Haivision Systems Inc.

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Management’s Discussion and Analysis

For the Three Months and Full Year Ended October 31, 2021

Dated: January 25, 2022

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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 ................................................................ 6 Key Components of Results of Operations ..................................................................... 7 Selected Information and Reconciliation of Non-IFRS Measures ........................................ 9 Discussion of Operations ........................................................................................... 11 Summary of Quarterly Results ................................................................................... 16 Financial Condition, Liquidity and Capital Resources ..................................................... 17 Financial Instruments and Other Instruments .............................................................. 20 Off-Balance Sheet Arrangements................................................................................ 22 Related Party Transaction .......................................................................................... 22 Risk Factors ............................................................................................................. 22 Critical Accounting Policies and Estimates .................................................................... 23 Outstanding Share Data ............................................................................................ 24 Disclosure Controls and Procedures and Internal Controls over Financial Reporting ........... 24 Legal Proceedings and Regulatory Actions ................................................................... 25 Further Information .................................................................................................. 25

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 full year ended October 31, 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 2021”, “Fiscal 2020” and “Fiscal 2019” are respectively to the fiscal years ended October 31, 2021, October 31, 2020 and October 31, 2019.

This MD&A should be read in conjunction with the information contained in the Company’s audited consolidated financial statements and related notes for Fiscal 2021 (the “ 2021 Annual Financial Statements ”), the Company’s annual information form for Fiscal 2021 (the “ 2021 Annual Information Form ” and together with this MD&A and the 2021 Annual Financial Statements, the “ 2021 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 January 25, 2022.

BASIS OF PRESENTATION

For reporting purposes, we prepared our 2021 Annual 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 2021 Annual 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 share and per share amounts or as otherwise indicated. Unless otherwise indicated, all references to a specific “note” refer to the notes to the 2021 Annual 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 source components for an manufacture our products; 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 to be 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 2021 Annual Information Form, as well as those risk factors presented elsewhere in the 2021 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, including EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Gross Margin. 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 EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Gross Margin 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 in the technology industry frequently use non-IFRS measures in the evaluation of issuers. Our management also uses these 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 non-recurring 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. Adjusted EBITDA Margin is a non-IFRS ratio.

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).

Gross Margin

We define Gross Margin as gross profit divided by revenue. Gross Margin is a nonIFRS ratio.

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 Fiscal 2021 revenue increased by $9.5 million or 11% when compared to Fiscal 2020. Further, Fiscal 2020 revenue increased by $9.2 million or 12% relative to Fiscal 2019.

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 COVID-19 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 2021 Annual Information Form.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

Consolidated Highlights for the Three Months and Full Year Ended October 31, 2021

On June 30, 2021, we announced the execution of a definitive agreement to acquire CineMassive Displays, LLC (“ CineMassive ”). The acquisitions was subsequently completed on August 2, 2021. With the addition of the CineMassive technology we now will combine low latency live video with real-time secure data sources and communication elements to provide customers with a single-vendor solution for situational awareness.
Revenue for the full year ended October 31, 2021 was $92.6 million, an increase of $9.5 million or 11% when compared to the full year ended October 31, 2020. Revenue generated from the CineMassive business was $5.1 million.
Adjusted EBITDA for the full year ended October 31, 2021 was $12.3 million an increase of $2.4 million or 25% when compared to the full year ended October 31, 2020. Our Adjusted EBITDA Margin for the full year ended October 31, 2021 was 13.3% compared to 11.9% for the full year ended October 31, 2020. See “Non-IFRS Measures”,
Net loss for the full year ended October 31, 2021 was $8.8 million a decrease of $14.6 million compared to the full year ended October 31, 2020; but was impacted by one-time expense of $14.1 million in non-recurring share-based payments related to our legacy employee stock option plan (the “ ESOP ”); $2.6 million in share-based expense related to our current long term incentive plan (the “ LTIP ”); and $3.1 million in insurance and professional fees largely related to being a public issuer and expenses of recent acquisitions. 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 sharebased expenses were previously recorded since the ESOP’s inception.
Gross Margins for the three months ended October 31, 2021 were 70.8% whereas Gross Margins for the full year ended October 31, 2021 were 74.9%. Gross Margins in the three month pended October 31, 2021 were impacted by revenues generated by CineMassive which operates at a lower gross margin than Haivision’s traditional business.
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.
On August 23, 2021, we announced that the Company entered into a three-year credit agreement providing for a new revolving line credit facility in the principal amount of $35 million with Bank of Montreal. The revolving facility also provides access to additional financing of $25 million on an uncommitted basis through an accordion provision under the same terms. The revolving facility is for general working capital, general corporate requirement and financing for acquisitions.
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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 continue 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 are 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 particularly 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 – 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” in the 2021 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 solutions 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 managed services, cloud-based 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 include 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.
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Other costs of sales includes certain technology licenses, fulfillment supplies, scrap, reserves for obsolescence, return merchandise authorization costs and depreciation.

