EastWest Bioscience Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2020

FORM 51-102F1

The following Management Discussion & Analysis (“MD&A”) is intended to assist in understanding the trends and significant changes in the financial condition and results of operations of Eastwest Bioscience Inc. (“Eastwest”, “EAST” or the “Company”), formerly Harbour Star Capital Ltd., for the three months ended October 31, 2020. The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements for the three months ended October 31, 2020 and the audited consolidated financial statements for the year ended July 31, 2020, and the related notes thereto (“Financial Statements”). The Company’s Financial Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). All amounts are expressed in Canadian dollars, unless otherwise indicated. The MD&A has been prepared effective January 15, 2021.

Eastwest was incorporated pursuant to the provisions of the Business Corporations Act (Alberta) on October 24, 2014. Prior to its Qualifying Transaction, detailed below, the Corporation was a Capital Pool Company (“CPC”) as defined pursuant to Policy 2.4 of The TSX Venture Exchange (“TSXV”). The common shares of the Company commenced trading on March 6, 2017 under the trading symbol HSC.P. The head office and principal office of the Company is located at 260 Okanagan Avenue East, Penticton BC, V2A 3J7.

The recent outbreak of the coronavirus, also known as "COVID-19", continues to impact worldwide economic activity. The extent to which the coronavirus may impact the Company’s business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada and other countries to contain and treat the disease. These events are highly uncertain and as such, the Company cannot determine their financial impact at this time.

FORWARD LOOKING STATEMENTS

Certain statements contained in this document constitute “forward-looking statements”. Such forward-looking information constitutes disclosure regarding possible events, conditions or results of operations that is based on assumptions about future economic conditions and courses of action and includes future oriented financial information with respect to prospective results of operations, financial position or cash flows that is presented either as a forecast or a projection. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “propose”, “anticipate”, “believe”, and similar expressions used by the Company’s management are intended to identify forward-looking statements. Such statements reflect the Company’s forecasts, estimates and expectations as they relate to the Company’s current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

DISCUSSION OF OPERATIONS

Eastwest Business Model

Eastwest is a vertically integrated wellness company that provides value and high-quality products and services to its customers in Canada and beyond.

To support this vision, Eastwest aims to fully control its supply chain, leverage its assets and currently has several wholly owned operating subsidiaries, from health supplement manufacturing operation to retail presence across Canada.

Manufacturing - Orchard Vale Naturals (“OVN”)

OVN is a Health Canada licensed manufacturing facility with capabilities to encapsulate, package and label. OVN manufactures health supplements for its B2B clients. OVN’s unique preposition is that it offers a turnkey solution for small brands and accommodates small quantities.

Retail - Sangsters Group of Companies (“Sangsters”)

Eastwest acquired Sangsters on November 30, 2018. The Company established 3 separate companies to reflect and accommodate the different operational structures and revenue models.

1) Sangster's Health Centres Head Office - 102064495 SK Inc. O/A Sangster’s (“495”)

Head franchisor with 17 franchisees as of October 31, 2020. As the Head Franchisor, Sangster’s owns the brand rights and manages the franchisor-franchisee distribution relationships. Sangster’s sells supplements and wellness products through its franchise locations and its online eCommerce platform.

2) Sangsters Corporate Stores - 102064509 SK Inc. O/A Sangsters Corp Stores (“509”)

Sangsters Corporate Stores own and manage Sangster’s corporate owned stores across Canada. As of October 31, 2020, Sangster’s continued to cease all operations of its corporate stores due to COVID-19.

3) Sangsters Leases - 102064512 SK Inc. O/A Sangster’s Head Office Leasing (“512”)

512 holds the head lease for certain franchise and corporate store locations with landlord and subleases to franchisees and corporate stores. Allows Sangster's to ensure franchise not sold to competition and to take on corporate stores in case of franchisee retirement, exit or bankruptcy.

Intellectual Property: 1123573 BC Ltd ("573")

This subsidiary holds the Health Canada licenses to 187 Natural Product Numbers (NPN) certified by Health Canada. These NPNs are mandatory for supplement products to be marketed in Canada and are valuable assets for any companies that are manufacturing, distributing and marketing supplements in Canada.

Real Estate: 1123568 BC LTD (“568”)

This subsidiary owns and manages the land and building at 260 Okanagan Avenue, Penticton BC. The facility is a 34,000 sq facility located off the main street at Penticton. It is equipped with 2 loading docks, ample parking space and fully secured. Currently it is renting out space to related parties and third-party renters. Current tenants include EWS, OVN and Sangster's.

