Foreign exchange loss (gain)		8,378		12,156
Insurance		34,978		34,239
Interest and bank		59,266		59,119
Legal		39,335		30,657
Loss on writedown of inventory		-		8,150
Office		8,434		8,551
Professional fees		58,116		86,373
Regulatory fees		34,676		29,752
Rent		16,720		22,389
Research and development		-		24,562
Salaries and wages	11	370,391		568,247
Share-based compensation	11, 12	6,597		13,787
Telephone and utilities		52,487		65,996
Transfer agent and filing fees		25,055		27,803
Travel		670		5,758
		880,193		1,637,442
Other income		81,991		-
Loss on write-down of vendor deposit		-		(117,899)
Net loss and comprehensive loss	$	(63,606)	$	(1,062,108)
Lossper common share - basic and diluted		($0.00)		($0.01)
Weighted average number of common shares -
Basic and diluted		141,437,098		139,521,505

The accompanying notes are an integral part of these financial statements.

CardioComm Solutions, Inc. Statements of changes in shareholders’ deficiency For the years ended 31 December 2020 and 2019 Expressed in Canadian dollars

2020 activity	Note	Shares	Share capital	Share capital	Shares to be issued	Shares to be issued		Other equity reserve		Warrant reserve		Deficit	Shareholders’ deficiency	Shareholders’ deficiency
Balance, beginning of year		140,613,754	$	29,683,246	$	11,300	$	4,348,477	$	149,690	$	(35,088,522)	$	(895,809)
Net and comprehensive loss		--		--		--		--		--		(63,606)		(63,606)
Shares issued as payment to vendor	12(a)(ii)	226,000		11,300		(11,300)		--		--		--		-
Shares issued for debt settlement	12(a)(i)	650,000		32,500		250,000		--		--		--		282,500
Share-based compensation	12('e)	--		--		--		6,597		--		--		6,597
Balance - 31 December 2020		141,489,754	$	29,727,046	$	250,000	$	4,355,074	$	149,690	$	(35,152,128)	$	(670,318)
2019 activity		Shares		Share capital	Shares to be issued			Other equity reserve		Warrant reserve		Deficit	Shareholders’ deficiency
Balance, beginning of year		137,439,815	$	29,419,594		--	$	4,353,511	$	184,894	$	(34,026,414)	$	(68,415)
Net and comprehensive loss		--		--		--		--		--		(1,062,108)		(1,062,108)
Share-based compensation		--		--		--		13,787		--		--		13,787
Shares issued for debt settlement		689,165		41,350		--		--		--		--		41,350
Shares issued as payment to vendor		547,274		33,900		11,300		--		--		--		45,200
Stock options, exercised		437,500		40,698		--		(18,821)		--		--		21,877
Warrants, exercised		1,500,000		147,704		--		--		(35,204)		--		112,500
Balance - 31 December 2019		140,613,754	$	29,683,246	$	11,300	$	4,348,477	$	149,690	$	(35,088,522)	$	(895,811)

The accompanying notes are an integral part of these financial statements.

CardioComm Solutions, Inc. Statements of cash flows As at December 31, 2020 and 2019 Expressed in Canadian dollars

			31 December 2020			31 December 2019
Cash flows from operating activities
	Net loss and comprehensive loss	$	(63,606)		$	(1,062,108)
	Items not involving cash
	Share-based compensation		6,598			13,787
	Leases, interest expense		2,721			4,155
	Depreciation of property and equipment		4,411			10,242
	Depreciation of right of use assets		19,858			19,859
	Shares issued and shares to be issued		-			40,000
	Loss on writedown of vendor deposit		-			117,899
	Loss on writedown of inventory		-			8,150
	Unrealized (gain) loss on foreign exchange		3,573			4,879
	Bad debts expense		-			453,581
	Non-cash working capital item changes
	Trade receivables		16,151			111,514
	Inventory		(21,234)			26,883
	Prepaid expenses and deposits		(3,200)			17,897
	Trade and other payables and accrued liabilities		80,042			162,008
	Deferred revenue		(5,913)			9,368
	Net cash used in operating activities		39,401			(61,886)
Cash flows from investing activities
	Acquisition of equipment		(15,998)			(8,496)
	Net cash used in investing activities		(15,998)			(8,496)
Cash flows from financing activities
	Proceeds from exercise of options		-			21,875
	Proceeds from exercise of warrants		-			112,500
	Lease liability paid		(22,608)			(22,608)
	Long-term debt		40,000			-
	Repayment of short-term note		-			(100,000)
	Net cash from financing activities		17,392			11,767
Net change in cash and cash equivalents			40,795			(58,615)
Cash and cash equivalents, beginning of period			81,167			139,782
Cash and cash equivalents,end ofperiod		$	121,962		$	81,167
Cash (paid) received for
	Interest	$	(59,264)		$	(29,918)
	Taxes		-			-

Non-cash investing and financing activities (note 17)

The accompanying notes are an integral part of these financial statements.

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Nature of operations

The financial statements represent the accounts of CardioComm Solutions, Inc. (incorporated in British Columbia) (the “Company”). The Company develops advanced software, hardware and core laboratory reading services related to electrocardiogram (“ECG”) and ambulatory arrhythmia monitoring systems for medical and consumer markets globally. The head office and principal address of the Company is located at 259 Yorkland Road, Suite 200, North York, Ontario, M2J 0B5. The records office of the Company is 600 – 1090 West Georgia Street, Vancouver, BC V6E 3V7. The shares of the Company are listed on the TSX Venture Exchange as EKG.

These financial statements have been approved and authorized for issue by the board of directors of the Company on 30 April 2021.