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. Operations and support expenses also include the license costs of technologies deployed internally. 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. 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 and research and development 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, and 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 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 short- and long-term financings are recorded at the relevant rates on the various borrowing agreements, and any non-use fees on revolving lines of credit.

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 and non-monetary items denominated in foreign currencies, are retranslated at the rates prevailing at that date. The exchange differences arising on the translation are recognized as a foreign currency translation adjustment.

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 2021 Financial Statements and related notes for Fiscal 2021, 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 October 31, 2021 2020 ($) ($) 27,060 22,124 7,892 5,212 19,168 16,912 19,664 15,498 (496) 1,414 145 78 (641) 1,336 (812) (150) 171 1,486 (1,594) (78) (1,423) 1,408	Year ended October 31,	Year ended October 31,
2021 ($) 27,060 7,892 19,168 19,664 (496) 145 (641) (812) 171 (1,594) (1,423)	2021 ($) 92,591 23,265 69,326 74,813 (5,487) 393 (5,880) 2,903 (8,783) (2,373) (11,156)	2020
		($) 83,112 19,364
		63,749 55,589
		8,160 345
		7,815 2,018
		5,797 144
		5,940

Net income per share Net income per share (basic and diluted) Weighted average number of common shares outstanding Basic Diluted	Three months ended October 31, 2021 2020 ($) ($) 0.02 0.10 28,761,365 15,340,715 29,363,158 15,340,715	Year ended October 31,	Year ended October 31,
	2021 ($) 0.02 28,761,365 29,363,158	2021 ($) (0.34) 25,783,477 25,783,477	2020
			($) 0.38 15,374,460 15,374,460

Three months ended October 31, 2021 2020 ($) ($) 171 1,486 (812) (150) (641) 1,336 545 117 896 320 815 — 145 78 1,760 1,851 — — 1,760 1,851 6.5% 8.4%	Year ended October 31,	Year ended October 31,
2021 ($) 171 (812) (641) 545 896 815 145 1,760 — 1,760 6.5%	2021 ($) (8,783) 2,903 (5,880) 1,429 1,311 16,831 393 14,084 (1,772) 12,312 13.3%	2020
		($) 5,797 2,018
		7,815 576 1,162 — 345
		9,898 —
		9,898
		11.9%

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	Fiscal 2021 ($) 122,480 9,179 33,559	Fiscal 2020 ($) 60,805 7,134 30,731

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DISCUSSION OF OPERATIONS

Three Months and Full Year ended October 31, 2021

Revenue

Revenue for the three months and full year ended October 31, 2021 was $27.1 million and $92.6 million, respectively, an increase of $4.9 million or 22% and $9.5 million or 11%, respectively, compared to the three months and full year ended October 31, 2020. Recurring revenue for the three months and full year ended October 31, 2021 was approximately 27% and 25%, respectively. The principal factor contributing to the revenue growth is the recent acquisition of CineMassive which contributed $5.1 million to fourth quarter revenue and an increase of overall economic activity (some of which may be related to the COVID-19 pandemic).

Three months ended October31, 2021 2020 ($) ($) 19,782 17,082 2,189 1,969 5,089 3,073 27,060 22,124	Full year ended October31,	Full year ended October31,
2021 ($) 19,782 2,189 5,089 27,060	2021 ($) 69,355 8,447 14,789 92,591	2020
		($) 62,677 7,902 12,533
		83,112

Cost of Sales

Cost of sales for the three months ended October 31, 2021, was $7.9 million, an increase of $2.7 million or 51% when compared to the three months ended October 31, 2020. The increase in cost of sales in the three-month period ended October 31, 2021 is largely related to $1.8 million in direct product costs related to the 22% increase in year-over-year revenue, and the higher direct product costs as a percentage of CineMassive revenues; to $0.3 million in higher production department costs related to the addition of CineMassive’s production department to the mix and increases in Haivision’s production department to accommodate growth; and to $0.5 million in higher other cost of sales including increases in obsolescence reserves.