Consumer Goods: Eastwest Science LTD (“EWS”)

EWS distributes hemp-based consumer goods to B2B clients, wholesalers, distributors and end consumers. During the three months ended October 31, 2020, there has been minimal sales volume as the Company intends to exit this business model in the near future.

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

US Operation: Eastwest Science USA (“EWS USA”)

EWS USA is a Kentucky, US based company that was established to allow the Company to pursue US based opportunities, in particular for CBD infused products.

HIGHLIGHTS FOR THE THREE MONTHS ENDED OCTOBER 31, 2020

Reduction in G&A expenses

The Company's loss for the three months ended October 31, 2020 was $311,395, a 27% improvement from the loss of $424,225 for the three months ended October 31, 2019. The improvement in the Company’s net loss was primarily driven by the Company’s continued focus on cost reduction initiatives. These initiatives focused on general and administrative expenses which dropped by $214,091 from the comparable period, a 32% decrease. Refer to the Overall Performance and Results of Operations section for a detailed breakdown of changes.

Debt settlement

During the three months ended October 31, 2020, the Company issued 1,185,937 common shares to settle debt of $57,296. This represents settlement of a significant portion of amounts owing by the Company in respect of various services rendered, including but not limited to consulting, accounting and legal, and for settlement of loans and/or advances provided to the Company. The shares issued had a fair value of $26,581 and the Company recognized a gain of $32,715 on the settlement of debt related to the issuance of these shares.

New President of Sangsters Health Centre

On October 15, 2020, the Company announced the appointment of Carlo Bevilacqua as President of Sangsters Health Centre’s, its National Chain of 17 Wellness Stores. Mr. Bevilacqua held senior-level management positions and has led national growth & expansion with companies such as Cara Operations (Recipe Ltd), Sodexo, Target, LiveWell Canada, Canopy Growth Retail Brands and Apollogreen. Mr. Bevilacqua’s appointment is part of the ongoing strengthening process of the Company's leadership team focused on supporting the execution of the Company's new strategic direction.

OUTLOOK

Keep the things that are working for us

Maintain Management Discipline to Constrain Costs

Our initial growth phase required us to incur several significant expenditures and investments but along the way, we were also building framework and infrastructure that allowed for automatization and streamlined processes whenever possible.

It is important to emphasize the cost constraint discipline that management has imposed on itself in order to get to where it is today. General and administrative expenses have decreased by $214,091. This is a 32% drop compared to the same period last year.

We negotiated discounts and payment terms with every vendor, reduced redundant overhead, focused on our core competencies and most importantly, we continued to focus on the automation and optimization of all our processes.

The Company strives to limit all costs that do not foster a clear path to revenue growth, in order to have the cash to invest intelligently in the things that do help grow and accelerate sales.

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

Shared Services Model (SSM)

One of the key drivers that enabled the Company to dramatically decrease its overhead is the implementation of Shared Services Model (“SSM”) for several key functions across the organization. Instead of having the same function existing within each of the subsidiaries, SSM offer a centralized approach to manage business resources.

Management realizes that SSM decreases the control each subsidiary has which may impact accountability and ownership. We mitigate this by continuously working and improving reporting and inter-company workflows.

At the current stage of the organization, we found that the Shared Services Model suits the Company’s organizational structure and the varied strengths of the multiple business units. By implementing this model, we were able to decrease headcount by almost 50% while decreasing our overhead.

Changes needed to move forward

Increasing the breadth and skills sets of our management team

Since our inception in late 2015, Eastwest has maintained a lean, profit- and product-focused management team led by our Co-founder and Chief Executive Officer, Rodney Gelineau, and by our Co-founder and Chief Operation Officer, Ciska Asriel.

However, in order to achieve our growth goals, we recognized this past year that we need to add new team members to our senior executive team who can leverage the assets that we have, and more importantly: take the helm on sales and fix the gaps in our sales personnel and sales processes for each subsidiary.

We are systematically making the necessary personnel changes beginning with the hiring of a new President for Sangster’s, Carlo Bevilacqua, whose focus is to revitalize the brand and elevate it to the phase of growth while leveraging the surging demand for health products in the post COVID-19 world.

