Haivision Systems Inc.

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Management’s Discussion and Analysis

For the Three Months and Six Months Ended April 30, 2021

Dated June 9, 2021

Management’s Discussion and Analysis ......................................................................... 1 Basis of Presentation .................................................................................................. 1 Caution Regarding Forward-Looking Statements ............................................................ 1 Non-IFRS Measures .................................................................................................... 3 Business Overview ..................................................................................................... 3 Impact of Covid-19 on Our Operations .......................................................................... 4 Financial and Operational Highlights ............................................................................. 5 Factors Affecting the Company’s Performance ................................................................ 5 Key Components of Results of Operations ..................................................................... 7 Selected Information and Reconciliation of Non-IFRS Measures ........................................ 9 Discussion of Operations ........................................................................................... 10 Summary of Quarterly Results ................................................................................... 15 Financial Condition, Liquidity and Capital Resources ..................................................... 16 Financial Instruments and Other Instruments .............................................................. 19 Off-Balance Sheet Arrangements................................................................................ 21 Related Party Transaction .......................................................................................... 21 Risk Factors ............................................................................................................. 21 Critical Accounting Policies and Estimates .................................................................... 22 Outstanding Share Data ............................................................................................ 23 Disclosure Controls and Procedures and Internal Controls over Financial Reporting ........... 23 Legal Proceedings and Regulatory Actions ................................................................... 24 Further Information .................................................................................................. 24

MANAGEMENT’S DISCUSSION AND ANALYSIS

This management’s discussion and analysis (this “ MD&A ”) provides a review of the financial condition and results of operations of Haivision Systems Inc. on a consolidated basis for the three months and six months ended April 30, 2021. In this MD&A, where the context so requires, references to the “Company”, “Haivision”, “we”, “us”, “our” or similar expressions refer to Haivision Systems Inc. together with our subsidiaries, on a consolidated basis, and references to “Fiscal 2020”, “Fiscal 2019” and “Fiscal 2018” are respectively to the fiscal years ended October 31, 2020, October 31, 2019 and October 31, 2018.

This MD&A should be read in conjunction with the information contained in the Company’s consolidated interim financial statements and related notes for the three months and six months ended April 30, 2021 (the “ Q2 Financial Statements ”), the Company’s annual financial statements for Fiscal 2020 (the “ 2020 Annual Financial Statements ”), the management’s discussion and analysis thereon, (the “ 2020 Annual MD&A ”), and the Company’s annual information form for Fiscal 2020 (the “ 2020 Annual Information Form ” and together with the 2020 Annual Financial Statements and the 2020 Annual MD&A, (the “ 2020 Annual Reports ”). These documents and additional information regarding the business of the Company are available under our profile on the System for Electronic Document Analysis and Retrieval (“ SEDAR ”) at www.sedar.com. This MD&A reflects information available to the Company as at June 9, 2021.

BASIS OF PRESENTATION

For reporting purposes, we prepared our Q2 Financial Statements in accordance with International Financial Reporting Standards (“ IFRS ”) as issued by the International Accounting Standards Board. The financial information contained in the MD&A was derived from the Q2 Financial Statements. Unless otherwise indicated, all references to “$” are to Canadian dollars and all references to “US$” are to U.S. dollars. Figures in tables are presented in thousands of Canadian dollars, except per share amounts or as otherwise indicated. Unless otherwise indicated, all references to a specific “note” refer to the notes to the Q2 Financial Statements. Certain totals, subtotals and percentages throughout this MD&A may not reconcile due to rounding.

Given that our headquarters are in Canada, we have a large Canadian workforce. We have a long operating history in Canada. We have decided to report our consolidated financial results in Canadian dollars notwithstanding that our functional currency is the U.S. dollar. We do not currently hedge our exposure to fluctuations in U.S. dollar or other European currency denominated revenue and expenses.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This MD&A contains “forward-looking statements” and “forward-looking information” (collectively, “forward-looking statements”) within the meaning of applicable securities legislation. In some cases, these forward-looking statements can be identified by words or phrases such as “forecast”, “target”, “goal”, “may”, “might”, “will”, “expect”, “anticipate”, “estimate”, “intend”, “plan”, “indicate”, “seek”, “believe”, “predict”, or “likely”, or the negative of these terms, or other similar expressions intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and assumptions about future events and financial trends that we believe might affect our financial condition, results of operations, business strategy and financial needs, including expectations and assumptions concerning: our ability to capitalize on growth opportunities and implement

our growth strategy; our ability to retain key personnel; our ability to maintain existing customer relationships and to continue to expand our customers’ use of our products solutions; our ability to acquire new customers; our ability to enhance our offerings to remain at the forefront of our industry; the impact of competition; the successful integration of our recent and future acquisitions; the absence of material adverse changes in our business, our industry or the global economy; and that the risks and uncertainties described under “Risk Factors” will not materialize.

Forward-looking statements in this MD&A include, among other things, statements relating to our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, plans and objectives. Particularly, statements regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate are forward-looking statements.

Forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments and other factors we believe are appropriate, and are subject to risks and uncertainties. Although we believe that the assumptions underlying these statements are reasonable, they may prove to be incorrect and there can be no assurance that actual results will be consistent with these forward-looking statements. Given these risks, uncertainties and assumptions, readers should not place undue reliance on these forward-looking statements. Whether actual results, performance or achievements will conform to our expectations and predictions is subject to a number of known and unknown risks, uncertainties, assumptions and other factors, including those listed under “Risks Factors” in this MD&A and in the 2020 Annual Information Form, as well as those risk factors presented elsewhere in the 2020 Annual Reports and in other filings that we have made and may make in the future with applicable securities authorities, which factors should not be considered exhaustive and should be read together with the other cautionary statements in this MD&A. If any of these risks or uncertainties materialize, or if assumptions underlying the forward-looking statements prove incorrect, actual results might vary materially from those anticipated in those forward-looking statements.

Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution readers that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this MD&A. In addition, even if our results of operations, financial condition and liquidity and the development of the industry in which we operate are consistent with the forward-looking statements contained in this MD&A, those results or developments may not be indicative of results or developments in subsequent periods.

Any forward-looking statement that is made in this MD&A speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments, except as required by applicable securities laws. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.

NON-IFRS MEASURES

This MD&A makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.

We use non-IFRS measures, including EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin. These non-IFRS measures are used to provide investors with supplemental measures of operating performance and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.