2. Going concern assumption

These financial statements have been prepared on the going concern basis, which assumes the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities in the normal course of business. The net loss for the year ended 31 December 2020 was $63,606 compared to a net loss for the year ended 31 December 2019 of $1,062,108. The working capital deficit as of 31 December 2020 was $414,129 compared to a working capital deficit as of 31 December 2019 of $921,620. Working capital for the year was influenced by a loss in sales for certain classes of business due to the COVID-19 pandemic. In 2019 working capital was impacted by allowances taken for overdue receivables, primarily from Shoppers Drug Mart, a division of Loblaw Companies Limited (Shoppers Drug Mart) who currently has overdue outstanding receivables which have a material impact to the Company. The working capital deficit indicates the existence of a material uncertainty that may cast significant doubt on the ability of the Company to continue as a going concern if additional funding is not secured or sales do not materialize.

To address these uncertainties, the Company is implementing some or all the following measures:

• Continue the process of renewing contracts;

• Realize new revenue streams from the launch of new hardware products first approved for sale in 2019 and new contracts with existing software;

• Reductions in salaries;

• Seek debt financing as required;

• Seek equity financing consisting of common shares and stock purchase warrants as required; and

• Evaluate possible M&A and reverse takeover (“RTO”) opportunities as they are presented.

The Company believes that if it were to be successful in implementing some or all the above risk mitigating measures; it will be able to continue as a going concern. There remains, however, significant risk and uncertainty associated with implementing any of these measures which are dependent on several factors outside of the Company’s control. The material uncertainty cast significant doubt regarding the ability to continue as a going concern.

These financial statements do not reflect any adjustments that would be necessary if the going concern basis was not appropriate. Such adjustments, if required, may be material.

Since 31 December 2019, the outbreak of the novel strain of coronavirus, specifically identified as COVID19, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to business globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID19 outbreak is unknown

| 8

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Going concern assumption (continued…)

currently, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company in future periods.

1. Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are set out in below. The policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are presented in Canadian dollars, which is also the Company’s functional currency.

a) Statement of compliance

These financial statements were prepared in accordance with international Financial Reporting Standards (IFRS) as issued by the international Accounting Standards Board (IASB) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) (collectively IFRSs).

b) Changes in accounting policies

New standards, interpretations, and amendments not yet effective

There are several standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Company has decided not to adopt early. The following amendments are effective for the period beginning 1 January 2020:

• IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment – Definition of Material)

• Revised Conceptual Framework for Financial Reporting

New standards, interpretations, and amendments not yet effective (continued)

In January 2020, the IASB issued amendments to IAS 1 which clarify the criteria used to determine whether liabilities are classified as current or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. The amendments also clarify that ‘settlement’ includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument. The amendments are effective for annual reporting periods beginning on or after 1 January 2022.

The Company is currently assessing the impact of these new accounting standards and amendments. The Company does not believe that the amendments to IAS 1 will have a significant impact on the classification of its liabilities.

Other

The Company does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Company.

c) General

The financial statements are presented in Canadian dollars, which is the functional currency of the Company, and have been prepared and measured at historical cost, except for certain financial instruments that are measured at fair value as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for the assets acquired and liabilities assumed. In addition, these financial statements have been prepared using the accrual basis for accounting, except for certain cash flow information.

| 9

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Basis of preparation (continued…)

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires the Company’s management to exercise judgment in applying the Company’s accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in note 3(d).

Basis of measurement

The financial statements have been prepared on a historical cost basis except for the following items (refer to individual accounting policies for details):

• Financial instruments – fair value through profit or loss

• Financial instruments – fair value through other comprehensive income

• Contingent consideration

• Cash settled share-based payment liabilities.

d) Critical accounting judgments and key sources of estimation uncertainty

In the application of the Company’s significant accounting policies, management is required to make judgments, estimates, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from those estimates.

The following are the critical accounting judgments and the key estimates concerning the future, and other key sources of estimation uncertainty at the end of the reporting year, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Critical Judgments

Going concern

The Company's ability to continue as a going concern is dependent on securing additional and immediate financing and on achieving and maintaining profitable operations. Management must assess the outcome of these matters when preparing the Company’s financial statements. The Company’s current level of operations is not sufficient to cover its expenses and ongoing commitments, resulting in the negative cash flows generated from its operating activities. The

Company's ability to generate positive cash flows from its operating activities is dependent on achieving and maintaining profitable operations. Since inception, the Company has been able to finance its activities and operate on a going concern basis through issuances of shares, stock warrants, convertible notes, convertible debentures, and demand loans. However, there is no guarantee that such financing will be available going forward (refer to note 2).

Functional currency

The preparation of these financial statements requires management to make judgments regarding the determination of functional currency. The functional currency is the currency of the primary economic environment in which an entity operates and has been determined for each entity within the Company. The functional currency for the Company has been determined to be the Canadian dollar.

Key Sources of Estimation Uncertainty

Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the

| 10

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Basis of preparation (continued…)

financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates and such differences could be significant.

Significant estimates made by management affecting the financial statements include:

Tax credits on research and development expenses

Research and development investment tax credits (ITCs), which are earned as a result of incurring qualifying research and development expenditures, are recorded as a reduction of the related expense or cost of the asset acquired when there is reasonable assurance that they will be realized. No claims for ITCs were made in 2019.

Research and development expenditures

Research costs are expensed as incurred. Development costs are expensed as incurred unless they meet certain criteria for deferral and amortization. At each reporting date, the Company assesses whether it has met the relevant criteria for deferral and amortization. In 2019 and 2020 no expenditures met these criteria.

