CardioComm Solutions, Inc. — Interim / Quarterly Report 2021

Aug 31, 2021

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CardioComm Solutions, Inc.

Unaudited Condensed Interim Financial Statements For Six Months Ended 30 June 2021 and 2020 (IN CANADIAN DOLLARS)

CardioComm Solutions, Inc.

Notice of No Auditor Review of Interim Financial Statements

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 Company for the quarter ended 30 June 2021 have been prepared by management and approved by the Audit Committee and Board of Directors of the Company and were prepared in compliance with IAS 34 ‐ Interim Financial Reporting . These condensed interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended 31 December 2020 which were prepared in compliance 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). These statements have been prepared following the same accounting policies used in the preparation of the Company’s audited financial statements for the year ended 31 December 2020 unless otherwise noted.

The Company’s independent auditors have not performed a review of these financial statements in accordance with the standards established by the Canadian Institute of Chartered Professional Accountants for a review of interim financial statements by an entity’s auditors.

CardioComm Solutions, Inc. Unaudited condensed interim statements of financial position As at 30 June 2021 and 31 December 2020 (In Canadian dollars)

	Note		30 June 2021			31 December 2020
ASSETS
Current assets
Cash and cash equivalents	4	$	44,387		$	121,962
Trade receivables	5		91,972			110,404
Inventory	6		72,286			86,518
Prepaid expenses and deposits	7		16,620			7,922
			225,265			326,806
Non‐current assets
Property and equipment	8		19,101			18,917
Right of use assets	9		4,964			14,894
		$	249,330		$	360,617
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current
Trade and other payables and accrued liabilities	10, 11	$	269,117		$	474,115
Lease liabilities	9		5,559			16,271
Deferred revenue			255,003			250,549
			529,679			740,935
Non‐current
Notespayable	11		353,000			290,000
			882,679	#		1,030,935
Shareholders' equity (deficiency)
Share capital	13		30,188,528			29,727,046
Shares to be issued	13		‐			250,000
Other equity reserve	13		4,355,985			4,355,074
Warrant reserve			149,690			149,690
Deficit			(35,327,552)			(35,152,128)
			(633,349)			(670,318)
		$	249,330		$	360,617

Nature of operations (note 1) Going concern assumption (note 2)

Approved on 26 August 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.

Unaudited condensed interim statements of net and comprehensive loss

For the three and six months ended 30 June 2021 and 2020

(In Canadian dollars)

Note	30 June 2021 30 June 2020 113,654 $ 97,373 $ 13,932 25,723 19,868 25,321 6,300 31,003 153,754 179,420 7,991 21,502 145,763 157,918 750 1,506 17,500 7,500 27,735 10,000 1,333 812 4,964 4,965 8,688 8,125 5,329 10,481 9,252 9,665 7,395 13,729 25,860 4,147 2,888 4,976 53,833 24,238 27,126 14,200 4,181 4,181 15 ‐ 64,534 66,792 911 2,157 9,516 14,506 6,185 1,009 ‐ ‐ 277,995 202,989 14,600 ‐ (117,632) $ (45,071) $ ($0.00) ($0.00) 149,202,238 141,489,754 Three months ending	Six months ending
		30 June 2021 30 June 2020
Revenue Software licensing Hardware sales Support Services		209,526 $ 228,473 30,917 60,142 36,931 56,535 11,199 32,296
Cost of sales		288,573 377,445 27,843 46,047
Gross margin Operating expenses Advertising and promotion Audit and accounting fees Contractors 12 Depreciation, property and equipment 8 Depreciation, ROU 9 Director fees 12 Foreign exchange loss (gain) Insurance Interest and bank Legal Office Professional fees Regulatory fees Rent Research and development Salaries and wages 12 Share‐based compensation 13(f) Telephone and utilities Transfer agent and filing fees Travel		260,730 331,397 1,250 8,935 25,000 15,000 55,479 23,333 2,447 2,284 9,929 9,929 18,271 16,250 5,451 (4,517) 18,468 18,675 15,955 30,862 40,768 4,148 4,060 5,525 70,833 41,623 29,297 26,339 8,363 8,363 21 ‐ 137,022 190,915 911 4,372 17,153 29,959 13,396 11,978 ‐ 670
		474,072 444,644
Other income 11 Net loss and comprehensive loss		37,920 ‐ (175,422) $ (113,247)
Lossper common share ‐ basic and diluted		($0.00) ($0.00)
Weighted average number of common shares ‐ Basic and diluted		149,202,238 140,947,354