For the full-year ended October 31, 2021 cost of sales increased by $3.9 million or 20% when compared to the full year ended October 31, 2020. The increase in cost of sales in the full year ended October 31, 2021 is largely related to the $2.7 million increase in Direct product costs related to 11% increase in year-over-year revenue and the higher direct product costs as a percent of CineMassive revenues; to $0.6 million in higher production department costs related to increases in Haivision’s legacy production department (including the expansion of our Montreal production facility) and the the addition of CineMassive’s production department; and to $0.6 million in higher other cost of sales including increases in obsolescence reserves. As we continue to grow, we anticipate that we will continue to realize healthy gross margins, but at lower levels than historical averages as we assimilate the CineMassive products.

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Three months ended October 31, 2021 2020 ($) ($) 5,821 4,013 634 319 1,437 880 7,892 5,212 70.8% 76.4%	Full year ended October 31,	Full year ended October 31,
2021 ($) 5,821 634 1,437 7,892 70.8%	2021 ($) 18,845 1,936 2,484 23,265 74.9%	2020
		($) 16,176 1,362 1,826
		19,364
		76.7%

Note:

(1) Gross Margin is not a recognized measure under IFRS. See “Non-IFRS Measures”.

Expenses

For the three months and full year ended October 31, 2021 and 2020 expenses were:

Three-months ended October 31, 2021 2020 ($) ($) 7,219 5,806 2,170 1,099 5,740 4,594 3,719 3,999 816 — 19,664 15,498 72.7% 70.0% 19,664 15,498 816 — 18,848 15,498 69.7% 70.0%	Full year ended October 31,	Full year ended October 31,
2021 ($) 7,219 2,170 5,740 3,719 816 19,664 72.7% 19,664 816 18,848 69.7%	2021 ($) 21,205 5,505 18,617 12,655 16,831 74,813 80.8% 74,813 16,831 57,982 62.6%	2020
		($) 20,411 4,906 19,450 10,822 —
		55,589
		66.9% 55,589 —
		55,589
		66.9%