Share-based payments and warrant valuations

Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are considered by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. If all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.

The Company relies on the fair value obtained by applying the Black - Scholes option pricing model. This model requires making assumptions related to the risk-free interest rate (with a term that matches the expected life of the options), the expected stock price volatility, the expected life of the options and warrants and the expected dividend yield on the Company’s shares. Management also must estimate the number of options and warrants that will eventually vest. Management relies on experience to make these estimates.

Fair value of financial instruments

Financial instruments are presented at fair value. In the absence of active markets in the evaluation of financial assets and financial liabilities, the Company relies on evaluation techniques based on inputs that are not based on observable market data which could cause the actual results to differ from the estimates.

Recognition of deferred tax assets and liabilities

The estimation of income taxes includes evaluating the recoverability of deferred tax assets and liabilities based on assessment of the Company`s ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all the deferred income tax assets and liabilities will not be realized.

Leases

Most of the Company’s accounting policies for leases are set out in note 9.

Identifying Leases

The Company accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period in exchange for consideration. Leases are those contracts that satisfy the following criteria:

• (a) There is an identified asset;

| 11

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Basis of preparation (continued…)

2. (b) The Company obtains substantially all the economic benefits from use of the asset; and

3. (c) The Company has the right to direct use of the asset.

The Company considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract is not identified as giving rise to a lease.

In determining whether the Company obtains substantially all the economic benefits from use of the asset, the Company considers only the economic benefits that arise from use of the asset, not those incidentals to legal ownership or other potential benefits.

In determining whether the Company has the right to direct use of the asset, the Company considers whether it directs how and for what purpose the asset is used throughout the period of use. If there are no significant decisions to be made because they are pre-determined due to the nature of the asset, the Company considers whether it was involved in the design of the asset in a way that predetermines how and for what purpose the asset will be used throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the Company applies other applicable IFRSs rather than IFRS 16.

Useful life of property and equipment

Property and equipment are depreciated over its estimated useful life. Estimated useful lives are determined based on current facts and experience and take into consideration the anticipated physical life of the asset, the potential for technological obsolescence, and regulations.

Deferred revenue

Deferred revenue is calculated on services and support revenue and is calculated based on the portion of the contract relating to future periods.

Inventory obsolescence

The Company estimates the amount of inventory on hand that may not be recoverable and will allow for a write down of such amounts.

Allowance for expected credit losses

The Company estimates the amount of trade receivables that may not be defined as collectable under IFRS and will allow for a write down of such amounts. Management uses historical information on the recoverability of trade receivables and looks at specific account balances in determining the allowance.

• e) Cash and cash equivalents

Cash and cash equivalents include cash and highly liquid investments that are readily converted into known amounts of cash and subject to insignificant risk of changes in value.

f) Inventory

Inventories are valued at the lower of cost and net realizable value, with cost determined based on a first-in, firstout basis. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimate costs necessary to make the sale.

Inventories include the cost of materials purchased, the cost of conversion, as well as other costs required to bring the inventories to their present location and condition.

| 12

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Basis of preparation (continued…)

2. g) Revenue recognition

Performance obligations and timing of revenue recognition

The Company recognizes revenue when it has persuasive evidence of a contract, performance obligations have been identified and satisfied, payment terms have been identified, and it is probable that the Company will collect the consideration it is entitled to.

In addition to this general policy, the following are the specific revenue recognition policies for each major category of revenue:

• Revenue from the sale of proprietary software is recognized when title is transferred to the customer and customer acceptance is established. Shipping and handling costs paid by the customer to the Company are included in revenue.

• Revenues derived from ongoing service and maintenance contracts are recognized over the term of the contract on a straight-line basis, net of discounts. Other service revenue is recognized at the time the service is performed.

• Revenues derived from hardware sales when title is transferred to the customer and customer acceptance is established. Shipping and handling costs paid by the customer to the Company are included in revenue.

• Multiple element arrangements:

The Company also has multiple-element sales arrangements where software licenses, the associated postcontract services (PCS) and other services are sold together.

The Company has established vendor-specific objective evidence (VSOE) of the fair value of PCS for specific customer classes based on the value of PCS when sold separately as an optional renewal after the expiry of the initial maintenance term or based on contracted prices for optional PCS renewals included in the original multiple element sales arrangement.

The Company uses the residual method to determine the fair value of the services and software licenses if VSOE of the fair value of all undelivered elements exists. Under the residual method, the fair value of the undelivered elements is deferred, and the remaining portion of the arrangement fee is recognized as revenue. In such cases when vendor-specific objective evidence of fair value exists for all the undelivered elements (most commonly PCS), the residual amount is recognized as revenue and the PCS is recognized ratably over the PCS term, which is typically 12 months.

• h) Foreign currency

Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the rate of exchange prevailing at the statement of financial position date. Non-monetary items are translated at rates of exchange in effect when the amounts were acquired, or obligations incurred. Foreign currency gains and losses resulting from these translation adjustments are included in the determination of profit or loss.

i) Financial instruments

Financial assets and financial liabilities are recognized on the statements of financial position when the Company becomes a party to the contractual provisions of the financial instrument.

Fair value through profit or loss

The Company classifies its financial instruments in the following categories: at fair value through profit and loss (FVTPL), at fair value through other comprehensive income (loss) (FVTOCI) or at amortized cost. The Company

| 13

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

3. Basis of preparation (continued…)

determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL.

Measurement

Financial assets and liabilities at amortized cost

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment.

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of loss and comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statements of loss and comprehensive loss in the period in which they arise.

Debt investments at FVOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Equity investments at FVOCI

These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss.