Adjusted EBITDA

We define Adjusted EBITDA as EBITDA adjusted for share-based payment and nonrecurring expense items as set out in the table under “Selected Information and Reconciliation of Non-IFRS Measures”. Non-recurring expense items are transactions or events which management believes will not re-occur within the foreseeable future.

Adjusted EBITDA Margin

We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.

EBITDA

We define EBITDA as earnings (loss) before income taxes, depreciation, amortization and financial expenses. See the table under “Selected Information and Reconciliation of NonIFRS Measures” for a reconciliation of EBITDA to net income (loss).

BUSINESS OVERVIEW

We are a leading provider of infrastructure solutions for the video streaming market, servicing enterprises and governments globally. The world’s top organizations use our solutions to communicate, collaborate and educate their customers and stakeholders. We deliver high quality, low latency, secure and reliable video through the entire IP video lifecycle (contribution, distribution, and delivery), using a broad range of hardware, software and cloud services in order to deliver a full end-to-end premium level experience. Our solutions give organizations control over mission-critical remote video production capabilities amid the growing needs of decentralized, remote workforces while engaging audiences worldwide with real-time video.

We generate revenue primarily from the sale of our solutions, which are sold separately or part of integrated systems, consisting of hardware, software and services. Our hardware is sold largely as a one-time sale, supplemented by a stream of maintenance and support

revenue. Our software solutions are sold as perpetual licenses or on a subscription basis, consisting of one-time and recurring monthly subscription fees. Given the nature of our implementations, much of our revenue include a combination of recurring revenue, multi-year deployment programs and maintenance and support contracts, providing us with strong revenue visibility. This results in a relatively smooth revenue curve with good visibility into near-term revenue growth. We typically enter into purchase agreements with our customers, with pricing based on list prices less a discount. Our goal is to continue to grow revenue arising from our existing customer base as well as adding new customers and end clients.

To continue to grow our business and to achieve our goals, we have identified the following key strategic priorities: (i) Drive strategic alliances; (ii) Increase share of customer’s network footprint; (iii) Identify new solution opportunities in core markets; (iv) Leverage SaaS cloud-native video workflows to drive recurring revenue; and (v) Selectively pursue acquisitions.

We delivered against these growth initiatives and for the six months ended April 30, 2021, revenue increased by $4.2 million or 10% when compared to the same period in the previous year. Fiscal 2020 revenue increased by $9.2 million or 12% relative to Fiscal 2019. Further, for Fiscal 2019, revenue increased $6.6 million or 10% relative to Fiscal 2018.

IMPACT OF COVID-19 ON OUR OPERATIONS

The spread of COVID-19 has caused us to modify our business practices to help minimize the risk of the virus to our employees, our partners, our customers, and the communities in which we participate, which could negatively impact our business. In response to the COVID19 pandemic, we have enabled our employees to work remotely, implemented travel restrictions for all non-essential business, divided certain functional departments into shifts, and shifted company events to virtual-only experiences, and we may deem it advisable to similarly alter, postpone or cancel additional events in the future. There is no certainty that the measures we have taken will be sufficient to mitigate the risks posed by the virus. If the COVID-19 pandemic worsens, especially in regions where we have offices, our business activities originating from affected areas could be adversely affected.

Although we believe that, at this time, the disruptions resulting from the spread of COVID-19 will not have a long-term impact on our results from operations, we cannot estimate the duration and severity of this outbreak and its financial impact. We cannot predict with any certainty whether and to what degree the disruption caused by the COVID-19 pandemic and reactions thereto will continue, and expect to face difficulty accurately predicting our internal financial forecasts. It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects on our business, results of operations, or financial condition at this time.

For additional detail on how COVID-19 may impact us and our future results, see “Risk Factors – Risks Related to our Business - The ongoing COVID-19 pandemic, including the resulting global economic uncertainty and measures taken in response to the pandemic, could materially impact our business and future results of operations and financial condition.” in the 2020 Annual Information Form.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

Consolidated Highlights for the Three Months and Six Months Ended April 30, 2021

Revenue for the six months ended April 30, 2021 was $44.8 million, an increase of $4.2 million or 10% when compared to the six months ended April 30, 2020. Our functional currency for Haivision and all our subsidiaries is the US$. On a functional currency basis, revenue for the six months ended April 30, 2021 represented an increase of 17% when compared to the six months ended April 30, 2020.
Adjusted EBITDA for the six months ended April 30, 2021 was $7.2 million an increase of $2.7 million or 60% when compared to the six months ended April 30, 2020. Our Adjusted EBITDA margin for the six months ended April 30, 2021 was 16.0% compared to 11.0% for the six months ended April 30, 2020.
Net loss for the six months ended April 30, 2021 was $10.8 million a decrease of $13.1 million compared to the six months ended April 30, 2020; but was impacted by one-time expense of $14.2 million in non-recurring share-based payments related to our legacy employee stock option plan (the “ ESOP ”) and $1.0 million in share-based expense related to our current long term incentive plan. The legacy ESOP included a provision that options would only become exercisable upon the occurrence of a liquidity event (such as an initial public offering); thus no share-based expenses were previously recorded since the ESOP’s inception.
Gross Margins for the three months ended April 30, 2021 was 78.1% an increase of 70 basis points from the same period in the prior year.
On December 16, 2020, we closed our initial public offering, pursuant to which we raised total gross proceeds of $34.5 million and issued 5,750,000 common shares at a price of $6.00 per share, including shares issued on December 18, 2020 following the exercise by the underwriters of their over-allotment option in full.

FACTORS AFFECTING THE COMPANY’S PERFORMANCE

We believe that the growth and future success of our business depends on many factors, including those described below. While each of these factors presents significant opportunities for our business, they also pose important challenges, some of which are discussed below. See “Risk Factors”.

Market Adoption of our Products

We believe that video workflows will become an increasingly important part of our customers infrastructure. We believe that there is significant potential to increase the penetration of our total addressable market and attract new customers. We plan to further develop our products and services as well as continuing to invest in marketing strategies tailored to attract new businesses to our solutions, both in our existing geographies and in new markets around the world. We plan to continue to invest in our products to expand our customer base and drive market adoption and our operations may fluctuate as we make these investments.

Upselling Existing Customers

Our existing customers represent a significant opportunity to cross-sell and up-sell products and services with little incremental marketing expense. Our customer may initially deploy our solutions for a specific use case. Once they realize the functionality and benefits of our products, they may expand the number of use cases for our products. We plan to continue to invest in products development and in sales and marketing to add more solution to our portfolio of products and to increase the usage and awareness of our solutions.