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

CardioComm Solutions, Inc.

Unaudited interim statements of changes in shareholders’ deficiency

For the six months ended 30 June 2021 and for the twelve months ended 31 December 2020 (In Canadian dollars)

2021 activity to 30 June 2021	Note	Shares		Share capital	Shares to be issued	Shares to be issued		Other equity reserve		Warrant reserve		Deficit		Shareholders’ deficiency
Balance, beginning of year		141,489,754		29,727,046		250,000		4,355,074		149,690		(35,152,130)		(670,320)
Net and comprehensive loss		‐‐		‐‐		‐‐		‐‐		‐‐		(175,422)		(175,422)
Shares issued for debt settlement	13(a)(i)	8,353,644		436,482		(250,000)		‐‐		‐‐		‐‐		186,482
Stock options, exercised	13(a)(i)	500,000		25,000		‐‐		‐‐		‐‐		‐‐		25,000
Share‐based compensation	12	‐‐		‐‐		‐‐		911		‐‐		‐‐		911
Balance ‐ 30 June 2021		150,343,398	$	30,188,528	$	‐	$	4,355,985	$	149,690	$	(35,327,552)	$	(633,349)
2020 activity for the year		Shares		Share capital	Shares to be issued			Other equity reserve		Warrant reserve		Deficit		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		226,000		11,300		(11,300)		‐‐		‐‐		‐‐		‐
Shares issued for debt settlement		650,000		32,500		250,000		‐‐		‐‐		‐‐		282,500
Share‐based compensation		‐‐		‐‐		‐‐		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)

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

CardioComm Solutions, Inc. Unaudited interim statements of cash flow For the three and six months ended 30 June 2021 and 2020 (In Canadian dollars)

	30 June 2021 30 June 2020 30 June 2021 30 June 2020 Three months ended Six months ended
Cash flows from operating activities Net loss and comprehensive loss Items not involving cash Share‐based compensation Leases, interest expense Depreciation of property and equipment Depreciation of right of use assets Shares issued as payment of debt Shares issued for director fees Unrealized (gain) loss on foreign exchange Non‐cash working capital item changes Trade receivables Inventory Prepaid expenses and deposits Trade and other payables and accrued liabilities Deferred revenue Net cash used in operating activities Cash flows from investing activities Acquisition of equipment Net cash used in investing activities Cash flows from financing activities Proceeds from exercise of options Lease liability paid Notepayable Net cash from financing activities Net change in cash and cash equivalents Cash and cash equivalents,beginningofperiod	(117,632) (45,071) (175,422) (113,247) 911 2,157 911 4,371 296 11,455 593 12,320 1,333 812 2,447 2,284 4,965 4,965 9,930 9,930 161,482 162,107 32,500 ‐ ‐ 24,375 ‐ ‐ 13,896 ‐ 504 1,693 127,716 18,432 (6,981) 5,737 (5,881) 14,232 2,690 (6,933) (12,468) (8,698) (21,732) (186,155) 4,538 (204,998) 71,591 65,192 (17,856) 4,452 67,721
	(69,111) 84,263 (151,639) 61,951 (2,631) (10,711) (2,631) (20,452)
	(2,631) (10,711) (2,631) (20,452) 25,000 ‐ 25,000 ‐ (5,719) (5,653) (11,305) (11,305) 39,000 40,000 63,000 40,000
	58,281 34,347 76,695 28,695 (13,461) 107,899 (77,575) 70,194 57,848 43,462 121,962 81,167
Cash and cash equivalents,end ofperiod	44,387 $ 151,361 $ 44,387 $ 151,361 $
Cash (paid) received for Interest Taxes	(4,136) $ ‐ $ (10,994) $ (4,164) $ ‐ ‐ ‐ ‐