Mr. Bevilacqua comes from an entrepreneurial family background coupled with an extensive professional career of over 20 years of leading national retail, C.P.G. and franchise brands in Canada. Mr. Bevilacqua has an impressive track record working in senior-level management positions and has led national growth & expansion with companies such as Cara Operations (Recipe Ltd), Sodexo, Target, LiveWell Canada, Canopy Growth Retail Brands and Apollogreen. He has successfully opened over 90+ stores across every province in Canada and has extensive experiences and a passion for natural health, science and wellness.

We are actively making personnel changes and have engaged an external talent recruitment agent to assist in finding the right candidates that will increase the breadth and depth of our management team.

Cut our losses, reallocate resources, and cross-selling synergies

We have not been successful in gaining traction with our hemp-based consumer goods products. Our sales numbers have been unsatisfactory and we lacked the resources and the sales leadership to help navigate the long sales cycles to gain shelf space.

After careful consideration, the Management decides to exit the hemp-based consumer goods sphere and reallocate efforts on high-performing and growth areas of the business and maximize our cross-selling synergies:

Sangster’s Health Centres (“Sangster’s”) which sells supplements and wellness products through its franchise locations and its online ecommerce platform.

Sangster’s short-term and medium-term strategic plan focuses on both customer experience and delivering business values to our franchise partners. Drivers for sales growth, especially in a post COVID-19 world, will change. We need to invest in Sangster’s e-Commerce platform and omnichannel fulfillment capabilities in order to remain competitive in the new environment. Specifically, they will need to drive traffic to their stores through services such as buy online and pickup in store.

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

1123568 BC LTD (“568”) which owns and manages the land and building at 260 Okanagan Avenue, Penticton BC.

Currently, 568 is only utilizing approximately 15% of the 34,000 sq facility. The management of 568 is actively pursuing strategic partnerships that enable the Company to generate additional revenues with minimum to no capital expenditures. The Company is also working on cross selling synergies with other subsidiaries, such as OVN and Sangster’s with the goal of taking existing products and services to new customers and the potential of taking new products and services to existing customers such as offering storage add-on service to OVN customers.

Orchard Vale Naturals (“OVN”) which manufactures supplements for Sangster’s and third-party clients.

In the short term, OVN focuses on expanding its client base and generating recurring revenues from its existing clients. OVN is also leveraging other Eastwest assets and maximizing synergies with other subsidiaries in providing turnkey product & service offerings to its clients. For example, OVN clients would have access to Sangster’s retail shelves and online platform to distribute their products. OVN clients would also have access to 568 warehousing and logistic capabilities. These synergies increase the client’s lifetime value; the measurement of how much revenue a client will bring to your brand throughout their entire time as a paying customer.

OVERALL PERFORMANCE AND RESULTS OF OPERATIONS

Three months ended October 31, 2020 compared to the three months ended October 31, 2019

During the three months ended October 31, 2020, the Company had a net loss of $311,395 from operations compared to a net loss of $424,225 for the three months ended October 31, 2019. Operating expenses for the three months ended October 31, 2020 were $449,611 compared to $663,702 for the three months ended October 31, 2019.

The change in revenues and expenses for the three months ended October 31, 2020 as compared to the three months ended October 31, 2019 is due to the following significant impacts:

Distribution sales decreased by $228,282 to $111,328 for the three months ended October 31, 2020 due to COVID-19 related store closures.
Distribution cost of goods sold decreased by $120,845 to $104,806 for the three months ended October 31, 2020 due to COVID-19 related store closures. This is consistent in the decrease of distribution sales
Advertising and promotion decreased by $23,286 to $2,449 for the three months ended October 31, 2020 related to a reallocation of the advertising and promotional budget from traditional regional print flyers to store specific print and online promotions. Closures of several stores and overall economic downturn due to COVID-19 also affected the Company’s advertising and promotional activities.
Business development and marketing expenses decreased by $41,606 to $190 for the three months ended October 31, 2020 related to cost cutting measures to limit cash outflows and reduce stock promotion activities.
Consulting fees decreased by $67,506 to $98,673 for the three months ended October 31, 2020. The decrease is attributable to a series of cost cutting measures. The Company terminated contracts to coincide with decreasing revenues and operational requirements during COVID-19 pandemic. In the prior year, the Company had engaged more consultants to assist in the development of the business and its operations, improve procedures, and to assist in the Sangster’s acquisition.
Rent and utilities decreased by $49,880 to $9,729 for the three months ended October 31, 2020 due to the move of Eastwest’s head office location from Vancouver, BC, and Sangster’s head office location from Saskatoon, SK to the Company’s facility in Penticton, BC. These changes significantly reduced rent paid to third parties.
Share-based payments increased by $29,097 to $41,890 for the three months ended October 31, 2020 as

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

the Company had an increase in the number of stock options vesting during the period compared to the prior year.