Scaling our Sales and Marketing Team

We believe the global demand for our products and services will continue to increase. Accordingly, we believe there is significant opportunity to grow our business in North America and internationally. We have invested and intend to continue to invest meaningfully in expanding our sales force and consequently, we anticipate that our headcount will continue to increase from these investments.

Seasonality

Our revenue has experienced and is expected to continue to experience moderate seasonality due to the buying patterns of certain customers. Typically, our fourth quarter generates the highest level of revenue within a given fiscal year, whereas our first quarter generates the lowest level of revenue within a given fiscal year.

Ability to Integrate Acquired Companies

We have successfully acquired and integrated several companies in our history, and we intend to augment our organic growth with strategic and tactical acquisitions. We are of the view that the ability to realize synergies and integrate management teams, technologies, and employees is critical to our future growth.

Foreign Currency

Currency exchange rate fluctuations affect our results of operations because our functional currency is the U.S. dollar and our presentation currency is the Canadian dollar. We receive a significant amount of our revenue and a significant portion of our product costs and operating costs in U.S. dollars. Our results of operations are converted from each entities’ local functional currency to Canadian dollars using the average foreign exchange rates for each period presented. As a result, our results of operations are impacted by fluctuations in the value of the Canadian dollar relative to the U.S. dollar.

Our financial results may be adversely affected by fluctuations in exchange rates, principally in the value of the Canadian dollar versus the U.S. dollar”. For a discussion on exchange rate fluctuations and their potential negative effect on our results of operations see “Risk Factors – Risks Related to our Business” in the 2020 Annual Information Form.

Scientific Research and Experimental Development Credits

We claim Canadian federal and Quebec refundable investment tax credits based upon qualifying scientific research and experimental development expenditures (“ SR&ED ”). As a public issuer, we are no longer eligible for refundable Canadian federal SR&ED credits. However, as a public issuer, we are still eligible for non-refundable Canadian federal SR&ED

credits which may be applied to reduce future income taxes payable, and we will also remain eligible to claim refundable SR&ED credits for Quebec income tax purposes, albeit at a lower rate than before becoming public.

KEY COMPONENTS OF RESULTS OF OPERATIONS

Revenue

We deliver solutions for encoding, streaming, recording, managing, distributing and displaying secure IP video and interactive media within enterprises and government. We offer an extensive product range as part of our end-to-end solution offerings. We offer these solutions to our end-clients through a combination of our direct sales force, supplemented by intermediary channel partners (fulfillment partners, resellers, systems integrators, and original equipment manufacturer integrators).

For the sale of products, we recognize revenue when the goods have been shipped to the customer’s specified delivery location. We also provide managed services and cloud-based solution which are recognized over the term of their respective agreements. We also sell maintenance and support programs as an after-sales service. Revenue related to these maintenance and support programs is recognized over the term of the program. Since cloudbased services and maintenance and support programs are contracted, we often refer to them as recurring revenue.

Cost of Sales

Our cost of sales consists of the following:

Direct product costs consist of the costs of hardware for proprietary hardware products sold, the costs of server hardware when sold with software, and the direct services costs of providing managed services (i.e., bandwidth).
Production costs include compensation related expenses for employees that work in our production department.
Other Costs of Sales includes certain technology licenses, fulfillment supplies, scrap, reserves for obsolescence and return merchandise authorization costs.

Expenses

Our expenses consist of the following:

Sales and marketing expenses include the compensation expenses for employees that work in sales and marketing, marketing and promotional expenses, and travel expenses. Compensation expenses include salaries, bonuses and commissions, and related benefits.
Operations and support expenses consist of the compensation related expenses for information services, technical support and professional services personnel, and related travel. Compensation expenses include salaries, bonuses, and related benefits.
Research and development expenses include the compensation expenses for employees in product management, product development and quality assurance.
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Compensation expenses include salaries, bonuses, and related benefits. In addition, research and development expenses include the cost of subcontractors used to supplement our in-house development staffs, prototypes and equipment rentals, and other general expenses. SR&ED credits are recorded as a reduction of research and development expenses.

General and administrative expenses consist of compensation related expenses for certain senior executives, finance and human resources function, rent and utilities, professional services (i.e., legal and accounting), insurance, other office and general expenses, losses/gain related to realized and unrealized foreign exchange translation.
Share-based payments consists of compensation expense for grants of stock options, restricted share units (“ RSUs ”) and deferred share units (“ DSUs ”) issued under our long-term incentive plan (“ LTIP ”). Compensation expense is based on the fair value of each tranche of stock option, RSUs or DSUs at their respective grant date. In addition, stock options granted to our directors, officers and employees under our legacy ESOP that were settled by the issuance of shares in connection with our initial public offering were only exercisable upon the occurrence of a liquidity event. As these options only became exercisable upon the occurrence of our initial public offering, share-based compensation was recorded at the time of the initial public offering.

In aggregate, approximately three-quarters of our expenses are attributed to compensation related expenses. A significant percentage of our sales force’s compensation is variable and based on sales performance. Furthermore, staff members have bonuses based on quarterly revenue, annual EBITDA performance, or key performance indices. Overall positive performance may increase the level of these expenses.

Financial Expenses

Interest expenses include interest on term loans, interest on credit facilities (including non-use fees) and interest on lease liabilities offset by interest income. Interest on shortand long-term financings are recorded at the relevant rates on the various borrowing agreements, and any non-use fees on revolving lines of credit. In addition, a shareholder was granted a put option allowing them to sell shares back to us at any time after February 2015. The put option had characteristics of a current liability, and was accounted for in accordance with its substance. As such, the redemption prices were reassessed at every reporting period, and increases in the amount of the liability were recorded as a financial expense (and conversely any reduction in liability was recorded as income). In Fiscal 2019, we purchased for cancellation all shares held by the shareholder and no such expense were recorded in Fiscal 2020.

Foreign Currency Translation Adjustments

Transactions in currencies other than the Canadian dollar, which is our reporting currency, are recognized at the rates of exchange prevailing at the dates of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value, that are denominated in foreign currencies, are retranslated at the rates prevailing at the date when the fair value was determined. The exchange differences arising on the translation are recognized as a foreign currency translation adjustment.

SR&ED Credits

We are the beneficiary of certain SR&ED credits from Canada and from the province of Quebec. Historically, these credits provided support in the form of refunds (and to a lesser extent tax credits) for scientific research or experimental development incurred in Canada or Quebec. As a public issuer, the level of these credits will be reduced, and for federal tax purposes, will only reduce future income taxes payable.