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 (unaudited) As at 30 June 2021

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. As of August 1, 2021, the Company moved its office to a new location at 18 Wynford Drive, Suite 305, North York, Ontario, M3C 3S2. 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 26 August 2021.

1. 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 and comprehensive loss for the three months ended 30 June 2021 was $117,632 and for the three months ended 30 June 2020 the net loss was $45,071. The net loss and comprehensive loss for the six months ended 30 June 2021 was $175,422 and for the six months ended 30 June 2020 the net loss and comprehensive loss was $113,247. The working capital deficit as of 30 June 2021 was $304,414 compared to a working capital deficit as of 31 December 2020 of $414,129. 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 or an exchange of debt for shares;

• 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 COVID‐19, 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 COVID‐19 outbreak is unknown currently, as is the efficacy of the government and central bank

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

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 presentation

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 interim financial statements were prepared in compliance with IAS 34 – Interim Financial Reporting (IAS 34) . These interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended 31 December 2020, which 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) 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.

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(c).

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.

• c) 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.

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

Critical Judgments

Going concern

The Company's ability to continue as a going concern is dependent on securing continued access to financing on an as needed basis 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 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 the second quarter ended 30 June 2021 or for the year ended 31 December 2020.

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 the second quarter ended 30 June 2021 and for the year ended 31 December 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.

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

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;

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

• (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.

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

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.

• d) 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.

• e) Inventory

Inventories are valued at the lower of cost and net realizable value, with cost determined based on a first‐in, first‐out 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.

• f) 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 post‐ contract 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

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

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.

• g) 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.

• h) 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 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.

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

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 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.

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

i) 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.

j) 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:

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

k) 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.

l) 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 share‐based payment. Otherwise, share‐based payments are measured at the fair value of the goods or services received.

1. Cash and cash equivalents

	30	June 2021	31 December 2020
Cash		44,387	121,962

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

5. Trade 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:

	30 June 2021 31 December 2020
Current 31 ‐ 60 days 61 ‐ 90 days Over 90 days Allowance for doubtful accounts	44,507 $ 11,335 $ 1,657 17,254 586 311 380,842 417,124 (335,620) (335,620)
	91,971 $ 110,404 $

In accordance with IFRS 9, the Company regularly assesses its trade receivables for impairment. The trade receivables over 90 days are largely related to royalty revenue. The Company is working with the customer and expects the outstanding balance to be fully paid.

6. Inventory

Inventories expensed to cost of sales during the six months ended 30 June 2021 and 30 June 2020 were $27,843 and $46,047 respectively.

7. Prepaid expenses and deposits

As at 30 June 2021, the Company had prepaid expenses of $16,620 (31 December 2020 – $7,922) which represent vendor prepaid deposits related to insurance, expected to be amortized over the next 12 months.

1. Property and equipment

	Computer Hardware Computer Software Total
Cost Balance at 31 December 2019 Additions Balance at 31 December 2020 Additions Balance at 30 June 2021	425,502 $ 276,012 $ 701,514 $ 13,368 2,629 15,997
	438,870 278,641 717,511 ‐ 2,631 2,632
	438,870 281,273 720,143
Accumulated depreciation Balance at 31 December 2019 Depreciation Balance at 31 December 2020 Depreciation Balance at 30 June 2021	419,500 $ 274,684 $ 694,184 $ 3,968 443 4,411
	423,468 275,127 698,595 2,228 219 2,447
	425,696 275,346 701,042
Net book value 31 December 2020 30 June 2021	15,402 $ 3,514 $ 18,917 $ 13,174 $ 5,927 $ 19,101 $