Wages and benefits decreased by $47,379 to $143,531 for the three months ended October 31, 2020. The reduction in wages is primarily due to lower levels of staffing. Furthermore, the reduction of the overall payroll costs is also a result of the Canada Emergency Wage Subsidy and grants received from the BC Provincial Government.
Other expenses increased by $5,761 to $16,398 for the three months ended October 31, 2020 due to the following:
In the current period, the Company recorded an intangible asset impairment of $17,000 due to the decreased expected cash flows from select Natural Product Numbers. There was no comparable impairment in the prior period.
In the prior period, the Company recorded a gain on the disposal of equipment totalling $29,822, with no comparable activity in the current year.
In the current period, the Company recorded a gain on the settlement of debt of $32,834 related to the share issuances. There was no comparable activity in the three months ended October 31, 2019.

Summary of Quarterly Information

The following table summarizes the results of operations for the last eight quarters.

		Three months ended	Three months ended
	October 31,	July 31,	April 30,	January 31,
	2020	2020	2020	2020
	$	$	$	$
Revenue	274,483	198,774	231,248	370,017
General and administrative expenses	(449,611)	(491,503)	(442,283)	(516,013)
Net loss	(311,395)	(291,097)	(374,690)	(42,147)
Net lossper share(basic and diluted)	(0.00)	(0.00)	(0.00)	(0.00)

		Three	months ended
	October 31,	July 31,	April 30,	January 31,
	2019	2019	2019	2019
	$	$	$	$
Revenue	506,211	436,181	699,991	528,199
General and administrative expenses	(663,702)	(893,438)	(1,127,134)	(1,064,694)
Net loss	(424,225)	(1,218,862)	(828,045)	(897,521)
Net lossper share(basic and diluted)	(0.01)	(0.01)	(0.01)	(0.01)

During the quarter ended October 31, 2020, the Company recognized a net loss of $311,395 as compared to the previous quarter’s net loss of $291,097, an increase of approximately $20,298. The increase can be attributed to an increase in revenues.
During the quarter ended July 31, 2020, the Company recognized a net loss of $291,097 as compared to the previous quarter’s net loss of $374,690, a decrease of approximately $83,593. The decrease can be attributed to the reduction in overhead expenses and implementation of the shared-services model. Also, the Company had a gain totaling $90,110 on the settlement of debt for the issuance of shares on June 25, 2020.
During the quarter ended April 30, 2020, the Company recognized a net loss of $374,690 as compared to the previous quarter’s net loss of $42,147, an increase of $332,543. This was driven by a prior quarter reduction in the net loss due to a gain on the settlement of debt. Also, the Company had some costs attributed to the Sangster’s acquisition and integration and increased the net loss.
During the quarter ended January 31, 2020, the Company recognized a net loss of $42,147 as compared to the

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

previous quarter’s net loss of $424,225, a decrease of $382,078. The decrease in net loss is due to a gain on the settlement of debt of $293,219 which significantly reduced the net loss for the three months ended January 31, 2020.

During the quarter ended October 31, 2019, the Company recognized a net loss of $424,225 as compared to the previous quarter’s net loss of $1,218,863, a decrease of $794,638. The decrease in net loss is due primarily to a return to normal expenditure levels as the previous quarter had the year end charge recorded for the impairment of goodwill of $420,153 related to Sangster’s, and the realization of cost savings due to cost cutting measures.
During the quarter ended July 31, 2019, the Company recognized a net loss of $1,218,863 as compared to the previous quarter’s net loss of $828,045, an increase of $390,818. This increase in net loss is primarily due to the charge recorded to profit and loss for the impairment of goodwill of $420,153 related to Sangster’s.
During the quarter ended April 30, 2019, the Company recognized a net loss of $828,045 as compared to the previous quarter’s net loss of $897,521, a decrease of $69,476. The decrease in the net loss was due to an increase of $75,211 in the gross profit and other operating revenue of the Company.
During the quarter ended January 31, 2019, the Company recognized a net loss of $897,521 as compared to the previous quarter’s net loss of $704,637, an increase of $192,884. The increase was mainly due to costs attributed to the Sangster’s acquisition and integration.

