CardioComm Solutions, Inc. — Management Reports 2021

May 1, 2021

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CardioComm Solutions, Inc.

Management’s Discussion and Analysis

For the year ended 31 December 2020

Management’s Discussion and Analysis Financial Condition and Results of Operations

Background

This discussion and analysis of financial position and results of operations is prepared as of 30 April 2021 and should be read in conjunction with the audited financial statements of CardioComm Solutions, Inc. (“CardioComm” or the “Company”) for the year‐ended 31 December 2020. The audited financial statements have been prepared in accordance with international Financial Reporting Standards (IFRS). Except as otherwise disclosed, all dollar figures included herein, and the following Management Discussion and Analysis (MD&A) are quoted in Canadian dollars. Additional information relevant to the Company’s activities can be found on SEDAR at www.sedar.com.

The Company is a reporting issuer in British Columbia, Alberta, and Ontario, and trades on the TSX Venture Exchange under the symbol “EKG”. The content of this MD&A has been approved by the board of directors of the Company (the “Board”), on the recommendation of its Audit Committee.

CAUTIONARY STATEMENT ON FORWARD LOOKING INFORMATION

This Management Discussion and Analysis may include forward‐looking statements with respect to business plans, activities, prospects, opportunities, and events anticipated or being pursued by the Company and the Company’s future results. Although the Company believes the assumptions underlying such statements to be reasonable, any of the assumptions may prove to be incorrect. The anticipated results or events upon which current expectations are based may differ materially from actual results or events. Therefore, undue reliance should not be placed on such forward‐looking information. A number of risks and uncertainties could cause actual results to differ materially from those expressed or implied by the forward‐looking statements, including: (1) a downturn in general economic conditions in North America and internationally; (2) the uncertainty as to product development and commercialization milestones; (3) the uncertainty as to the regulatory approval of the Company’s technology or intellectual property; (4) the risk that the Company does not execute its business plan; (5) inability to retain key employees, (6) inability to finance operations and growth; and, (7) other factors beyond the Company's control.

Forward‐looking statements speak only as of the date of this MD&A and actual results could differ materially from those anticipated in the forward‐looking statements because of several factors. Investors should not place undue reliance on forward‐ looking statements as the plans, intentions, or expectations upon which they are based may not occur. The Company does not assume responsibility for the accuracy and completeness of the forward‐looking statements set out in this MD&A and, subject to applicable securities laws, does not undertake any obligation to publicly revise these forward‐looking statements to reflect subsequent events or circumstances. The forward‐looking statements contained herein are expressly qualified by this cautionary statement.

Overall Performance

Financial Condition:

• Q4 2020 revenue was $271,696, an increase of 31.1% as compared to $207,208 in Q4 2019.

• Q4 2020 Net profit and comprehensive profit was $66,594, compared to a net loss and comprehensive loss of $696,535 in Q4 2019, an improvement of $763,129 or 119.6%.

• Revenue for the year‐ended 31 December 2020 was $834,785, compared to revenue for the year‐ended 2019 of $874,888, representing a decrease of $40,103 or 4.6%.

• Net loss and comprehensive loss for the year‐ended 31 December 2020 was $63,606, compared to net loss and comprehensive loss for the year‐ended 31 December 2019 of $1,062,108, representing an improvement of $998,502 or 94%.

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Company Overview

The Company was incorporated under the laws of British Columbia on 26 October 1989 and operated as a computer related consulting firm until 1991. In 1992, the Company commenced activities in research and development of advanced software and hardware related to a personal heart arrhythmia monitoring system.

Effective 7 December 1998, the Company's name was changed to CardioComm Solutions Inc. and to CardioComm Solutions, Inc. effective 26 November 2007.

The Company’s proprietary device connectivity and ECG management technologies are used in medical, consumer, clinical research and telemedicine solutions for the recording, transmission, viewing, analyzing, reporting and storage of electrocardiograms (ECGs), for arrhythmia screening, diagnosis and management of cardiac patients. The Global ECG Management Solutions (“GEMS™”) and GlobalCardio (Cloud based GEMS™) products are licensed worldwide to hospitals, ECG commercial reading services and physician. The Company has earned the ISO 13485:2016 under MDSAP certification, is HPB approved, HIPAA compliant, and has received FDA, Health Canada, European Union CE Mark, and Chinese SFDA market clearances for software and HeartCheck™ ECG devices. CardioComm Solutions, Inc. is headquartered in Toronto, Canada.