Impairment of financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the statements of loss and comprehensive loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity.

Financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expired. The Company also derecognizes a financial liability when the terms of the liability are modified such that

| 14

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Basis of preparation (continued…)

the terms and/or cash flows of the modified instrument are substantially different in which case a new financial liability based on the modified terms is recognized at fair value.

Gains and losses on derecognition are generally recognized in profit or loss. The Company’s financial assets and liabilities are recorded and classified as follows:

Asset or liability	Classificaton
Cash and cash equivalents	Fair value
Trade receivables	Amortized cost
Trade and other payables	Amortized cost
Notes payable	Amortized cost
Long-term debt	Amortized cost

The Company determines the fair value of financial instruments according to the following hierarchy based on the number of observable inputs used to value the instrument.

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in Level 2 are either directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs, including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the marketplace.

Level 3 – Valuations in this level are those with inputs for the asset or liability that are not based on observable market data.

Cash and cash equivalents are measured at fair value using Level 1 inputs.

j) Investment tax credits

The Company records investment tax credits when it believes it has complied with the eligibility requirements as set out in the income tax legislation of Canada and its provinces and collection is reasonably assured. Refundable investment tax credits are presented in reduction of research and development expenses in the statements of loss and comprehensive loss. Investment tax credits related to capital expenditures are recorded as reductions of capital assets.

• k) Property and equipment

Property and equipment are stated at historical cost less accumulated amortization, impairment losses and related tax credits. Historical cost includes all costs directly attributable to the acquisition. Computer equipment cost includes software that is integral to its functionality.

Useful lives, residual values and amortization methods are reviewed at each year-end. Such a review takes into consideration the nature of the assets, their intended use, and technological changes.

Amortization is provided on a straight-line basis over the estimated useful lives of the assets, as follows:

| 15

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Basis of preparation (continued…)

Asset	Rate
Computer hardware	3-5 years
Leasehold improvements	4 years
Furniture and fixtures	4 years
Computer software	1-3years

l) Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year and which are unpaid. Due to their short-term nature, they are measured at amortized cost and are not discounted. The amounts are unsecured and are usually paid within 90 days of recognition.

m) Share-based payments

The Company grants stock options to buy common shares of the Company to directors, officers, employees, and service providers. The Company recognizes share-based compensation expense based on the estimated fair value of the options. A fair value measurement is made for each vesting instalment within each option grant and is determined using the Black-Scholes option-pricing model. The fair value of the options is recognized over the vesting period of the options granted as both share-based compensation expense and reserves. This includes a forfeiture estimate, which is revised for actual forfeitures in subsequent periods. The reserves account is subsequently reduced if the options are exercised, and the amount initially recorded is then credited to capital stock.

In situations where equity instruments are issued to non-employees and some or all the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the sharebased payment. Otherwise, share-based payments are measured at the fair value of the goods or services received.

n) Income (loss) per share

Net income (loss) per common share has been computed by dividing the income (loss) applicable to common shareholders by the weighted average number of shares of common stock outstanding during the respective periods. Dilutive income (loss) per share is calculated by dividing the applicable net loss by the sum of the weighted average number of shares outstanding during the period and all additional common shares that would have been outstanding if potentially dilutive common shares had been issued during the period.

o) Income taxes

Income tax on profit or loss for the year comprises of current and deferred tax. Current tax is the expected tax paid or payable on the taxable income for the year, using tax rates enacted or substantively enacted at the statement of financial position date, and any adjustment to tax paid or payable in respect of previous years.

Deferred tax is recorded by providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. The effect on deferred tax assets and liabilities of a change in income tax rates is recognized in the period that includes the date of the enactment or substantive enactment of the change. Deferred tax assets and liabilities are presented separately except where there is a right of set-off within fiscal jurisdictions.

| 16

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Basis of preparation (continued…)

p) Reclassification

Certain prior period amounts have been reclassified to conform to the current period’s presentation.

	2020 2019
Cash Guaranteed investment certificates	121,962 55,930 - 25,238
	121,962 81,167

GICs are cashable without any penalties and therefore are presented as a cash equivalent in the Statement of Financial Position. The GICs bear an interest rate of 1.60% and matured on June 26, 2020.

4. Trade receivables and other receivables

Trade receivables are amounts due from customers for goods sold, contracts on software services, or services performed in the ordinary course of business. They are generally due for settlement within 30 days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional. Due to the short-term nature of the current receivables, their carrying amount is the same as their fair value.

The aging of the trade receivables is as follows:

	2020 2019
Current 31 - 60 days 61 - 90 days Over 90 days Allowance for doubtful accounts	11,335 $ 32,079 $ 17,254 7,758 311 2,508 417,124 548,844 (335,620) (464,634)
	110,404 $ 126,555 $

In accordance with IFRS 9, the Company regularly assesses its trade receivables for impairment. The trade receivables over 90 days are largely related to sales of HeartCheck ECG PENS made to Shoppers Drug Mart. Due to the balance outstanding for more than 12 months, the Company has recorded a full allowance related to this customer. In 2020, the Company recovered $129,024 of this bad debt and is reflected in the Statement of Loss and Comprehensive Loss as software licensing revenue.

As at 31 December 2020, included in other receivables is $14,021 (2019 - $Nil) related to the Canada Emergency Wage Subsidy.

5. Inventory

In 2020, the amount of inventory expensed was $100,189 (2019 – 181,655). Adjustments of $Nil (2019 - $8,150) were made to inventory to reflect changes to pricing and some write-downs.