Management and Staffing

OVERALL PERFORMANCE AND GOING CONCERN ASSUMPTION

Due to the unprecedented COVID-19 pandemic, the Company undertook a number of measures to mitigate the negative impacts of the changing economy. Overall, lower sales volumes experienced in this period led to decreases in revenue levels, and layoffs and cost cuts during the downtime led to decreases in expenditure levels.

For the three months ending October 31, 2020, the Company reported total revenue of $274,483, as compared to $506,211 in the prior year. Distribution and manufacturing revenues decreased to $172,204 as compared to $387,856 in the prior year. The Company realized lower gross margins of $52,335 or 30% on distribution and manufacturing sales, as compared to $131,759 or 34% in the prior year. Other operating revenues (including franchise sales royalties and advertising royalties, and rental income) decreased to $102,279 for the three months ended October 31, 2020, as compared to $118,355 in the prior year.

The Company has not yet realized profitable operations and has mainly relied on non-operational sources of financing to fund operations. Management has been able to raise sufficient funds to finance its operations in the past through private placements of equity and debt and will need to continue to do so to fund operations in the future. The Company benefited by cost sharing and business-to-business arrangements which allowed the Company to reduce its investment in working capital to generate sales and share sales development and administrative costs. The Company will continue to pursue debt and equity financings, government subsidies, negotiation of reduction of accounts payable obligations, and cost sharing and business-to-business arrangements in order to continue to finance and manage costs related to operations. The condensed consolidated interim financial statements and this MD&A do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

The Company’s condensed consolidated interim financial statements have been prepared on a going concern basis that presumes the realization of assets and discharge of liabilities in the normal course of business, there are material

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

uncertainties related to adverse conditions and events that cast significant doubt on the Company's ability to continue as a going concern.

LIQUIDITY

	October 31,2020	October 31,2019	Change
	$	$	$
Cash used in operating activities	(190,466)	(99,270)	(91,196)
Cash provided by financing activities	112,346	46,369	65,977
Cashprovided by (used in)investingactivities	-	33,767	(33,767)
Net (decrease) increase in cash	(78,120)	(19,134)	(58,986)
Cash,beginningofyear	107,084	54,808	52,276
Cash,end ofyear	28,964	35,674	(6,710)

Cash used in operating activities is comprised of net loss, add-back of amounts not affecting cash, and net change in non-cash working capital items. Cash used in operating activities increased to $190,466 for the three months ended October 31, 2020 (October 31, 2019 - $99,270). This increase of $91,196 is primarily due to the non-cash working capital changes related to accretion expense, gain on settlement of debt, and share based payments. Also, the timing difference related to the non-cash working capital changes in the accounts receivable, accounts payable and accrued liabilities, and inventory between the periods contributed to the increase in the cash used in operating activities.

Cash provided by financing activities increased by $65,977 in the three months ended October 31, 2020 as compared to the amount reported in the comparable period. This increase is primarily due to the proceeds received under the CEBA and CECRA loans, and repayments from third parties.

Cash provided by investing activities decreased by $33,767 in the three months ended October 31, 2020 as compared to the prior period. This decrease is primarily due to proceeds received on the disposition of property, plant and equipment that was received in the three months ended October 31, 2019.

As at October 31, 2020, the Company had working capital deficit of $2,527,931 (July 31, 2020 - $2,319,134), consisting of $28,694 in cash, accounts receivable of $69,622, inventory of $308,752, due from related parties of $224,451 and prepaid expenses of $38,274, offset with current liabilities of $3,197,994, primarily including $813,914 in accounts payable and accrued liabilities and $1,795,200 mortgage payable.

The Company believes that the current capital resources are not sufficient to satisfy its current liabilities and pay overhead expenses for the next twelve months and will need to seek additional funding to fund any future expansion of its operations. The Company will continue to monitor the current economic and financial market conditions, and evaluate their impact on the Company’s liquidity and future prospects.

As currently the Company is not able to generate sufficient cash from its operations to fund its operations, the Company will have to rely on issuing shares for cash or to settle debt, loans and related party loans to fund ongoing operations and investments. The ability of the Company to raise capital will depend on market conditions and it may not be possible for the Company to issue shares on acceptable terms or at all.

CAPITAL RESOURCES

There are no known trends or expected fluctuations in the Company's capital resources, including expected changes in the mix and relative cost of such resources.