SELECTED INFORMATION AND RECONCILIATION OF NON-IFRS MEASURES

The following table summarizes our recent results of operations as of the dates and for the periods indicated below. The information should be read together with the Q2 Financial Statements and the 2020 Financial Statements, which were prepared in accordance with IFRS.

Historical financial and operating information may not be indicative of future performance, and certain financial information presented below includes non-IFRS financial measures that we believe are important in evaluating the operating performance of our business and making results more comparable from period to period. See “Non-IFRS Measures”.

Three months ended April 30, 2021 2020 ($) ($) 21,851 21,229 4,788 4,806 17,062 16,423 14,629 13,050 2,433 3,372 79 89 2,354 3,283 1,117 917 1,237 2,366 (450) 631 787 2,997 0.05 0.15 26,632,340 15,402,688 27,344,467 15,402,688	Six months ended April 30,	Six months ended April 30,
2021 ($) 21,851 4,788 17,062 14,629 2,433 79 2,354 1,117 1,237 (450) 787 0.05 26,632,340 27,344,467	2021 ($) 44,836 10,221 34,615 4,906 (8,879) 188 (9,067) 1,781 (10,848) (940) (11,788) (0.46) 23,809,782 23,809,782	2020
		($) 40,642 9,442
		31,200 27,587
		3,613 190
		3,423 1,172
		2,251 682
		2,933
		0.15 15,408,613 15,408,613

Net (loss) income .................. Income taxes ..................... Income before income taxes............................... Depreciation ...................... Amortization ...................... Share-based payments ....... Financial expenses .............. Adjusted EBITDA1............... Adjusted EBITDA Margin .....	Three months ended April30, 2021 2020 ($) ($) 1,237 2,366 1,117 916 2,354 3,282 298 161 138 381 745 — 79 89 3,614 3,913 16.5% 18.4%	Six months ended April30, 2021 2020 ($) ($) (10,848) 2,251 1,781 1,172 (9,067) 3,423 587 320 276 552 15,194 — 188 190 7,178 4,485 16.0% 11.0%
	2021 ($) 1,237 1,117 2,354 298 138 745 79 3,614 16.5%	2021 ($) (10,848) 1,781 (9,067) 587 276 15,194 188 7,178 16.0%

Note:

(1) EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not recognized measures under IFRS. “Non-IFRS Measures”.

Total assets ..................................... Non-current liabilities ........................ Total liabilities ..................................	April 30, 2021 ($) 94,719 6,667 26,735	October 31, 2020
		($) 62,767 7,465 32,694

DISCUSSION OF OPERATIONS

Three Months and Six Months ended April 30, 2021

Revenue

Revenue for the three months and six months ended April 30, 2021 was $21.9 million and $44.8 million, respectively, an increase of $0.6 million or 3% and $4.2 million or 10%, respectively, compared to the three months and six months ended April 30, 2020. Recurring revenue for the three months and six months ended April 30, 2021 and April 30, 2020 was approximately 26% of total revenue in all periods. The principal factor contributing to the organic revenue growth is an increase of overall economic activity (some of which may be related to the COVID-19 pandemic).

Product ............................ Cloud solutions ................. Maintenance and support ...	Three months ended April30, 2021 2020 ($) ($) 16,603 15,735 2,132 2,098 3,116 3,396	Six months ended April30,	Six months ended April30,
	2021 ($) 16,603 2,132 3,116	2021 ($) 34,364 4,106 6,366	2020
			($) 30,223 3,968 6,451

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Revenue .........................	Three months ended April30, 2021 2020 ($) ($) 21,851 21,229	Six months ended April30,	Six months ended April30,
	2021 ($) 21,851	2021 ($) 44,836	2020
			($) 40,642

Cost of Sales

Cost of sales for the three months and six months ended April 30, 2021, was $4.8 million and $10.2 million, respectively. For the three months ended April 30, 2021 cost of sales remained constant, despite a modest increase in revenue contributing to additional margin improvements. For the six months ended April 30, 2021, cost of sales increased $0.8 million or 8%, a rate slower than the increase in revenue contributing additional margin improvements resulting from economies of scale and modest shifts in overall product mix. As we continue to grow, we anticipate that we will continue to realize healthy gross margins.

Three months ended April30, 2021 2020 ($) ($) 4,236 4,185 337 344 213 277 4,788 4,806 78.1% 77.4%	Six months ended April30,	Six months ended April30,
2021 ($) 4,236 337 213 4,788 78.1%	2021 ($) 8,842 812 567 10,221 77.2%	2020
		($) 8,101 713 628
		9,442
		76.8%

Expenses

For the three months and six months ended April 30, 2021 and 2020 expenses were:

Sales and marketing .............. Operations and support .......... Research and development ..... General and administrative .....	Three-months ended April30, 2021 2020 ($) ($) 4,841 4,735 1,170 1,307 4,359 4,944 3,514 2,064	Six-months ended April30,	Six-months ended April30,
	2021 ($) 4,841 1,170 4,359 3,514	2021 ($) 9,952 2,488 9,239 6,621	2020
			($) 9,926 2,645 10,387 4,629

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Three-months ended April30, 2021 2020 ($) ($) 745 — 14,629 13,050 67.0% 61.5% 14,629 13,050 745 — 13,844 13,050 63.5% 61.5%	Six-months ended April30,	Six-months ended April30,
2021 ($) 745 14,629 67.0% 14,629 745 13,844 63.5%	2021 ($) 15,194 43,494 97.0% 43,494 15,194 28,300 63.1%	2020
		($) —
		27,587
		67.9% 27,587 —
		27,587
		67.9%

The changes in expenses were due to a combination of the following:

Sales and marketing expenses increased by $0.1 million for the three months ended April 30, 2021, when compared to the three months ended April 30, 2020. The increase in the three month period ended April 30, 2021 is largely related to increases in compensation expenses of $0.3 million related to bonuses and commissions based on sales and profitability performance, and higher levels of headcount. These expenses were offset by a reduction in travel expenses of $0.2 million which was impacted by the COVID-19 pandemic. For the six month period ended April 30, 2021, sales and marketing expenses were flat when compared to the six months ended April 30, 2020. Increases in compensation expenses of $0.9 million were offset by reductions in travel expenses of $0.6 million and marketing expenses of $0.3 million, both of which were impacted by the COVID-19 pandemic. The number of people in the sales organization increased from 58 people at April 30, 2020 to 62 people at April 30, 2021.
Operations and support expenses for the three months and six months ended April 30, 2021, decreased by $0.1 million and $0.2 million, respectively. The decrease in both periods is related to compensation related expenses during each respective period.
Research and development expenses for the three months and six months ended April 30, 2021 decreased by $0.6 million and $1.1 million, respectively, when compared to the three months and six months ended April 30, 2020. The decrease in the three month period ended April 30, 2021 is largely related to lower subcontractor costs of $0.5 million, and a reduction of SR&ED credit reimbursements of $0.1 million. The decrease in the six month period ended April 30, 2021 is largely related to higher levels of headcount (including headcount related to the acquisition of the assets of Teltoo (US) Inc. on July 1, 2020 offset by lower subcontractor costs of $1.6 million, a reduction of SR&ED credit reimbursements of $0.2 million and reduction in travel related expenses of $0.2 million. SR&ED credit reimbursements are at a lower rate than before becoming public and travel expenses were impacted by the COVID-19 pandemic. The number of people in the product realization organization increased from 96 people at April 30, 2020 to 101 people at April 30, 2021.
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General and administrative expenses for the three months and six months ended April 30, 2021 increased by $1.4 million and $2.0 million, respectively, when compared to the three months and six months ended April 30, 2020. The increase in the three month period ended April 30, 2021 is largely related to the stronger Canadian dollar’s impact on US dollar denominated assets and liabilities of $0.6 million, increases in professional fees and insurance costs of $0.6 million and $0.3 million, respectively. The increase in the six month period ended April 30, 2021 is largely related to the stronger Canadian dollar’s impact on US dollar denominated assets and liabilities of $1.2 million related to increases in professional fees and insurance costs of $0.7 million and $0.5 million, respectively. The increases in professional fees and insurance is largely related to the additional cost of being a public issuer.
Share-based payments increased by $0.7 million for the three months ended April 30, 2021, when compared to the three months ended April 30, 2020. The increase during the three month period is the result of expenses related to our current LTIP program. For the six month period ended April 30, 2021, share-based compensation increased by $15.2 million compared to the same prior year period. The increase includes $14.2 million in expense related to the legacy ESOP plan, and $1.0 million in expense related to our current LTIP. The legacy ESOP included a provision that options would only become exercisable upon the occurrence of a liquidity event (such as an initial public offering); thus, no share-based expenses were previously recorded since the ESOP’s inception. The ESOP has been replaced in its entirety by the LTIP upon the closing of our initial public offering, and all options outstanding under the ESOP were exercised immediately prior to the closing of our initial public offering.

Net Income

For the three months ended April 30, 2021, net income was $1.2 million, a decrease of $1.3 million when compared to the three months ended April 30, 2020. The decrease in net income is largely due to $0.9 million in professional fees and insurance costs related to the additional cost of being a public issuer, $0.7 million in share-based payments related to our current LTIP, $0.6 million related to the stronger Canadian dollar’s impact on US dollar denominated assets and liabilities. For the six months ended April 30, 2021, net loss was $10.8 million a decrease of $13.1 million compared to the same prior year period. The decrease in net income is largely due to $15.2 million in share-based payment related to our legacy ESOP and current LTIP; $1.2 million in professional fees and insurance costs related to the additional cost of being a public issuer, and $1.2 million related to the stronger Canadian dollar’s impact on US dollar denominated assets and liabilities. For the six months ended April 30, 2021, net loss was $10.8 million a decrease of $13,1 million.

Three months ended April30, 2021 2020 ($) ($) 2,433 3,372 79 89 2,354 3,283	Six months ended April30,	Six months ended April30,
2021 ($) 2,433 79 2,354	2021 ($) (8,879) 188 (9,067)	2020
		($) 3,613 190
		3,422

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Three months ended April30, 2021 2020 ($) ($) 1,117 917 1,237 2,366 5.7% 11.1%	Six months ended April30,	Six months ended April30,
2021 ($) 1,117 1,237 5.7%	2021 ($) 1,781 (10,848) (24.2)%	2020
		($) 1,172
		2,251
		5.5%

Adjusted EBITDA

Adjusted EBITDA for the three months ended April 30, 2021 was $3.6 million, a decrease of $0.3 million compared to the same period in the prior year. The decrease in the Adjusted EBITDA in the three months ended April 30, 2021 is largely the result of higher gross profit (resulting from higher revenue and modest improvements in gross margins), offset by the additional cost of being a public issuer, and additional expenses related to the stronger Canadian dollar’s impact on US dollar denominated assets and liabilities.

Adjusted EBITDA for the six months ended April 30, 2021 was $7.2 million, an increase of $2.7 million compared to the same period in the prior year. The increase in the Adjusted EBITDA in the six months ended April 30, 2021 is largely the result of higher revenue and the resulting $3.4 million increase in gross profit offset by the $0.7 million increase in expenses – including the additional cost of being a public issuer, and additional expenses related to the stronger Canadian dollar’s impact on US dollar denominated assets and liabilities.

Three months ended April30, 2021 2020 ($) ($) 2,433 3,371 298 161 138 381 2,869 3,913 745 — 3,614 3,913 16.5% 18.4%	Six months ended April30,	Six months ended April30,
2021 ($) 2,433 298 138 2,869 745 3,614 16.5%	2021 ($) (8,879) 587 276 (8,016) 15,194 7,178 16.0%	2020
		($) 3,613 320 552
		4,485 —
		4,485
		11.0%

Note:

(1) EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not recognized measures under IFRS. See “NonIFRS Measures”.

Share-based compensation consists of $14.2 million in expense related to the legacy ESOP, and $1.0 million in expense related to our current LTIP. The ESOP included a provision that options would only become exercisable upon the occurrence of a liquidity event (such as an initial public offering); thus, no share-based expenses were previously recorded since the ESOP’s inception. The ESOP has been replaced in its entirety by the LTIP upon the closing of our initial public offering, and all options outstanding under the ESOP were exercised immediately prior to the closing of our initial public offering.

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SUMMARY OF QUARTERLY RESULTS

The following table sets out select quarterly results for our past eight quarters. Our government business experiences moderate seasonality, primarily because the U.S. government year-end is commensurate with our fourth quarter. Typically, our fourth quarter generates higher revenue. Expenses are generally consistent from quarter-to-quarter, but may fluctuate based on the timing of marketing programs and other periodic expenditures.