6. Prepaid expenses and deposits

In 2020, the Company had prepaid expenses of $7,922 (2019 – $8,296) which represent vendor prepaid deposits related to insurance, expected to be amortized over the next 12 months. In 2019, a loss write-down on a vendor deposit of $117,899 had been recorded as other items.

| 17

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

7. Property and equipment

	Computer Hardware Computer Software Total
Cost Balance at 31 December 2018 Additions Balance at 31 December 2019 Additions Balance at 31 December 2020	419,637 $ 273,381 $ 693,018 $ 5,865 2,631 8,496
	425,502 276,012 701,514 13,368 2,629 15,998
	438,870 278,642 717,512
Accumulated depreciation Balance at 31 December 2018 Depreciation Balance at 31 December 2019 Depreciation Balance at 31 December 2020	416,851 $ 267,091 $ 683,942 $ 2,649 7,593 10,242
	419,500 274,684 694,184 3,968 443 4,411
	423,468 275,127 698,595
Net book value 31 December 2019 31 December 2020	6,002 $ 1,328 $ 7,330 $ 15,402 $ 3,515 $ 18,917 $

1. Right-of-use assets and lease liabilities

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

• Leases of low value assets; and

• Leases with a duration of 12 months or less.

IFRS 16 was adopted 1 January 2019 without restatement of comparative figures. The following policies apply after the date of initial application, 1 January 2019.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by the Company’s incremental borrowing rate on commencement of the lease is used.

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

Lease payments made at or before commencement of the lease;

• Initial direct costs incurred; and

• the amount of any provision recognised where the Company is contractually required to dismantle, remove, or restore the leased asset.

After initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease.

When the Company revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining

| 18

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Right-of-use assets and lease liabilities (continued…)

(revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss.

For 2019, the Company had identified one lease for its corporate head office in Toronto, Ontario for which it recognized both a right-of-use asset and a lease liability. This lease expires on 30 September 2021. The Company recognized a right-of-use asset offset by a lease liability in the statement of financial position, initially measured at the present value of future lease payments, net of non-lease general expenses which are expensed as incurred.

Right-of-use asset

The Company’s right-of-use asset as of 31 December, is as follows:

Right-of-use asset	2020 2019
As at January 1, Amortization As at December 31,	34,752 $ 54,611 $ (19,858) (19,859)
	14,894 $ 34,752 $

Lease liability

The Company’s lease liability as of 31 December, as follows:

	31 December 2020 31 December 2019
Opening balance, lease liability Interest expense Lease payments Ending balance, lease liability Of which are: Short-term lease liability Long-term lease liability	36,158 $ 54,611 $ 2,721 4,155 (22,608) (22,608)
	16,271 $ 36,158 $
	16,271 $ 19,887 $ - 16,271

Lease liability interest expense recognized in profit and loss and lease payments recognized in the financing component of the statement of cash flows are as follows:

The following table discloses the undiscounted cash flow for lease obligations as of 31 December, as follows:

		31 December 2020		31 December 2019
Less than one year	$	16,271	$	22,068
One to five years		-		16,956
Total undiscounted lease obligation	$	16,271	$	39,024

1. Trade and other payables and accrued liabilities

Note	31 December 2020 31 December 2019
Accounts payable 11 Interest payable 11 Accrued liabilities 9b Sales tax payable 9c	277,238 $ 294,731 $ - 32,658 173,414 70,795 23,464 28,389
	474,116 $ 426,573 $

| 19

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

10. Notes payable

During the year ended 31 December 2020, the Company renegotiated certain terms of the notes payable agreements with its lenders which included a reduction in the annual interest rate from 10% to 8% and the maturity term from 31 December 2020 to 31 December 2022 to be effective December 31, 2020.

During the year ended 31 December 2020, the Company took advantage of the Canada Emergency Business Account (CEBA) interest free loan which provides interest-free, partially forgivable, loans of up to $60,000, to small businesses, that have experienced diminished revenues due to COVID-19 but face ongoing non-deferrable costs, such as rent, utilities, insurance, taxes, and wages. As of 31 December 2020, the Company had borrowed $40,000 to be repaid on or before 31 December 2022.

Short-term notes payable Note	31 December 2020 31 December 2019
Family member of the CEO 12 Director 9b 12 Third parties 9c 9c	- $ 200,000 $ - 100,000 - 200,000
	- $ 500,000 $
Long-term notes payable Note	31 December 2020 31 December 2019
Director 9b 12 Third parties 9c 9c	100,000 $ - $ 190,000 -
	290,000 $ - $

During the year ending 31 December 2020, the Company retired $250,000 worth of short-term notes payable in exchange for common shares of the Company to be issued at $0.05 per share (note 12). Additionally, the Company incurred interest of $50,137 (2019 - $52,466) of interest expense on these loans. As of 31 December 2020, there is $Nil (2019 - $32,658) of interest payable (note 9), of which $Nil (2019 – $22,603) is due to related parties (note 11). During the year ending 31 December 2020, the Company received $40,000 from the Government of Canada pursuant to the Canada Emergency Business Account (CEBA) program which was created to support small businesses to bridge the financial gap experienced because of the COVID-19 pandemic additionally, the Company received assistance through the Canada Emergency Wage Subsidy (CEWS) from the Government of Canada in amount of $81,991 and is reflected in the statement of loss and comprehensive loss as Other Income.

11. Related party transactions

Related parties and related party transactions impacting the financial statements not disclosed elsewhere in these financial statements are summarized below and include transactions with the following individuals or entities:

Key management personnel

Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of members of the Company’s board of directors, corporate officers, including the Company’s Chief Executive Officer, Chief Financial Officer, and Vice Presidents.