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

Sales and marketing expenses increased by $1.4 million for the three months ended October 31, 2021, when compared to the three months ended October 31, 2020. The increase in the three-month period ended October 31, 2021 is largely related to increases in compensation expenses of $0.8 million including the addition of fifteen sales and marketing people from the CineMassive acquisition, and increases in marketing spending of $0.2 million and travel of $0.1 million. For the full year ended October 31, 2021, sales and marketing expenses increased by $0.8 million compared to the full year ended October 31, 2020. Increases in compensation expenses of $1.6 million were offset by a subsequent reduction of $0.7 million related to the forgiveness of the PPP (as defined below) loan. Sales and marketing expenses for the full year also benefited from reductions in travel expenses of $0.5 million and marketing expenses of $0.1 million, both of which were impacted by the COVID-19 pandemic. The number of people in the sales and marketing organizations increased from 84 people at October 31, 2020 to 103 people at October 31, 2021.
Operations and support expenses increased by $1.1 million for the three months ended October 31, 2021, when compared to the three months ended October 31, 2020. The increase in the three-month period in October 31, 2021 is largely related to increases in compensation expenses of $0.8 million, including the addition of ten people related to the CineMassive acquisition, and travel expenses of $0.2 million. For the full year ended October 31, 2021, Operations and support expenses increased by $0.6 million compared to the full year ended October 31, 2020. Increases in compensation expenses of $0.7 million were offset by a subsequent reduction of $0.4 million related to the forgiveness of the PPP loan. Operations and Support expenses also experienced increases in travel expenses of $0.2 million and technical support equipment of $0.2 million. The number of people in the Operations and support function increased from 38 people at October 31, 2020 to 45 people at October 31, 2021.
Research and development expenses increased by $1.1 million for the three months ended October 31, 2021 when compared to the three months ended October 31, 2020. Compensation related expenses for the three-month period ended October 31, 2021 increased by $0.8 million compared to the prior year period but included the addition of twelve people related to the CineMassive acquisition. Depreciation and amortization expenses increased by $0.8 million for the three months ended October 31, 2021 compared to the prior year period but was offset by a reduction in the use of subcontractors by $0.6 million. For the full year ended October 31, 2021, Research and development expenses decreased by $0.8 million year-over-year. Year-over-year increases in compensation expenses of $1.5 million was offset by a reduction of $0.6 million related to the forgiveness of the PPP loan; increases in Depreciation and amortization of $0.8 million-; and a reduction of SR&ED credit reimbursements of $0.6 million. SR&ED credit reimbursements are at a lower rate than before becoming public. These increases were more than offset by a reduction of Subcontractor costs of $3.1 million yearover-year. The number of people in the product realization organization increased from 99 people at October 31, 2020 to 125 people at October 31, 2021.
General and administrative expenses decreased by $0.2 million for the three months ended October 31, 2021 when compared to the three months ended October 31, 2020. The decrease in the three-month period ended October 31,
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2021 is largely related to a reduction of $1.2 million in compensation related expenses – including the executive bonus plan and $1.0 million reduction related to the Canadian dollar’s impact on the US dollar denominated assets and liabilities; offset by increases in occupancy expenses of $0.8 million and professional fees and insurance costs of $1.0 million. For the full year ended October 31, 2021, General and administrative expenses increased by $1.8 million when compared to the full year ended October 31, 2020. The increase in the full-year period ended October 31, 2021 is largely related to a reduction of $1.3 million in compensation related expenses (including the executive bonus plan) and the Canadian dollar’s impact on US dollar denominated assets and liabilities of $0.7 million; offset by increases in professional fees and insurance costs of $3.1 million. The increases in professional fees and insurance is largely related to the additional cost of being a public issuer and the recent acquisition of CineMassive. The number of people in the General and administrative function increased from 20 people at October 31, 2020 to 45 people at October 31, 2021.

Share-based payments increased by $0.8 million for the three months ended October 31, 2021, when compared to the three months ended October 31, 2020. The increase during the three-month period is the result of expenses related to our current LTIP program. For the full year ended October 31, 2021, share-based compensation increased by $16.8 million compared to the same prior year period. The increase includes $14.2 million in expenses related to the legacy ESOP plan, and $2.6 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, since the ESOP’s inception, no share-based expenses were previously recorded. 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 October 31, 2021, net income was $0.2 million, a decrease of $1.3 million when compared to the three months ended October 31, 2020. The decrease in net income is largely due to $0.6 million in professional fees related to the additional cost of being a public issuer and the cost of acquisitions; $0.8 million in share-based payments related to our current LTIP.. For the full year ended October 31, 2021, net loss was $8.8 million a decrease of $14.6 million compared to the same prior year period. The decrease in net income is largely due to $16.0 million in share-based payments related to our legacy ESOP and current LTIP; $2.0 million in professional fees related to the cost of being a public issuer and the cost of acquisitions; and $1.1 million in insurance costs (the majority of which is related to the cost of being a public issuer); offset by a reduction in consulting fees of $3.1 million and the Canadian dollar’s impact on U.S. dollar denominated assets and liabilities of $0.6 million.

$0.6 million.
Operating profit (loss) Financial expenses	Three months ended October 31, 2021 2020 ($) ($) (496) 1,415 145 78	Full year ended October 31,
	2021 ($) (496) 145	2021 ($) (5,487) 393	2020
			($) 8,160 345

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Three months ended October31, 2021 2020 ($) ($) (641) 1,337 (812) (150) 171 1,487	Full year ended October31,	Full year ended October31,
2021 ($) (641) (812) 171	2021 ($) (5,880) 2,903 (8,783)	2020
		($) 7,815
		2,018
		5,797

Adjusted EBITDA

Adjusted EBITDA for the three months ended October 31, 2021 was $1.8 million, a decrease of $0.1 million compared to the same period in the prior year. The decrease in the Adjusted EBITDA in the three months ended October 31, 2021 is the result of increased revenues generating $2.3 million in increased gross profit, offset by an increase in total expenses (excluding share-based compensation and depreciation) of $2.7 million. The additional expenses of being a public issuer were offset by the Canadian dollar’s impact on US dollar denominated assets and liabilities.