OFF-BALANCE SHEET ARANGEMENTS

There are no off-balance sheet arrangements noted by management as at the date of this MD&A.

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

TRANSACTIONS WITH RELATED PARTIES

Included in amounts due from/to related parties are as follows and are non-interest bearing unsecured and are due on demand:

Name	Relationship	October 31, 2020	July 31,	2020
		$	$
Due from related parties
1020650 BC LTD	Controlled by CEO	1,280		-
0999650 BC Ltd.	Controlled by CEO	184		-
Azema Sciences Inc. (“Azema”)	Controlled by Common officers and	132,489	175,088
	directors
Continental Agro Trade Corporation	Controlled by common former director	23,995	23,995
Haltain Developments Inc.	Controlled by former director	23,794	23,839
KYBG Inc.	Controlled by Common officers and directors	38,593		-
Rodney Gelineau	CEO of the Company	4,116		-
		224,451	222,922

Amounts due from related parties are non-interest bearing, unsecured and are due on demand.

Name	Relationship	October 31, 2020	July 31,	2020
		$	$
Due to related parties
Azema	Controlled by Common officers and directors	850		-
Rodney Gelineau	CEO of the Company	870		6,923
0999650 B.C. Ltd.	Controlled by CEO	59,170	28,601
10620771 BC Ltd.	Controlled by CEO	-		6,824
1175218 BC Ltd.	Controlled by COO	33,438	12,875
Marjerrison Financial Management	Controlled by CFO	8,303	19,302
Ira Sudargo	Related to COO	1,201		1,201
Sigma Penta International	Controlled by COO	1,642		52
Due to Joint Venture	Equityaccountedjoint venture	22,328		-
		137,802	75,778

Amounts due to related parties are non-interest bearing, unsecured, and are due on demand, except for the amount due to Ira Sudargo which is subject to the same conditions but bear interest at 15% per annum.

Name	Relationship	October 31,	2020	July 31, 2020
		$		$
Consulting fees (recoveries)
0999650 B.C. Ltd.	Controlled by CEO	26,250		103,500
1175218 BC Ltd.	COO of the Company	26,250		71,552
Azema	Controlled by common officers and		-	43.333
	directors
Marjerrison Financial Management	Controlled by CFO	10,000		(3,333)
Nathan Lidder	Director of the Company		-	9,524
VigroupData Consulting	Controlled byformer IR Manager		-	(1,050)
		62,500		223,526

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

The Company incurred the following expenses and expense recoveries with related parties during the three months ended October 31, 2020 and 2019:

During the three months ended October 31, 2020, the Company charged Azema $2,625 (October 31, 2019 – $nil) for consulting fees and travel expense recoveries. The amounts recoverable from Azema have been recorded as a reduction against the related expenditures.

During the three months ended October 31, 2020, the Company purchased $nil (July 31, 2020 – $27,820) inventory from Azema, of which $nil (July 31, 2020 – $1,070) was used for research and development on a new product line. As at October 31, 2020, the Company has $14,980 (July 31, 2020 – $14,980) on deposit with Azema for inventory purchase which is recorded in prepaid expenses and deposits.

The above transactions are in the normal course of operations and are measured at the amounts of considerations established and agreed to by the related parties.

OUTSTANDING SHARE DATA

Authorized: unlimited common shares without par value

Issued and Outstanding:

Issued and Outstanding:
	Number Outstanding as of	Number Outstanding as of
	the Date of this MD&A	October 31,2020
Common shares issued and outstanding	93,791,712	93,791,712
Options	9,117,696	9,117,696
Share Purchase Warrants	1,141,586	1,141,586
Agent’s Warrants	49,991	49,991

PROPOSED TRANSACTION

The Company has no planned acquisitions or divestitures planned as at the date of this MD&A.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

As of October 31, 2020, the Company’s financial instruments include cash, accounts receivable, accounts payable and accrued liabilities, promissory notes payable, mortgage payables and loan payables. The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, amounts due to or from related parties and mortgage payables, which approximate their carrying values due to their short-term nature. The promissory note payable and loans payable are non‐interest bearing and are accounted for at amortized cost using the effective interest method.

IFRS 13 Fair Value Measurement establishes a fair value hierarchy for financial instruments measured at fair value that reflects the significance of inputs used in making fair value measurements as follows:

Level 1 – quoted prices in active markets for identical assets or liabilities;

Level 2 – inputs other than quoted prices included in Level 1 that observable for the asset or liabilities, either directly (i.e. as prices) or indirectly (i.e. from derived prices); and

Level 3 – inputs for the asset or liability that are not based upon observable market data.