Remuneration attributed to key management personnel for the years ended 31 December 2020 and 2019 is summarized as follows:

| 20

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Related party transactions (continued…)

	31 December 2020 31 December 2019
Share-based compensation	6,598 $ 13,787 $
Salaries	189,698 300,000
Contractors Director's fees	40,167 40,000 41,625 35,100
	278,088 $ 388,887 $

Amounts due to and from related parties as at 31 December 2020 included the following:

• Short-term notes payable of $100,000 (2019 - $300,000) are due to related parties. Interest payable of $Nil (2019 - $22,603) on these notes is due to related parties (note 11).

• Amounts due to related parties as of 31 December 2020 of $151,617 (2019 - $129,927) are due to various members of management and the board of directors. As of 31 December 2020, and 2019 these amounts were included in trade and other payables and accrued liabilities.

• Included in accounts payable as of 31 December 2020 is $6,598 (2019 - $1,453) owing to a company controlled by the CEO (note 9). Also included in accounts payable as of 31 December 2020 is $43,408 (2019 - $Nil) owing to a company controlled by a family member of the CEO.

• On 14 December 2020, the Company entered into a lending agreement from a lender who is a family member of the CEO. The principal amount of up to $75,000 to be used for legal expenses and certain working capital needs bearing 8% interest per annum accrued on outstanding balances. As at 31 December 2020, $Nil was drawn on the line of credit.

Other than the notes payable and accrued interest as discussed in note 11, amounts due to and from related parties are non-interest bearing with no set terms of repayment.

12. Share capital

• a) Common shares

The Company is authorized to issue an unlimited number of common shares with no par value, issuable in series. Refer to note 19 for subsequent events for common shares.

(i) Shares issued for debt settlement

Activity in 2020

On 22 January 2020, the Company issued 650,000 common shares at $0.05 per share as settlement of $32,500 of debt to directors.

As at 31 December 2020, 5,000,000 common shares will be issued at $0.05 per share as settlement for the debt of $250,000 to note holders.

Activity 2019

On 28 June 2019, the Company issued 689,165 common shares as settlement for debt of $41,350 to directors, employees, and consultant of the Company at $0.06 per share.

| 21

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

12. Share capital (continued…)

(ii) Shares issued as payment to a vendor

Activity in 2020

On 22 January 2020, the Company issued 226,000 common shares from shares to be issued at $0.05 per share to a company in exchange for advertising and promotion services having an aggregate value of $11,300 (representing $10,000 plus 13% HST).

Activity in 2019

On 5 April 2019, the Company issued 132,941 shares to a company in exchange for services at $0.05 per share for advertising and promotion of $10,000 and HST of $1,300.

On 28 June 2019, the Company issued 188,333 shares to a company in exchange for services at $0.05 per share for advertising and promotion of $10,000 and HST of $1,300.

On 10 October 2019, the Company issued 226,000 common shares to a company in exchange for services at $0.05 per share for advertising and promotion of $10,000 and HST of $1,300.

On 31 December 2019, the Company had 226,000 common shares to be issued to a company in exchanges for services at $0.05 per share for advertising and promotion of $10,000 and HST of $1,300. These shares were subsequently issued on 22 January 2020, refer to note 19.

(iii) Stock options exercised

On 3 July 2019, the Company issued 62,500 common shares upon exercise of 62,500 options at $0.05 per option for total proceeds of $3,125. The fair value associated with these options was $3,436.

On 16 June 2019, the Company issued 375,000 common shares upon the exercise of 375,000 options at $0.05 per option for total proceeds of $18,750. The fair value associated with these options was $14,585.

(iv) Warrants exercised

On 26 February and 27 February 2019, the Company issued 1,500,000 common shares upon the exercise of warrants at an exercise price of $0.075 per warrant. Total cash received was $112,500. The fair value associated with these warrants is $35,204.

b) Other equity reserve

Other equity reserve consists of expired, unexercised warrants and the cumulative stock-based compensation expenses that are recognized through the issuance of stock options.

c) Warrant reserve

Warrant reserve contains the allocation of share issuance proceeds for amounts attributed to the value of outstanding warrants, and the fair value of outstanding, unexpired agent warrants.

d) Warrants

The following is a summary of warrant activities during the years ended 31 December 2020 and 2019:

| 22

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

12. Share capital (continued…)

	Number of Warrants(1) Weighted Average Exercise Price
Outstanding, 31 December 2018 Exercised(1) Outstanding, 31 December 2019 Expired(2) Outstanding, 31 December 2020	7,446,000 $0.075 (1,500,000) $0.075
	5,946,000 $0.075 (4,646,000) $0.075
	1,300,000 $0.075

As of 31 December 2020, the Company had the following share purchase warrants outstanding:

Outstanding	Exercise Price	Remaining Life (Years)	Expiry Date
1,300,000	$0.075	0.09	February 3, 2021(3)

1 Agent warrants.

2 On 8 September 2018, the warrants were extended to 23 December 2020. As a result of the extension to the terms, the warrants were revalued, resulting in an additional $24,106 being added to the fair value of these warrants. The adjusted fair value was calculated using the Black-Scholes Option Pricing Model, with a volatility of 158%, expected life of 4 years, discount rate of 1.1% and dividend rate of 0%.

3 On 8 September 2018, the warrants were extended to 3 February 2021. As a result of the extension to the terms, the warrants were revalued, resulting in an additional $6,887 being added to the fair value of these warrants. The adjusted fair value was calculated using the Black-Scholes Option Pricing. Subsequent 31 December 2020, the warrants have all expired.

e) Stock options

The Company has an incentive stock option plan (the Plan) to grant options to employees, officers, directors, and consultants of the Company. The maximum number of shares reserved for issuance under the Plan shall not exceed 10% of the issued share capital of the Company. Under the Plan, the exercise price of each option may not be less than the market price of the Company’s shares at the date of grant. Options granted under the Plan will have a term not to exceed 5 years and be subject to vesting provisions as determined by the board of directors of the Company.