Revenue............................................................ Cost of sales .................................................... Gross profit ...................................................... Expenses........................................................... Operating profit................................................ Net (loss) income.............................................. Net income per share (basic and diluted).......... Weighted avg. number of shares outstanding... Basic ............................................................... Diluted ............................................................. Net income........................................................ Income taxes .................................................... Depreciation ..................................................... Amortization ..................................................... Financial expense .............................................. EBITDA(1)............................................................ Share-based payment (LTIP) ................................. Non-recurring expenses: Share-based payments (ESOP) ........................... Adjusted EBITDA(1)............................................ Gross margin ....................................................... Adjusted EBITDA Margin(1)....................................	Q2 2021 $ 21,851 4,788 $ 17,062 $ 14,629 $ 2,433 $ 2,433 $ 0.05 26,632,340 27,344,467 $ 1,237 $ 1,117 $ 298 $ 138 $ 79 $ 2,869 $ 745 $ — $ 3,614 78.1% 16.5%	Q1 2021 $ 22,985 5,433 $ 17,552 $ 28,865 $ (11,313) $ (12,086) $ (0.60) 21,098,923 21,098,923 $ (12,086) $ 664 $ 289 $ 138 $ 109 $ (10,886) $ 324 $ 14,125 $ 3,563 76.4% 15.5%	Q4 2020 $ 22,124 5,212 $ 16,913 $ 15,498 $ 1,415 $ 1,487 $ 0.10 15,340,715 15,340,715 $ 1,487 $ (150) $ 117 $ 320 $ — $ 1,852 $ — $ — $ 1,852 76.4% 8.4%	Q3 2020 $ 20,346 4,710 $ 15,636 $ 12,505 $ 3,131 $ 2,059 $ 0.13 15,340,715 15,340,715 $ 2,059 $ 996 $ 140 $ 288 $ 77 $ 3,560 $ — $ — $ 3,560 76.9% 17.5%

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Revenue............................................................ Cost of sales .................................................... Gross profit ...................................................... Operating expense............................................ Operating profit................................................ Net Income....................................................... Net income per share (basic and diluted).......... Weighted avg. number of shares outstanding (basic and diluted)......................................... Net Income....................................................... Income taxes .................................................... Depreciation ..................................................... Amortization ..................................................... Financial expense .............................................. EBITDA(1).......................................................... Non-recurring expenses ..................................... Adjusted EBITDA(1)............................................ Gross margin ....................................................... Adjusted EBITDA Margin(1)....................................	Q2 2020 $ 21,229 4,806 $ 16,423 $ 13,050 $ 3,372 $ 2,366 $ 0.15 15,402,688 $ 2,366 $ 916 $ 161 $ 381 $ 89 $ 3,913 $ — $ 3,913 77.4% 18.4%	Q1 2020 $ 19,413 4,636 $ 14,777 $ 14,536 $ 241 $ (116) $ (0.01) 15,414,410 $ (115) $ 255 $ 159 $ 172 $ 101 $ 572 $ — $ 572 76.1% 2.9%	Q4 2019 $ 20,468 5,198 $ 15,270 $ 12,890 $ 2,380 $ 1,579 $ 0.10 15,414,410 $ 1,579 $ 766 $ 168 $ — $ 35 $ 2,548 $ — $ 2,548 74.6% 12.4%	Q3 2019 $ 16,627 4,288 $ 12,339 $ 12,236 $ 103 $ 40 $ 0.00 15,414,410 $ 40 $ 19 $ 173 $ — $ 44 $ 276 $ 141 $ 417 74.2% 2.5%

Note:

(1) EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not recognized measures under IFRS. See “NonIFRS Measures”.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Overview

Our financial condition and liquidity are and will continue to be influenced by a variety of factors, including: our ability to generate cash flows from operations; our capital expenditure requirements; the level of outstanding indebtedness and the interest obligations on this indebtedness; and our ability to raise capital.

The general objectives of our capital management strategy are to ensure sufficient liquidity to pursue our organic growth strategy and undertake selective acquisitions, while maintaining a strong credit profile and a capital structure that maintains total leverage ratio within the limits set in our credit facilities.

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Financial Condition

al Condition
Total cash ....................................... Total assets ..................................... Total liabilities ..................................	April 30, 2021 ($) 47,639 94,718 26,735	October 31, 2020
		($) 15,715 62,767 32,694

Cash increased $31.9 million from the year ended October 31, 2020 as a result of (i) net proceeds received from the initial public offering and the overallotment option which both closed during the six months ended April 30, 2021, (ii) proceeds from the exercise of options prior to the initial public offering, (iii) less a $1.5 million shareholder distribution related to a contractual obligation.

Total assets increased $32.0 million from the year ended October 31, 2020 primarily the result of increases in the amount of cash; whereas total liabilities decreased by $6.0 million primarily the result of performance based commissions and bonuses accrued in Fiscal 2020 and subsequently paid in the six months ended April 30, 2021.

Cash Flows

Our primary source of liquidity is from operations. Our principal liquidity needs include investment in our products and technology, as well as sales and marketing expenses, product development expense, general and administrative expenses, other operational expenses, and for selective acquisitions. In addition to our cash balances, we have a US$10 million revolving line of credit available to be drawn to meet ongoing working capital requirements and a US$5.0 million term loan, of which US$1.5 million has been borrowed.

We continuously monitor cash flows by reviewing actual operating expenditures and revenue compared to budget. We believe that our available cash, cash flows generated from operations, loans and borrowings available to us will be sufficient to meet our projected operating and capital expenditures requirements for the foreseeable future .

Net cash provided by operating activities ............. Net cash used by investing activities ................... Net cash provided/(used) by financing activities ... Change in cash during the period ........................ Cash, beginning of period .................................. Effect of foreign exchange in cash ....................... Cash, end of period ...........................................	April 30, 2021 ($) 332 (209) 32,903 33,026 15,715 (1,102) 47,639	April 30, 2020
		($) 2,421 (277) (1,473)
		671
		2,517 112
		3,300

For the six-months ended April 30, 2021, we had a net increase in cash of $31.9 million resulting in cash at the end of the period of $47.6 million at April 30, 2021.

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Net cash provided by operating activities for the six months ended April 30, 2021 was $0.3 million, whereas cash used by investing activities during the same period was $0.2 million. Cash provided by financing activities was $32.9 million, largely the results of $30.0 million in net proceeds from the issuance of common shares under our initial public offering, $4.9 million from the exercise of stock options and a payment of $1.5 million related to a shareholder distribution.

For the six-months ended April 30, 2020, we had a net increase in cash of $0.8 million, resulting in cash at the end of the period of $3.0 million.

Net cash provided by operating activities for the six months ended April 30, 2020 was $2.4 million, cash used by investing activities during the period was $0.3 million, and cash used by financing activities during the period was $1.5 million.