1. Right‐of‐use assets and lease liabilities

Right‐of‐use asset

The Company’s right‐of‐use asset consists of the following:

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

	30 June 2021 31 December 2020
As at January 1, Amortization	14,894 $ 34,752 $ (9,930) (19,858)
	4,964 $ 14,894 $

Lease liability

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

	30 June 2021 31 December 2020
Opening balance, lease liability Interest expense Lease payments Ending balance, lease liability Of which are: Short‐term lease liability	16,271 $ 36,158 $ 593 2,721 (11,305) (22,608)
	5,559 $ 16,271 $
	5,559 $ 16,271 $

The undiscounted cash flow for lease obligation as at 30 June 2021 is $5,559 for less than one year.

1. Trade and other payables and accrued liabilities

	Note			30 June 2021		31 December 2020
Accounts payable	11		$	210,645	$	277,238
Interest payable	11			6,539		‐
Accrued liabilities		9b		57,797		173,414
Sales tax payable		9c		(5,864)		23,463
			$	269,117	$	474,115

11. Notes payable

With the exception of the $60,000 loan received from the Government of Canada, the notes payable have an interest rate of 8% per annum. During the six months ended 30 June 2021, the Company incurred interest expense of $10,506 on these loans. As at 30 June 2021, there is $6,539 of interest payable (note 10), of which $4,556 (31 December 2020 ‐ $Nil) is due to related parties (note 12). 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. An additional $20,000 was made available by the Government of Canada in 2021 of which the Company received during the six months ending 30 June 2021. Additionally, the Company received assistance through the Canada Emergency Wage Subsidy (CEWS) from the Government of Canada during the six months ending 30 June 2021 of $37,920 (2020 ‐ $Nil) and is reflected in the statement of loss and comprehensive loss as Other Income.

Note	30 June 2021 31 December 2020
Director 12 Third parties 12	100,000 $ 100,000 $ 253,000 190,000
	353,000 $ 290,000 $

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

1. 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 six months ended 30 June 2021 and for the year ended 31 December 2020 is summarized as follows:

	30 June 2021 31 December 2020
Share‐based compensation	911 $ 6,598 $
Salaries	57,600 189,698
Contractors Director's fees	55,479 40,167 18,271 41,625
	132,261 $ 278,088 $

Amounts due to and from related parties as at 30 June 2021 included the following:

• Notes payable of $143,000 are due to related parties. Interest payable of $4,556 on these notes is due to related parties (note 11).

• Amounts due to related parties as of 30 June 2021 of $27,809 are due to various members of management and the board of directors. As of 30 June 2021, these amounts were included in trade and other payables and accrued liabilities.

• Included in accounts payable as of 30 June 2021 is $1,984 owing to a company controlled by the CEO (note 10). Also included in accounts payable as of 30 June 2021 is $36,263 owing to a company controlled by a family member of the CEO.

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.

1. Share capital

2. 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 18 for subsequent events for common shares.

(i) Shares issued for debt settlement

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

On April 7, 2021, 406,250 common shares were issued for debt settlement of $24,375 to members of the board of directors.

On April 26, 2021, 2,947,394 common shares were issued for debt settlement of $162,107 to members of management.