The following is a summary of stock option activities during the years ended 31 December 2020 and 2019:

	Number of Stock Options Weighted Average Exercise Price
Outstanding 31 December 2018 Granted Exercised Expired Outstanding 31 December 2019 Granted Exercised Expired Outstanding31 December 2020	4,667,520 $0.150 250,000 $0.080 (437,500) $0.000 (2,017,460) $0.230
	2,462,560 $0.120 250,000 $0.050 - $0.000 (2,100,060) $0.137
	612,500 $0.057

On 31 December 2020, the following stock options were outstanding:

| 23

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

12. Share capital (continued…)

Expiry date	Outstanding	Exercisable	Exercise price	Remaining life (years)
November 22, 2021 October 10, 2024 January 22, 2025 April 22, 2025 June 16, 2025 November 30, 2025	300,000 300,000 $0.075 0.89 62,500 62,500 $0.050 3.77 62,500 62,500 $0.050 4.05 62,500 62,500 $0.050 4.30 62,500 62,500 $0.050 4.45 62,500 62,500 $0.050 4.90
	612,500 612,500 $0.057 2.63

e) Share-based compensation

The Company recognizes compensation expense for all stock options granted using the fair value-based method of accounting. For the year ended 31 December 2020, the Company recorded share-based compensation expense of $6,598 (2019 - $13,787) for options vesting during the year. During the year ended 31 December 2020, the Company granted 250,000 options (2019 - 250,000) with a fair value of $0.05 (2019 - $0.05) per option. The options were valued using the Black-Scholes option pricing model with the following weighted average assumptions:

	2020	2019
Risk free interest rate	0.67%	1.49%
Expected dividend yield	0%	0%
Volatility	116.02%	150.99%
Expected life	5 years	5 years
Forfeiture rate	0%	0%

13. Segmented information

Management has determined that the Company has one operating segment, which involves the development of advanced software and sale of ECG recording equipment and ECG reading services for the cardiology field. Substantially all the Company's operations, assets and employees are in Canada. Revenue is earned in Canada; the United States and other countries as follows:

	2020 2019
Canada United States Other	400,941 $ 320,554 $ 359,019 435,110 74,825 119,224
	834,785 $ 874,888 $

14. Capital management

The Company’s objectives in managing capital are to optimize its weighted average cost of capital, and hence, maximize shareholder’s value while balancing the interests of debt and shareholders.

Management’s strategy of concentrating on the Company’s core business, while simultaneously diversifying into other business in which the Company can leverage synergies and its core competencies, is considered concurrently with the use of capital. In the management of capital, the Company includes its components of equity.

Continuous oversight and control of the capital structure is maintained by senior management and the board of directors. Management reviews its capital management approach on an ongoing basis and believes that this approach is reasonable given the relative size of the Company.

The Company is not subject to any externally imposed capital requirements. There were no changes in the Company’s approach to capital management during the year.

| 24

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Financial risk management and financial instruments

The fair value of the Company’s trade receivables, deposits, trade and other payables, short term notes payable, and amounts due to related parties’ approximate carrying value, due to their short-term nature. The Company’s cash and cash equivalents are measured at fair value under the fair value hierarchy based on level one quoted prices in active markets for identical assets or liabilities.

The Company’s financial instruments are exposed to certain financial risks, including credit risk, liquidity risk, and market risk, which includes currency risk, interest rate risk and price risk.

a) Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations.

The Company is subject to credit risk on its cash and cash equivalents and receivables. The Company limits its exposure to credit loss by placing its cash and cash equivalents with major financial institutions. The Company has no investments in asset-backed commercial paper.

The Company’s main exposure to credit risk is from its trade receivables and from time to time, is subject to the concentration of its key customers. The Company’s largest receivable balance due from its customers represent 65% of trade receivables on 31 December 2020 (2019 - 88%).

The Company records an allowance for credit losses related to trade receivables that are considered to be noncollectible. The allowance is based on the Company’s knowledge of the financial condition of its customers, the aging of the receivables, current business environment, customer and industry concentrations, and historical experience. To reduce credit risk, cash equivalents are only held at major financial institutions and management provides ongoing credit evaluations of its customers’ financial condition.

Total trade receivables less an allowance for expected credit losses as of 31 December 2020 amounted to $110,404 (2019 - $126,555), which management believes adequately reflects the Company’s credit risk. Of the reported trade receivables, 78% is determined to be past due, which is defined as amounts outstanding beyond normal credit terms and conditions for the respective customers. The significant over 90-day trade receivable is from Shoppers Drug Mart, a Canadian reseller of the HeartCheck™ ECG PEN. This vendor continues to remit periodic payments against the outstanding balance on a timeline as determined by them. The Company has confirmed with the vendor that the liability for payment is accepted. While the Company continues to believe the trade receivables from this client are collectable, the Company has set up an allowance for expected credit losses in accordance with their policy on long overdue accounts.

b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its short-term financial obligations as they fall due.