Adjusted EBITDA for the full year ended October 31, 2021 was $12.3 million, an increase of $2.4 million compared to the same period in the prior year. The increase in the Adjusted EBITDA in the full year ended October 31, 2021 is largely the result of higher revenue resulting in a $5.6 million increase in gross profit offset by an increase in total expenses (excluding share-based compensation and depreciation/amortization) of $1.4 million. Additional expenses of being a public issuer and the Canadian dollar’s impact on US dollar denominated assets and liabilities were offset by the forgiveness of the PPP loan during the period.

Three months ended October 31, 2021 2020 ($) ($) (496) 1,415 545 117 896 320 944 1,852 816 — — — 1,760 1,852 6.5% 8.4%	Full year ended October 31,	Full year ended October 31,
2021 ($) (496) 545 896 944 816 — 1,760 6.5%	2021 ($) (5,487) 1,429 1,311 (2,747) 16,831 (1,772) 12,312 13.3%	2020
		($) 8,160 576 1,162
		9,898 — —
		9,898
		11.9%

Note:

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

Share-based compensation consists of $14.2 million in expense related to the legacy ESOP, and $2.6 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

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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.

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 income (loss) Net income per share (basic and diluted) Weighted avg. number of shares outstanding Basic Diluted Net income (loss) Income taxes Depreciation Amortization Financial expense EBITDA(1) Share-based payment (LTIP) Non-recurring expenses: Share-based payments (ESOP) PPP loan forgiveness Adjusted EBITDA(1) Gross margin Adjusted EBITDA Margin(1) Revenue Cost of sales	Q4 2021 $ 27,060 $ 7,892 $ 19,168 $ 19,664 $ (496) $ 171 $ 0.02 28,761,365 29,363,158 $ 171 $ (812) $ 545 $ 896 $ 145 $ 945 $ 815 $ — $ — $ 1,761 70.8% 6.5% Q4 2020 $ 22,124 $ 5,212	Q3 2021 $ 20,695 $ 5,152 $ 15,543 $ 11,654 $ 3,889 $ 1,895 $ 0.07 26,634,916 27,316,136 $ 1,895 $ 1,934 $ 298 $ 138 $ 60 $ 4,325 $ 821 $ — $ (1,772) $ 3,374 78.1% 16.3% Q3 2020 $ 20,346 $ 4,710	Q2 2021 $ 21,851 $ 4,788 $ 17,063 $ 14,629 $ 2,433 $ 1,237 $ 0.06 26,632,340 27,344,467 $ 1,237 $ 1,117 $ 298 $ 138 $ 79 $ 2,869 $ 745 $ — $ — $ 3,614 78.1% 16.5% Q2 2020 $ 21,229 $ 4,806	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% Q1 2020
				$ 19,413 $ 4,636

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Gross profit Operating expense Operating profit Net income (loss) Net income per share (basic and diluted) Weighted avg. number of shares outstanding (basic and diluted) Net income (loss) Income taxes Depreciation Amortization Financial expense EBITDA(1) Non-recurring expenses Adjusted EBITDA(1) Gross margin(1) Adjusted EBITDA Margin(1)	Q4 2020 $ 16,913 $ 15,498 $ 1,415 $ 1,487 $ 0.10 15,340,715 $ 1,487 $ (150) $ 116 $ 321 $ 78 $ 1,852 $ — $ 1,852 76.4% 8.4%	Q3 2020 $ 15,636 $ 12,505 $ 3,131 $ 2,059 $ 0.13 15,340,715 $ 2,059 $ 996 $ 140 $ 288 $ 77 $ 3,560 $ — $ 3,560 76.9% 17.5%	Q2 2020 $ 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
				$ 14,777 $ 14,536
				$ 241 $ (116) $ (0.01) 15,414,410 $ (115) $ 255 $ 159 $ 172 $ 101
				$ 572 $ —
				$ 572 76.1% 2.9%

Note:

(1) EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Gross Margin are not recognized measures under IFRS. See “Non-IFRS 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 off 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.