The fair value of cash is based on Level 1 inputs and the fair value of the liabilities of promissory notes payable, mortgage payable and loans payable are based on Level 2 inputs.

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

For a detailed summary of the Company’s significant accounting policies, the reader is directed to the Notes of the audited annual consolidated financial statements for the year ended July 31, 2020 available on SEDAR at www.sedar.com.

Recently Adopted Accounting Standards

Accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s condensed consolidated interim financial statements.

Comparative Information

Certain comparative figures in the condensed consolidated interim statements of loss and comprehensive loss have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Basis of Presentation

The condensed consolidated interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting. They do not include all of the information required for full annual audited financial statements and should be read in conjunction with the Company’s audited annual consolidated financial statements for the fiscal year ended July 31, 2020, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board.

The condensed consolidated interim financial statements have been prepared using the accrual basis of accounting except for cash flow information and are based on historical costs except for certain financial instruments which are measured at fair value. These condensed consolidated interim financial statements are presented in Canadian dollars, which is also the Company’s functional currency.

Risks and Uncertainties

The following information is only a summary of certain risk factors and is qualified in its entirety by reference to, and must be read in conjunction with, the detailed information appearing elsewhere in this MD&A. These risks and uncertainties are not the only ones the Company is facing. Additional risks and uncertainties not presently known to the Company, or that it currently deems immaterial, may also impair its operations. If any such risks actually occur, the business, financial condition, liquidity and results of the Company’s operations could be materially adversely affected.

Government Regulation

The business could be subject to various federal and provincial laws and regulations on standards, claims, safety, efficacy and other matters. Regulatory approvals by government agencies on the Company’s products or services may be withheld or not granted at all and if granted may be subject to limitations which would materially affect the Company.

Although the Company’s activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail development, marketing or commercialization. Amendments to current laws and regulations governing operations and activities of the industry or more stringent implementation thereof could have a substantial adverse impact on the Company.

Uninsured Risks

The Company may carry insurance to protect against certain risks in such amounts as it considers adequate. The Company may become subject to liability for hazards that cannot be insured against or against which it may elect

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

not to be so insured because of high premium costs. Furthermore, the Company may incur liabilities to third parties (in excess of any insurance coverage) arising from any damage or injury caused by the Company’s operations.

The Company is subject to the risk of potential liability claims with respect to its product manufacturing and sales of retail products. Should such claims be successful, plaintiffs could be awarded significant amounts of damages, which could exceed the limits of any liability insurance policies that may be held by the Company. There is no guarantee that the Company will be able to obtain, maintain in effect or increase any such insurance coverage on acceptable terms or at reasonable costs, or that such insurance will provide the Company with adequate protection against potential liability.

Conflicts of Interest

Certain directors and officers of the Company may serve as directors or officers of other companies or have significant shareholdings in other business ventures. Consequently, there exists the possibility for such directors or officers to be in a position of conflict. Any decision made by such directors involving the Company will be made in accordance with their duties and obligations to deal fairly and in good faith with the Company and such for other companies. In addition, such directors will declare, and refrain from voting on, any matter in which such directors may have a conflict of interest.

Negative Operating Cash Flows

As the Company is at the early start-up stage, it may continue to have negative operating cash flows. Without the injection of further capital and the development of revenue streams from its business, the Company may continue to have negative operating cash flows until it can be sufficiently developed to commercialize. There is no assurance that the Company will be successful in raising sufficient funds to meet its obligations or to execute its business strategy.

Risks Related as a Going Concern

The ability of the Company to continue as a going concern is uncertain and dependent upon its ability to achieve profitable operations, obtain additional capital and receive continued support from its shareholders. Management of the Company will have to raise capital through private placements or debt financing and proposes to continue to do so through future private placements and offerings. The outcome of these matters cannot be predicted at this time.

Reliance on Key Personnel and Advisors

The success of the Company will be largely dependent upon the performance of its key officers, consultants and employees. The loss of their services may have a material adverse effect on the business of the Company. There can be no assurance that one or all of the employees of, and contractors engaged by, the Company will continue in the employ of, or in a consulting capacity to, the Company or that they will not set up competing businesses or accept positions with competitors. There is no guarantee that certain employees of, and contractors to, the Company who have access to confidential information will not disclose the confidential information.