The Company also holds e‐Class II medical device clearances for sales of a personal ECG monitor direct to consumers. The product is marketed under the HeartCheck™ brand. The Company developed compatibility of the HeartCheck™ device to its GEMS™ and GlobalCardio™ based software to enable use of the device for remote ECG/arrhythmia monitoring services. The Company also operates a fee‐for‐service ECG reading service named the SMART Monitoring ECG reading service through which ECGs recorded by a HeartCheck™ device may be reviewed by an ECG reading service. The Company plans to introduce new HeartCheck™ branded ECG monitoring devices and service options on an ongoing basis.

SUMMARY OF ANNUAL INFORMATION

The following financial data has been prepared in accordance with IFRS and presents selected financial information of the Company for the last three fiscal years. This financial information is derived from the audited financial statements of the Company:

	2020 2019 2018
Total revenue Net (loss) income Not loss on a per share basis Total assets Total long-term financial liabilities	834,785 874,888 1,075,564 (63,606) (1,062,108) (577,063) ($0.00) ($0.01) $0.00 360,617 323,384 1,089,796 290,000 16,271 NIL

The Company’s net loss and comprehensive loss for the year‐ended 31 December 2020 was $63,606, compared to the net loss and comprehensive loss for the year‐ended 31 December 2019 of $1,062,108, representing an improvement of $998,502 or 94%.

The losses in 2020 are primarily attributed to a decrease in revenue and customized ECG software engineering contracts. Lower than anticipated revenue were related to the discontinuation of production of the HeartCheck ECG PEN in favour of a new Bluetooth connected device for which sales were delayed due to clearance delays until the launch in 2020 and then marketing efforts delays were the result of COVID closures of medical device and cardiology conferences. The HeartCheck ECG PEN had been produced primarily for one large pharmacy chain client. In 2019 the Company took a provision for estimated credit losses for long overdue trade receivables from that large client in compliance with IFRS. In 2020, the Company was able to recover $129,014; captured as software licensing revenue in the statement of loss and comprehensive loss.

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SUMMARY OF QUARTERLY RESULTS

The following is a summary of the Company’s most recent 8 quarters. This information has been prepared in accordance with IFRS and presents selected financial information for the Company.

Quarterly results	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020
Total revenue	216,148	202,353	249,180	207,207	198,024	179,421	185,645	271,696
Net loss and comprehensive loss	(140,747)	(134,391)	(105,436)	(696,535)	(68,176)	(44,686)	(17,338)	66,594
Basic and diluted loss per share	($0.00)	($0.00)	($0.00)	($0.00)	($0.00)	$0.00	($0.00)	($0.00)
Total assets	1,099,856	1,034,859	1,001,369	323,384	437,764	416,625	386,241	360,617
Total liabilities	1,181,518	1,202,209	1,226,244	1,219,196	1,367,037	1,388,424	1,373,695	1,040,408

The following table shows operating results expressed as a percentage of revenue for the fourth quarter comparative over three years:

Fourth quarter	2020 2019 2018
Revenue Cost of sales Operations Sales service & support Marketing Research & development Total expenses Operating loss Other income (loss) Net income (loss) and comprehensive income (loss)	100% 100% 100%
	10% 14% 36% 89% 351% 122% 7% 12% 8% 0% 5% 4% 0% (3%) 7%
	96% 556% 141% (6%) (279%) (77%) 30% (57%) (6%)
	25% (336%) (82%)

*Certain data has been reclassed to conform to this year’s presentation.

The following table shows revenue by product line expressed as a percentage of revenue for the fourth quarter comparative over three years:

Revenue fourth quarter	2020 2019 2018
Software Hardware Support Services	47% 51% 48% 52% 17% 34% 4% 17% 11% (3%) 11% 7%
	100% 95% 100%

The following table shows revenue by geographic region expressed as a percentage of revenue for the fourth quarter comparative over three years:

Revenue fourth quarter by geographic region	2020 2019 2018
Canada United States Other	68% 26% 42% 31% 45% 41% 1% 29% 17%
	100% 100% 100%

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Revenue

Revenue for the quarter ended 31 December 2020 was $271,696 compared to $207,207 for the quarter ended 31 December 2019, an increase of 31.1%. This was largely due to the partial recovery of a prior year account receivable which was written off in 2019.