(ii) Stock options exercised

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

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

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 for the six months ended 30 June 2021 and for the year ended 31 December 2020:

	Number of Warrants Weighted Average Exercise Price
Outstanding, 31 December 2019 Expired Outstanding, 31 December 2020 Expired	5,946,000 $0.075 (4,646,000) $0.075
	1,300,000 $0.075 (1,300,000) $0.075
Outstanding, 30 June 2021	‐ $0.000

e) Stock options

The Company has an incentive stock option plan (“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 six months ended 30 June 2021 and for the year ended 31 December 2020:

	Number of Stock Options Weighted Average Exercise Price
Outstanding 31 December 2019 Granted Expired Outstanding 31 December 2020 Exercised Granted Outstanding30 June 2021	2,462,560 $0.120 250,000 $0.050 (2,100,060) $0.137
	612,500 $0.057 (500,000) $0.050 62,500 $0.055
	175,000 $0.050

On 30 June 2021, the following stock options were outstanding:

Expiry date	Outstanding	Exercisable	Exercise price	Remaining life (years)
July 16, 2025 November 30, 2025 April 26, 2026	50,000 50,000 $0.050 4.05 62,500 62,500 $0.050 4.42 62,500 62,500 $0.055 4.82
	175,000 175,000 $0.050 4.46

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

f) Share‐based compensation

The Company recognizes compensation expense for all stock options granted using the fair value‐based method of accounting. For the quarter ended 30 June 2021, the Company recorded share‐based compensation expense of $911 (31 December 2020 ‐ $6,598) for options vesting during the year. During the six months ended 30 June 2021, the Company granted 62,500 options with a fair value of $0.055 per common share and during the year ended 31, December 2020, the Company granted 250,000 options with a fair value of $0.05 per option. The options issued on April 26, 2021, were valued using the Black‐Scholes option pricing model with the following weighted average assumptions:

	30 June 2021	31 December 2020
Risk free interest rate	0.93%	1.49%
Expected dividend yield	0%	0%
Volatility	93.12%	150.99%
Expected life	5 years	5 years
Forfeiture rate	0%	0%

14. 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:

	30 June 2021 30 June 2020
Canada United States Other	61,360 $ 120,782 $ 204,000 200,046 23,213 56,617
	288,573 $ 377,445 $

15. 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.

1. Financial risk management and financial instruments

The fair value of the Company’s trade receivables, deposits, trade and other payables, 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.

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

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 88% of trade receivables on 30 June 2021 (31 December 2020 ‐ 65%).

The Company records an allowance for credit losses related to trade receivables that are considered to be non‐collectible. 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 30 June 2021 amounted to $91,972 (31 December 2020 – 110,404), which management believes adequately reflects the Company’s credit risk. Of the reported trade receivables, 92.3% 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 30 June 2021, the Company has cash and cash equivalents, and trade receivables, net of an allowance for expected credit losses, of $136,359 to settle its trade and other payables and accrued liabilities of $269,117. On 31 December 2020, the Company extended the maturity term of its notes payable from 31 December 2020 to 31 December 2022 along with retiring $250,000 worth of notes payable in exchange for common shares of the Company at $0.05 per common 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.

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 30 June 2021, the Company had net financial assets denominated in US dollars of approximately $35,695. A 10% change in the Canadian dollars versus the US dollar would give rise to a net gain of $721. The Company has not entered any foreign exchange contracts to hedge this risk.

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CardioComm Solutions Inc. 2021 Second Quarter

CardioComm Solutions, Inc. Notes to the financial statements (unaudited) As at 30 June 2021

• 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.

1. Non‐cash transactions from investing and financing activities

The Company had the following non‐cash transactions from investing and financing activities:

For the quarter ended 30 June 2021

• 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 April 7, 2021, 406,250 common shares were issued for debt settlement of $24,375 to members of the board of directors.

• On April 26, 2021, 2,947,394 common shares were issued for debt settlement of $162,107 to members of management.

For the year ended 31 December 2020

• 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.

• 226,000 common shares issued for advertising services of $10,000.

	Note	30 June 2021	31 December 2020
Shares issued for debt settlement	13(a)(i)	$436,482	$32,500
Shares to be issued for debt settlement		‐‐	250,000
Shares issued as payment to a vendor for advertising		‐‐	10,000

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CardioComm Solutions Inc. 2021 Second Quarter