Capital Expenditures

Our capital expenditures for the six months ended April 30, 2021 were $0.2 million compared to $0.3 million for the same period in the prior year. Capital expenditures are primarily related to computer equipment and to a lesser extent leasehold improvements. Capital expenditures have been modest as of late primarily attributed to reduced spending during the COVID-19 pandemic. We expect capital expenditures to revert to normal levels sometime in Fiscal 2021.

Expenditures on research activities are recognized as an expense in the period in which they incurred.

Credit Facilities

On May 2, 2020, we entered into an agreement with Silicon Valley Bank (“ SVB ”) whereby SVB provided a loan facility to the Company pursuant to a promissory note. The amount outstanding as of April 30, 2021 is US$1.5 million, bears interest at 1% per annum and has a term of twenty-four (24) months. No payments are due during the sixteen-month period beginning on the date of this loan.

The loan was made under the Small Business Administration’s (“ SBA ”) Paycheck Protection Program (“ PPP ”) (Section 1102 of the CARES Act), and forgiveness of the principal of the loan is available if proceeds from the loan are used for the limited purposes that expressly qualify for forgiveness under SBA requirements. We believe we have complied with the limited purposes that expressly qualify for forgiveness under the SBA requirements, and an application for PPP loan forgiveness has been submitted to SVB.

On October 5, 2020, we entered into an amended and restated loan and security agreement (the “ SVB Loan Agreement ”) with our U.S. subsidiary Haivision Network Video Inc., as co-borrower, and SVB, as lender, which provides for (i) a US$5 million term loan (the “ Term Loan ”) bearing interest at the greater of (x) the U.S. prime rate, as published by the Wall Street Journal, plus 2.25% and (y) 5.00% and (ii) a US$10 million working capital line of credit (the “ Revolving Line ”, and together with the Term Loan, the “ SVB Loan ”) bearing interest at the greater of (x) the U.S. prime rate, as published by the Wall Street Journal, plus 1.65% and (y) 4.25%. The SVB Loan is available for general corporate purposes, with the inclusion of share buybacks under the Term Loan.

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The SVB Loan is secured by the SVB Loan Agreement as well as an amended and restated intellectual property security agreement and a movable hypothec, which provide the lender with first priority security interests over all assets of the Company, including intellectual property.

As of April 30, 2021, the effective rate under the Term Loan and the Revolving Line were 5.50% and 4.90%, respectively, and advances under the Term Loan and the Revolving Line were US$1,500,000 and nil, respectively. Available capacity under the Term Loan was US$3,500,000 as of April 30, 2021 and US$10,000,000 under the Revolving Line. As at the date hereof, we are in compliance with all covenants under the SVB Loan.

Contractual Obligations

We have contractual obligations with a variety of expiration dates. Our operating lease obligations include commitments until 2030. The tables below outline our contractual obligations, by fiscal year, as of April 30, 2021.

		April30, 2021	April30, 2021
Year 1 ($) 7,139 223 835 8,197	Year 2 ($) — 2,173 678 2,851	Year 3 ($) — 614 686 1,300	Year 4 ($) — 614 721 1,335	Year 5+ ($) — — 2,116 2,116	Total
					($) 7,139 3,624 5,036
					15,799

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

In the ordinary course of our business activities, we are exposed to various market risks that are beyond our control, including fluctuations in foreign exchange rates and interest rates, and that may have an adverse effect on the value of our financial assets and liabilities, future cash flows and profit. Our policy with respect to these market risks is to assess the potential of experiencing losses and the consolidated impact thereof, and to mitigate these market risks. If deemed necessary, we may from time to time enter into foreign currency derivative contracts to reduce our exposure to foreign currency risks. No foreign currency derivative contracts have been entered into in the quarter ended April 30, 2021, Fiscal 2021 or Fiscal 2020.

Credit and Concentration Risk

Credit risk is the risk that one party to a transaction will fail to discharge an obligation and cause the other party to incur a financial loss. We are exposed to credit risk in the event of non-performance by customers, but do not anticipate any such non-performance would be material. We do not require guarantees from our customers. To the extent necessary, we take steps to monitor the credit risk of customers.

Due to our diverse customer base, there is no particular concentration of credit risk related to our trade receivables. Moreover, balances for trade receivables are managed and analyzed on an ongoing basis to ensure allowances for doubtful accounts, which are

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established and maintained at an appropriate amount. We have also insured the majority of our non-U.S. receivables through Export Development Canada as a further mitigation to bankruptcies and client default on payment.

We estimate anticipated losses from doubtful accounts based upon the expected collectability of all accounts receivable, which estimate takes into account the number of days past due, collection history, identification of specific customer exposure and current economic trends. An impairment loss on trade receivables is calculated as the difference between the carrying amount and the present value of the estimated future cash flow. Impairment losses are charged to general and administrative expense in the consolidated statements of loss and comprehensive loss. Receivables for which an impairment provision was recognized are written off against the corresponding provision when it is deemed uncollectible.

The maximum exposure to credit risk at the date of this MD&A is the carrying value of each class of receivables mentioned above. We do not hold any collateral as security.

Market Risk

We are exposed to market risk primarily in terms of revenue generation. Our revenue is based on transaction volumes which have increased with the growth of the worldwide market for video streaming infrastructure products. We monitor the market conditions in an effort to capture fluctuations in market demand that may affect ongoing revenue. Historically, our business model has proven to be resilient to market downturns.

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. We were exposed to interest rate risk under the Prior Credit Facilities and are exposed to such risk under our Revolving Line and Term Loan, which are in U.S. currencies. Interest on the Revolving Line is the greater of (i) U.S. prime rate plus 1.65%; or (ii) 4.25%; and the interest on the Term Loan is the greater of U.S. prime rate plus 2.25%; or (iii) 5.00%. As of April 30, 2021, $0 was outstanding on the Revolving Line and US$1.5 million was outstanding on the Term Loan.

Foreign Currency Exchange Risk

We are exposed to currency risk due to financial instruments denominated in foreign currencies. Our primary exposure with respect to foreign currencies is from Canadian dollar denominated investment tax credit receivables, trade and other payables, cash, purchase price payables, and trade and other receivables in transactional currency that is other than U.S. dollars. The net carrying value of these Canadian denominated balances as at April 30, 2021 and October 31, 2020 presented in Canadian dollars is as follows:

Amounts denominated in foreign currencies

Cash ............................................................. Trade and other receivables ............................. Investment tax credit......................................	April 30, 2021 ($) 33,501 636 6,523	October 31, 2020
		($) 1,502 584 6,136

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Trade and other payables ................................ Income taxes payables....................................	April 30, 2021 ($) 2,602 958	October 31, 2020
		($) 5,770 2,040

Liquidity Risk

Liquidity risk is the risk that we will not be able to meet our financial obligations as the come due. Our cash resources are managed based on financial forecasts and anticipated cash flows. Contractual maturities such as debt, trade and other payables, and accrued liabilities are exposed to liquidity risk.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements. From time to time, we may be contingently liable for componentry inventories held at our contract manufacturer.