Cost of sales

The Q4 2020 cost of sales was $26,611 which represents a 10.1% decrease from $29,594 in Q4 2019.

Operations

Operations expenses in the fourth quarter were $241,885 for Q4 2020, a decrease of 66.7% compared to the $726,492 in Q4 2019. This difference is due, in part, by a write‐down in 2019 of $411,457 for a deposit and a material allowance for estimated credit losses related to trade receivables for a client, Shoppers Drug Mart, a division of Loblaw Companies Limited.

Sales, service and support

Sales, service, and support expenses, excluding cost of sales, were $17,936 for the quarter ended 31 December 2020, compared to $25,569 for the quarter ended 31 December 2019, a decrease of $7,633.

Marketing

Marketing expenses were $661 for the quarter ended 31 December 2020 compared to $10,000 for the quarter ended 31 December 2019.

Research and development

Research and development expenses were Nil for the quarter ended 31 December 2020, compared to ($5,813) for the quarter ended 31 December 2019. In 2019 during the quarter, certain transactions were reclassified from research and development to operations. The reduction in research and development is due to a move from an emphasis of technological innovation to the sales of developed technologies.

Net loss/profit and comprehensive loss/profit

CardioComm recorded a net profit and comprehensive profit of $66,594 or $0.00 net profit per share for the quarter ended 31 December 2020, compared to a net loss and comprehensive loss of $696,535 or $0.00 net loss per share for the quarter ended 31 December 2019. The weighted average number of shares outstanding was 141,437,098 in Q4 2020 compared to 139,521,505 in Q4 2019 due to the issuance of shares for services.

SUMMARY OF ANNUAL RESULTS

Operating results	2020 2019 2018
Revenue Cost of sales Operations Sales service & support Marketing Research & development Total expenses Operating loss Other loss (income) Net loss and comprehensive loss	100% 100% 100%
	12% 21% 28% 97% 169% 35% 7% 10% 8% 2% 6% 2% 0% 3% 9%
	105% 187% 54%
	(17%) (108%) (54%) 10% (13%) 0%
	(8%) (121%) (54%)

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The following table shows revenue by product line expressed as a percentage of revenue for the fiscal year comparative over three years:

Revenue by product line	2020 2019 2018
Software Hardware Support Services	55% 57% 164% 29% 24% 137% 12% 15% 45% 4% 1% 33%
	100% 96% 378%

The following table shows revenue by geographic region expressed as a percentage of revenue for the fiscal year comparative over three years:

Revenue by geographic region	2020 2019 2018
Canada United States Other	61% 50% 41% 34% 37% 42% 5% 13% 17%
	100% 26% 100%

Revenue

Revenue for the year‐ended 31 December 2020 was $834,785 compared to $874,888 for the year‐ended 31 December 2019, a decrease of 4.6%. The net decrease in revenue is due to a decline in Heart Check ECG PEN hardware sales, support and services offset by the recovery of $129,024 of a prior year account receivable which was written off in 2019.

Cost of sales

Cost of sales for the year was $100,189 which represents a 44.8% decrease from $181,655 in 2019.

Operations

Operating expenses were $812,060 for the year‐ended 31 December 2020; a decrease of $666,264 or 45.6%, compared to $1,478,324 for the year‐ended 31 December 2019. This difference is due mainly to the Company’s effort at reducing costs because of lower‐than‐expected sales along with a write‐down of $117,899 in 2019 for a deposit with the OEM manufacturer of the HeartCheck ECG PEN and an IFRS mandated material allowance for estimated credit losses related to aged trade receivables for a client, Shoppers Drug Mart, a division of Loblaw Companies related to HeartCheck ECG PEN inventory currently being sold by the client.

Sales, service, and support

Sales, service, and support expenses were $55,559 for the year‐ended 31 December 2020, compared to $85,237 for the year‐ ended 31 December 2019.

Marketing

Marketing expenses were $12,575 for the year‐ended 31 December 2020, (2019 ‐ $49,320).

Research and development

Research and development expenses were $Nil for the year‐ended 31 December 2020, (2019 ‐ $24,563). Research and development costs remain low as the company is now in a sales and marketing phase for technologies that are already developed. Ongoing development and the release of new iterations of core technologies can be generated with minimal research and development expenses.