The Company manages liquidity risk through its capital management as outlined in note 15. As of 31 December 2020, the Company has cash and cash equivalents, and trade receivables, net of an allowance for expected credit losses, of $232,366 to settle its trade and other payables and accrued liabilities of $474,116. On 31 December 2020, the Company extended the maturity term of its long-term notes from 31 December 2020 to 31 December 2022 along with retiring $250,000 worth of short-term notes payable in exchange for common shares of the Company at $.05 per share to be issued in 2021(note 13).

c) Market Risk

Market risk is the risk of loss that may arise from changes in market factors such as foreign exchange rates, interest rates, and commodity and equity prices.

| 25

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

15. Financial risk management and financial instruments

i. Currency risk

The functional currency of the Company is the Canadian dollar. The Company has sales in both Canadian and US dollars. As a result, the Company is exposed to foreign exchange rate risk with respect to the US dollar. As of 31 December 2020, the Company had net financial assets denominated in US dollars of approximately $70,320. A 10% change in the Canadian dollars versus the US dollar would give rise to a gain of $6,796 or loss of $5,561. The Company has not entered any foreign exchange contracts to hedge this risk.

ii. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Company will realize a loss because of interest rate risk on its notes payable is minimal, as these have a short-term to maturity, and a fixed interest rate.

iii. Price risk

The Company is not exposed to significant price risk as it does hold investments in publicly traded securities.

16. Income taxes

The following is a reconciliation of income taxes attributable to operations computed at the statutory tax rates to income tax recovery.

	2020 2019
Loss for the year before taxes Expected income tax expense (recovery) at statutory rate (26.5%) Permanent differences Impact of change in tax rates Adjustment to prior years provision versus statutory tax returns, and other Change in unrecognized deductible temporary differences Total income tax recovery	(63,606) $ (1,062,108) $ (16,856) (281,459) 2,231 5,268 - (210,121) 24,815 574,430 (10,191) (88,118)
	- $ - $

The significant components of the Company’s unrecognized deferred tax assets are as follows:

Deferred taxes		2020 2019
Property and equipment Share issue costs Unclaimed scientific research and development expenditures Rights-of-use assets Lease liability Non-capital losses available for future period Unrecognized deferred tax assets Net deferred tax assets		128,707 $ 129,789 $ - 1,244 631,281 640,696 (3,947) (9,209) 4,312 9,582 2,643,363 2,641,805
		3,403,716 3,413,907 (3,403,716) (3,413,907)
		- $ - $

| 26

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

1. Income taxes (continued…)

The significant components of the Company’s unrecognized temporary differences and tax losses are as follows:

Temporary differences Expiry date range	2020 2019
Property and equipment No expiry date Intangible assets No expiry date Right-of-use asset No expiry date Lease liability No expiry date Share issue cots 2038-2040 Unclimed scientific research and development expenditures No expiry date Non-capital losses available for future period 2026-2040	485,685 $ 489,771 $ - - 14,894 34,753 16,271 36,158 - 4,695 2,382,193 2,393,541 9,974,957 9,969,076

Tax attributes are subject to review and potential adjustment by tax authorities.

17. Non-cash transactions from investing and financing activities

During the year ended 31 December 2020, the Company had the following non-cash transactions from investing and financing activities:

• 650,000 common shares were issued for settlement of debt of $32,500.

• 5,000,000 common shares to be issued for the settlement of debt of $250,000.

During the year ended 31 December 2019, the Company had the following non-cash transactions from investing and financing activities:

• Initial recognition of a right of use asset and lease liability for $54,611

• 1,500,000 of warrants were exercised with a fair value of $35,204.

• 437,500 of options were exercised with a fair value of $18,821.

• 547,274 common shares were issued, and 226,000 common shares are to be issued for $40,000 of advertising services, and $5,200 of HST.

• 689,165 common shares were issued for settlement of debt of $41,350.

	Note	2020	2019
Fair value of options exercised	12(a)(iii)	$ --	$18,021
Fair value of warrants exercised	12(a)(iv)	--	35,204
Shares issued for debt settlement	12(a)(i)	32,500	41,350
Shares to be issued for debt settlement		250,000
Shares issued as payment to a vendor for advertising	12(a)(ii)	10,000	40,000
Outstanding payableportion ofprepaid expenses		--	--

18. Subsequent Events

• (a) Stock options

• On 6 April 2021 and 26 April 2021, the Board of Directors authorized the issuance of a total of 125,000 stock options at $0.06 per common share to the CEO pursuant to his employment contract.

(b) Equity transactions

• On 2 January 2021, 5,000,000 common shares at $0.05 per common share were issued in settlement of debt of $250,000.

• On 12 January 2021, 500,000 common shares were issued as a result of the exercising of options by the CEO for a cash settlement of $25,000.

| 27

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0

CardioComm Solutions, Inc. Notes to the financial statements As at December 31, 2020 Expressed in Canadian dollars

18. Subsequent Events (continued…)

• On 6 April 2021, the Board of Directors authorized the issuance of 406,250 common shares at $0.06 per common share as settlement of debt to the Company’s board members to satisfy $24,375 of board of director fees for the year ending 31 December 2020.

• On 26 April 2021, the Board of Directors authorized the issuance of 2,947,394 common shares at $0.06 per common share as settlement of debt to the Company’s employees and contractors to satisfy $162,107 of wages for the year ending 31 December 2020.

• On 26 April 2021, the Board of Directors authorized the issuance of 62,500 stock options at

(c) Government assistance related to COVID-19

• In March 2021, the Company received additional assistance from the Government of Canada through the Canada Emergency Wage Subsidy (CEWS) for its employees.

• In April 2021, the Company received an additional $20,000 from the Canadian Government through the Canada Emergency Business Account pursuant to the Canada Emergency Business Account (CEBA) program which was created to support small businesses to bridge the financial gap experienced because of the COVID19 pandemic.

| 28

C a r d i o C o m m S o l u t i o n s I n c . A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 2 0