RELATED PARTY TRANSACTION

We define senior executives as the Chief Executive Officer of the Company, other executive officer of the Company and certain other senior leaders – all of whom participate in our executive bonus plan. The remuneration of senior management personnel during the six months ended April 30, 2021 and 2020 was as follows:

Salaries and Bonuses ................................................... Number of Senior Managers ..........................................	Six months ended April 30,	Six months ended April 30,
	2021 $ 1,490 4	2020
		$ 1,637 4

In addition to a base salary, the executive bonus plan included quarterly revenue bonus based on performance compared to budget (and assuming EBITDA targets are achieved); and annual EBITDA bonus based on Adjusted EBITDA performance compared to budget, The quarterly revenue bonus and to a lesser extent the annual EBITDA bonus include provisions for extra bonus amounts for extraordinary performance.

Other than in respect of executive management compensation, we have no related party transactions.

RISK FACTORS

Certain factors may have a material adverse effect on our business, financial condition and results of operations. Current and prospective investors should carefully consider the risks and uncertainties and other information contained in this MD&A, the Q2 Financial Statements, the 2020 Financial Statements and the 2020 Annual Information Form, particularly under the heading “Risk Factors” in the 2020 Annual Information Form, and in other filings that we have made and may make in the future with applicable securities

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authorities, including those available under the Company’s profile on SEDAR at www.sedar.com. The risks and uncertainties described herein and therein are not the only ones we may face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that could adversely affect our business, financial condition and results of operations. If any of such risks actually occur, our business, financial condition, results of operations, and future prospects could be materially and adversely affected. In that event, the trading price of our common shares (or the value of any other securities of the Company) could decline, and our securityholders could lose part or all of their investment.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Please refer to note 2 of the Q2 Financial Statements for a description of our critical accounting estimates and judgements .

The preparation of our consolidated financial statements in conformity with IFRS requires management to make estimates and assumption that affect the amounts reported in the consolidated financial statements and accompanying notes. We review those estimates on an ongoing basis based on management’s best knowledge of current events and actions that we may undertake in the future. Actual results could differ from these estimates. Areas requiring the most significant estimates and judgements are outlined below.

Business Combinations

Acquisition of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interest issued by the Company in exchange for control of the acquiree. Acquisition-related costs are recognized in profit or loss as incurred.

Revenue Recognition

We recognize revenue from the sale of products, cloud solution revenue and maintenance revenue. For the sale of products, revenue is recognized by us when control of the goods has transferred to the customer, being at the point the goods leave our warehouse. Cloud solution revenue is recognized as a performance obligation is satisfied over time. Revenue relating to maintenance programs is recognized over time.

Research and Development Costs

Research and development costs are recognized as an expense in the period in which they are incurred.

Government Assistance and Investment Tax Credits

Government assistance is recorded as a reduction of the related expense. Government assistance is recorded in the accounts when reasonable assurance exists that we have complied with the terms and conditions of the approved grant program. Investment tax credits are accounted for under the cost reduction method, whereby the investment tax credits are applied against the carrying value of the related expense. Investment tax credits are recorded when the qualifying expenditures have been incurred and if there is a reasonable assurance that the tax credits will be realized.

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Share-Based Payments

Share-based payments consists of compensation expense for grants of stock options, RSUs and DSUs issued in accordance with the Company’s LTIP. Compensation expense is based on the fair value of each tranche of stock option, RSUs or DSUs at their respective grant date.

Changes in Accounting Policies (including initial adoption)

We applied IFRS 16, Leases for the first time effective November 1, 2019. The nature and effect of the changes as a result of the adoption of new accounting standards are described in note 8 to the Financial Statements.

OUTSTANDING SHARE DATA

Our common shares are publicly traded on the Toronto Stock Exchange (TSX: HAI) since the completion of our initial public offering on December 16, 2020. Our authorized share capital consists of (i) an unlimited number of common shares, and (ii) an unlimited number of preferred shares, issuable in series, of which 26,612,019 common shares and no preferred shares were issued and outstanding as of June 9, 2021.

As of June 9, 2021, there were 1,311,000 options, 350,042 RSUs and 22,863 DSUs outstanding under our LTIP. Each such option is or will become exercisable for one common share, and each such RSU and DSU will be settled into one common share, in each case in accordance with the terms of our LTIP and the applicable award agreements.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Our Chief Executive Officer (“ CEO ”) and Chief Financial Officer (“ CFO ”) have designed, or caused to be designed under their supervision, disclosure controls and procedures which provide reasonable assurance that material information regarding the Company is accumulated and communicated to our management, including our CEO and CFO, in a timely manner.

In addition, our CEO and CFO have designed, or caused to be designed under their supervision, internal controls over financial reporting (“ ICFR ”) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. Our CEO and CFO have been advised that the control framework used to design our ICFR uses the framework and criteria established in the Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Our CEO and CFO have evaluated, or caused to be evaluated under their supervision, whether or not there were changes to our ICFR during the period ended April 30, 2021 that have materially affected or are reasonably likely to materially affect our ICFR. No such changes were identified through their evaluation.

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A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that its objectives are met. Due to inherent limitations in all such systems, no evaluations of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Accordingly, our disclosure controls and procedures and our ICFR are effective in providing reasonable, not absolute, assurance that the objectives of our control systems have been met.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

For information regarding our material legal proceedings and regulatory actions, if any, and material changes or updates thereto, see the 2020 Annual Information Form, particularly under the heading “Legal Proceedings” and note 19 to the Q2 Financial Statements.

FURTHER INFORMATION

Additional information relating to us and our business, including the Q2 Financial Statement, the 2020 Annual Reports and other filings that we have made and may make in the future with applicable securities authorities, may be found under our corporate profile on SEDAR at www.sedar.com. Additional information, including with respect to directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities, and securities authorized for issuance under equity compensation plans, is contained in our management information circular for our most recent annual meeting of shareholders that involved the election of directors, available under the Company’s SEDAR profile at www.sedar.com.

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AI assistant

Haivision Systems Inc. — Interim / Quarterly Report 2021

47984_rns_2021-06-09_42d3fcaa-7b1c-43f7-8224-890b32bfd300.pdf