Net loss and comprehensive loss

CardioComm recorded a net loss and comprehensive loss of $63,606 or $0.00 net loss per share for the year‐ended 31 December 2020, compared to a net loss and comprehensive loss of $1,062,108 or $0.00 loss per share for the year‐ended 31 December 2019. The basic and diluted weighted average number of shares outstanding was greater with 141,437,098 at year‐end 31 December 2020 (2019 ‐ 139,521,505) due to issuance of shares for services to a third‐party vendor, an employee, and to the board of directors in lieu of payment.

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Liquidity

Operating Activities

Net cash generated from operating activities was $39,401 in the year‐ended 31 December 2020 versus cash used in operations for 2019 of $61,886. The year‐ended 31 December 2020 had a net loss of $63,606 compared to a net loss and comprehensive loss of $1,062,108 in the year‐ended 31 December 2019.

Investing Activities

Cash used for investing activities was $15,998 in the year‐ended 31 December 2020 (2019 ‐ $8,496). The investing activities were due primarily to purchases of computer hardware.

Financing Activities

Net cash generated in financing activities was $17,392 in the year‐ended 31 December 2020 versus cash generated of $11,767 in 2019. In 2020, the Company re‐negotiated a reduction in the annual interest rate on its notes payable from 10% to 8% along with extending the maturity date from 31 December 2020 to 31 December 2022. During the year‐ended 31 December 2020, the Company received $40,000 from the Government of Canada pursuant to the Canada Emergency Business Account (CEBA) program, created to support small businesses to bridge the financial gap experienced because of COVID‐19 pandemic. In 2019, sources of financing were from shares issued on the exercise of options at $21,875 and $112,500 proceeds from the exercise of warrants.

Cash Requirements

Short‐term cash requirements are primarily related to funding of operations. Management continued to take steps to position the Company’s operations to be cash flow positive. Management believes that its existing working capital as well as cash provided from GEMS™ software licensing, SMART Monitoring ECG readings service revenues, and HeartCheck™ CardiBeat and GEMS Sirona device sales will provide sufficient funds to maintain operations through the end of 2021. Management expects to continue to maintain its cost containment efforts and to see increases in revenue generation from HeartCheck™ branded device sales, SMART Monitoring services, GEMS™ WIN software licensing and custom non‐recurrent‐engineering (NRE) software development agreements. The Company also has traditionally realized revenue from equipment / device sales under preferred distribution, original equipment manufacturer (OEM) agreements with a variety of ECG monitoring manufacturers and source code licensing agreements.

The Company has been working to develop larger, stable, and predictable, fee‐for service, recurrent revenue streams through the planned introduction of new and wireless HeartCheck™ branded devices, that were not available to its previously USB connected devices. Partnerships with telemedicine platforms are expected to yield revenue from the sale of wireless HeartCheck™ Branded ECG devices such as the HeartCheck CardiBeat, GEMS™ software licensing, GEMS™ Mobile Smartphone app downloads and from ECG paid for reading services. The Company secured key FDA and Health Canada clearances in early 2019 with additional clearances for 2020 which will form the basis of many of the new revenue opportunities.

Transactions with Related Parties

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:

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	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

• 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 of the Audited Financial Statements).

• 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 is to be used for legal expenses and certain working capital needs bearing 8% interest per annum accrued on outstanding balances. As of 31 December 2020, $Nil was drawn on this loan.

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.

Capital Resources and Forward Strategies

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.

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

Financing arrangement

• In January 2021, management entered a short‐term financing arrangement for one of its insurance contracts in the amount of $21,146. The Company generally finances its insurance contracts.

Equity transactions

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

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

• On 6 April 2021, the Board of Directors authorized the issuance of 406,250 shares at $0.06 per 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.

Government assistance related to COVID‐19

• In March 2021, the Company opted to receive 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 COVID‐19 pandemic.

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Debt financing

During the year‐ended 2020, $250,000 of short‐term loans were retired in exchange of 5,000,000 shares which are to be issued in 2021. The debtholders of the remaining $250,000 in long‐term loans extended the date of maturity of the loans from 31 December 2020 to 31 December 2022 along with a reduction in the annual interest rate from 10% to 8%.