Licenses, Patents and Proprietary Rights

The Company’s success could depend on its ability to protect its intellectual property, including trade secrets, and continue its operations without infringing the proprietary rights of third parties and without having its own rights infringed.

Uncertainty Regarding Penetration of the Target Market

The commercial success of the Company’s business as compared with those of its competitors depends on its acceptance by potential customers. Market acceptance will largely depend on the reputation of the Company, its marketing strategy, customer retention and other business partner’s sales and performance. The Company’s success will depend on its ability to commercialize and expand its network users. The Company will need to expand its marketing and sales operations and establish business relations with distributors and customers in a timely manner.

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

In order to meet its business objectives, the Company will have to ensure that its facilities and services are safe, reliable and cost-effective, and bring the expected return. There can be no assurance that the Company’s products will be accepted and recommended.

Operating History and Expected Losses

The Company expects to make significant investments in order to develop its products, increase marketing efforts, improve its operations, conduct research and development and update its equipment. As a result, start-up operating losses are expected and such losses may be greater than anticipated, which could have a significant effect on the long-term viability of the Company.

Reliance on Joint Ventures, License Assignors and Other Parties

The nature of the Company’s operations requires it to enter into various agreements with partners, joint venture partners, existing network of business partners, government agencies, licensors, licensees, and other parties for the successful operation of its businesses and the successful marketing of its products. There is no guarantee that those with whom the Company needs to deal will not develop alternative business strategies, acting either alone or in conjunction with other parties, including the Company’s competitors, in preference to those of the Company.

Growth Management

In executing the Company’s business plan for the future, there will be significant pressure on management, operations and technical resources. The Company anticipates that its operating and personnel costs will increase in the future. In order to manage its growth, the Company will have to increase the number of its technical and operational employees and efficiently manage its employees, while at the same time efficiently maintaining a large number of relationships with third parties.

COVID-19

The current outbreak of COVID-19 and any future emergence and spread of similar pathogens could have an adverse impact on global economic conditions, which may adversely impact the Company’s operations, and the operations of its suppliers, contractors and service providers, the ability to obtain financing and maintain necessary liquidity, and the ability to market the Company’s product menu. The outbreak of COVID-19 and political upheavals in various countries have caused changes to traditional methods of conducting business. While these effects are expected to be temporary, the duration of the business disruptions internationally and related financial impact cannot be reasonably estimated at this time.

Similarly, the Company cannot estimate to what extent this outbreak and the potential financial impact may extend to countries outside of those currently impacted. Travel bans and other government restrictions may also adversely impact the Company’s operations and the ability of the Company to grow its business. In particular, if any employees or consultants of the Company become infected with Coronavirus or similar pathogens and/or the Company is unable to source necessary consumables or supplies, due to government restrictions or otherwise, it could have a material negative impact on the Company’s operations and prospects, including the complete shutdown of its marketing activities. The situation is dynamic and changing day-to-day. The Company is exploring several options to deal with any repercussions that may occur as a result of the COVID-19 outbreak.

FINANCIAL AND DISCLOSURE CONTROLS AND PROCEDURES

During the three months ended October 31, 2020, there has been no significant change in the Company’s internal control over financial reporting since last year.

The management of the Company is responsible for establishing and maintaining appropriate information systems, procedures and controls to ensure that information used internally and disclosed externally is complete, reliable and timely. Management is also responsible for establishing adequate internal controls over financial reporting to provide sufficient knowledge to support the representations made in this MD&A and the Company’s condensed consolidated interim financial statements for the three months ended October 31, 2020 (together the “Filings”).

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

The management of the Company has filed the Venture Issuer Basic Certificate with the respective Filings on SEDAR at www.sedar.com.

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), the venture issuer basic certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as defined in NI 52-109. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost-effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency, and timeliness of interim and annual filings and other reports provided under securities legislation.

Officers and Directors:

Rodney Gelineau, Director, CEO Ciska Asriel, COO, Interim CFO Paul Mandl, Director Nathan Lidder, Director Jeff Bierman, Director

Contact Address:

Eastwest Bioscience Inc. 260 Okanagan Ave. East Penticton, British Columbia V2A 3J7

Eastwest Bioscience Inc. MD&A for the three months ended October 31, 2020

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EastWest Bioscience Inc. — Management Reports 2021

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