Business and sales strategies

With a continued emphasis on cost containment and through the entering of new joint venture, development, and co‐marketing agreements the Company will continue to apply strategic operational cost reductions balanced to ongoing and growing revenues from software license and hardware sales, provision of fee‐for‐services, consultation, and software customization to new customers. The Company continues to believe NRE custom software development opportunities, although unpredictable, represent an important revenue stream. To reduce dependency on NRE revenue for reaching profitability, the Company has executed on several co‐marketing, sales and partnership agreements with telemedicine platforms and hardware manufacturers to yield new revenue from the sale of wireless HeartCheck™ Branded ECG devices, GEMS™ software licensing, GEMS™ Mobile Smartphone app downloads and from ECG paid for reading services. The Company secured key FDA clearance in early 2019 which will form the basis of many of the new revenue opportunities.

The Company plans to launch a sales and marketing effort funded either through telemedicine platform sales by telemedicine platform business partnerships or from financing efforts to generate funds required to accommodate the Company’s ongoing efforts for releasing next generation products such as its GEMS™ FLEX, the Android and iOS compatible Smartphone GEMS™ app for use with HeartCheck™ branded ECG devices, the GEMS™ Universal Smartphone app that will work with many non‐ HeartCheck™ branded ECG monitoring devices sold globally as well as the Company’s branded handheld ECG devices marketed as the HeartCheck™ ECG Bluetooth PEN, the HeartCheck™ ECG Palm and the HeartCheck™ CardiBeat.

The Company will continue to look to the addition of new consumer and prescription medical devices from third party brand manufacturers that will be compatible to the Company’s prescription and consumer use software platforms. Under these relationships device development fees will be borne by the OEM device companies. Where appropriate for the Company, CardioComm Solutions will work to secure medical device clearances (FDA and/or CE and/or Health Canada) approvals for the sale of these new devices under distributor/representation/OEM agreements which will add to GEMS™, HeartCheck™ and SMART Monitoring revenue streams with a lower associated cost of good. The Company’s goal is to earn less expensive revenue where gross sales and associated costs of goods may be lower, but earnings are maximized. While product and software enhancements are planned, these will continue to occur in step with associated new revenue or contracted services.

The Company continues to issue GEM™ WIN and GEMS™ FLEX licensing agreements to new hospital and ECG service providers. GEMS™ WIN referral sales also occur as follow‐through sales from medical device manufacturer’s efforts to sell their ECG devices with a compatible ECG management solution GEMS™ software license are sold under an annual licensing or pre‐paid multi‐year agreements which enhances uninterrupted yearly renewals for continued use of the Company’s software.

Off Balance Sheet Arrangements

The company does not have any off‐balance sheet arrangements as of 31 December 2020 and 31 December 2019.

Non‐cash Transactions

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

• 650,000 shares were issued for settlement of debt of $32,500 to short‐term debtholders and board members. In addition, 5,000,000 shares are 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.

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

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

Critical Accounting Estimates

The financial statements of the Company for the year‐ended 31 December 2019, were prepared in accordance with IFRS applicable to a going concern which assumes that the Company will realize its assets and discharge its liabilities and meet its future obligations in the normal course of business. Accordingly, the financial statements do not include any adjustments for the recoverability and reclassification of recorded assets, or the amounts or classification of liabilities, that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material. However, there is significant doubt as to the appropriateness of the going concern presumption. There is no assurance that the Company's funding initiatives will continue to be successful.

Significant estimates made by management are, but are not limited to, revenue recognition, including the identification of separate units of accounting under multiple deliverable arrangements, the measurement of deferred revenue related to future services, valuation of stock‐based compensation, useful lives of equipment, the allowance for doubtful accounts, inventory valuation and the estimation of deferred income tax asset valuation allowances. Actual results could differ from those estimates.

Inventories

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 costs of completion and the estimated 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.

Revenue recognition

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, the product has been delivered and is installed and operational at a customer's place of business or the services have been provided to the customer, the fee is fixed and determinable, and collectability is reasonably assured.

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

Software

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

Service

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

Multiple‐element arrangements

The Company also has multiple‐element sales arrangements where software licenses, the associated post‐contract services (PCS) and ongoing 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 delivered hardware, services, and software license 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

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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.

Income taxes

Income tax expense comprises current and deferred taxes. Current tax and deferred tax are recognized in earning or loss except to the extent that it relates to items recognized directly in equity or other comprehensive income.

Current tax

Current taxes are the expected tax payable or recoverable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to taxes payable in respect of previous years.

Deferred Tax

The Company uses the asset and liability method of accounting for income taxes, under which deferred income tax assets and liabilities are recognized for the estimated future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred income tax assets and liabilities are measured using income tax rates in effect for the period in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in income tax rates or laws is recognized as part of the provision for income taxes in the period the changes are considered substantively enacted.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset deferred tax liabilities and assets, and they relate to income taxes levied by the same authority on the same taxable entity, or on different tax entities, but they intend to settle liabilities and assets on a net basis, or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable earnings will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Stock compensation

The Company has a share‐based payments awards plan, which is described in note 12(e) to the financial statements, available to officers, directors, employees, and consultants. All share‐based payments have been accounted for using a fair‐value‐based method of accounting. The fair value of each stock option granted is accounted for in the statements of loss and comprehensive loss, over the vesting period thereof, and the related credit is included in contributed surplus.

Equity‐settled share‐based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date using the Black‐Scholes option pricing model on the date of grant with management’s assumptions of risk‐free interest rate, dividend yield, volatility factor of expected market price of the Company’s common share, expected forfeiture and life of the options. For details regarding the determination of the fair value of equity‐settled share‐ based transaction see note 13(f) to the financial statements.

Financial instruments

The fair value determined at the grant date of the equity‐settled share‐based payments is expensed over the vesting period, based on the Company’s estimate of equity instruments that will eventually vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in the statements of loss and comprehensive loss such that the expense reflects the revised estimate, with a corresponding adjustment to contributed surplus.

Equity‐settled share‐based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the Company grants the shares.

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.

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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 is subject to the concentration of its key customers. Before allowances, 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 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 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, accrued liabilities short‐term lease liabilities and short‐term notes payable 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 shares of the Company to be issued in 2021 at $0.05 per share (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 respects 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%

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change in Canadian dollars versus US dollars would give rise to a gain of $6,796 or a loss of approximately $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.

Accounting Standards and Interpretations Issued and Adopted

The following IFRS, none of which had a material effect on the financial statements, were adopted during 2019:

IFRS 16 Leases

IFRS 16 specifies how to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, unless the lease term is 12 months or less or the underlying asset has a low value. This standard has been adopted by the Company effective 1 January 2019.

Outstanding Share Data

The total issued and outstanding shares of the Company on 31 December 2020, is 141,489,754 and, at 31 December 20, CardioComm issued 876,000 shares. As of 30 April 2021, there are 146,989,754 shares outstanding.

Disclosure Controls and Procedures

The Company’s audit committee has reviewed and approved this MD&A prior to its release. CardioComm Solutions is committed to providing timely, accurate and balanced disclosure of all material information about the Company and to providing fair and equal access to such information. As of 30 April 2021, the Company’s management evaluated the effectiveness of the design and operation of its disclosure controls and procedures, as defined under the rules adopted by the Canadian securities regulatory authorities. In addition, the Company’s management has assessed whether there have been many significant changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed with securities regulatory authorities is recorded, processed, summarized, and reported on a timely basis, and is accumulated and communicated to the Company’s management, including the CEO and CFO as appropriate, to allow timely decisions regarding required disclosure. Internal control over financial reporting is a process designed by, or under the supervision of, senior management to provide reasonable assurance regarding the reliability of financial reporting and preparation of the Company’s financial statements in accordance with IFRS.

The Company’s management, including the CEO and CFO, does not expect that the Company’s disclosure controls or internal control over financial reporting will prevent or detect all material misstatements due to error or fraud. Because of the inherent limitations of all control systems, an evaluation of controls can only provide reasonable, not absolute assurance, that all control issues and instances of fraud or error, if any, within the Company have been detected. The Company is continually evolving and enhancing its systems of controls and procedures. Based on the evaluation of disclosure controls, and assessment of changes in internal control over financial reporting, the CEO and CFO have concluded that, subject to the inherent limitations noted above, the Company’s disclosure controls are effective in ensuring that material information relating to the Company is made known to management on a timely basis, and is fairly presented in all material respects in this MD&A.

Internal Controls over Financial Reporting

Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, and effected by the Company’s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external

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purposes in accordance with the IFRS. Based on their evaluation, the CEO and CFO have concluded that the design of these internal controls over financial reporting and the preparation of financial statements for external reporting on 30 April 2021 are effective, except as noted below:

The Company relies on compensating controls, including substantive periodic review of the financial statements, to ensure that disclosure controls and procedures are effective. The Company continues to address requirements to strengthen audit and financial controls.

ADDITIONAL INFORMATION

Additional information relating to CardioComm Solutions, Inc. is located at www.sedar.com .

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