Financial Condition

Total cash Total assets Total liabilities	Fiscal 2021 ($) 26,838 122,480 33,559	Fiscal 2020
		($) 15,715 60,805 30,731

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Cash at October 31, 2021 increased $11.1 million from the year ended October 31, 2020 as a result of (i) net proceeds of $30.0 million received from the initial public offering and the subsequent overallotment option, (ii) proceeds of $4.9 million from the exercise of options prior to the initial public offering; (iii) proceeds of $2.0 million from ongoing operations , less cash payments of $19.5 million used in acquisitions, repayment of $3.9 million for term loans; a $1.5 million shareholder distribution related to a contractual obligation; and $0.7 million for capital expenditures.

Total assets at October 31, 2021 increased $60.9 million from the year ended October 31, 2020 primarily as a result of the $38.3 million in non-cash assets acquired from CineMassive, the $11.1 million increase in cash, the $5.3 million increase in non-cash operating working capital assets; and the $4.7 million increase in right-of-use assets – including leases assumed as part of the CineMassive acquisition. Total liabilities increased by $2.8 million. Increases in total liabilities were largely the result of the $4.5 million increase in lease liabilities – including leases assumed as part of the CineMassive acquisition, but were offset by a $3.9 million reduction in term loans outstanding at October 31, 2020 (including the $1.8 million related to the PPP loan that was forgiven).

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 $35 million revolving line of credit available to be drawn to meet ongoing operating and working capital requirements, capital expenditures, as well as permitted acquisitions.

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 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	Fiscal 2021 ($) 2,216 (20,323) 30,227 12,120 15,715 (997) 26,838	Fiscal 2020
		($) 13,917 (2,537) 1,795
		13,175
		2,517 24
		15,716

For the full year ended October 31, 2021, we had a net increase in cash of $11.1 million resulting in cash at the end of the period of $26.8 million at October 31, 2021.

Net cash provided by operating activities for the full year ended October 31, 2021 was $2.2 million, whereas cash used by investing activities during the same period was $20.3 million largely related to the $19.5 million paid for the CineMassive acquisition (net of cash received) and to a lesser extent capital expenditures of $0.7 million. Cash provided by

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financing activities was $30.2 million, largely the results of $30.0 million in net proceeds from the issuance of common shares under our initial public offering and $4.9 million from the exercise of stock options offset by the repayment (or forgiveness) of term loans totaling $3.9 million and a payment of $1.5 million related to a shareholder distribution.

For the full year ended October 31, 2020, we had a net increase in cash of $13.2 million, resulting in cash at the end of the period of $15.7 million.

Net cash provided by operating activities for the full year ended October 31, 2020 was $13.9 million, cash used by investing activities during the period was $2.5 million largely related to the Teltoo acquisitions and the remaining payments for the LightFlow acquisition, and cash generated by financing activities during the period was $1.8 million (largely the result of the net increase in term loans).

Capital Expenditures

Our capital expenditures for Fiscal 2021 were $0.8 million compared to $0.3 million for Fiscal 2020. 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 2022.

Expenditures on research activities are recognized as an expense in the period in which they are 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 loan was made under the Small Business Administration’s (“ SBA ”) Paycheck Protection Program (“ PPP ”) (Section 1102 of the CARES Act). The face amount of the loan was US$1.5 million and the interest rate on the loan was 1% per annum and has a term of twenty-four (24) months. The loan and accrued interest was forgiven in its entirety on June 10, 2021.

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 provide 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 was available for general corporate purposes, with the inclusion of share buybacks under the Term Loan. The SVB Loan was 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.

On August 20, 2021, we replaced the SVB Loan Agreement with a credit agreement with Bank of Montreal (the “ BMO Credit Agreement ”) with our U.S. subsidiaries Haivision Network Video Inc. and CineMassive Displays LLC, as co-borrowers, which provides for a $35 million revolving credit facility (the “ Revolving Facility ”), to be used to finance ongoing operating and working capital requirements, capital expenditures, as well as permitted acquisitions. The Revolving Facility bears interest at Canadian prime rate plus between 0% -

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1.50% depending on level of leverage. The current rate based on current level of leverage would be 2.45%. The Revolving Facility may be increased, at the sole discretion of Bank of Montreal by an aggregate amount not to exceed $25 million. As at the date hereof, there were no advances under the Revolving Facility and we are in compliance with all covenants under the BMO Credit Agreement.

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 October 31, 2021.

	October 31, 2021	October 31, 2021	October 31, 2021
Year 1 ($) 12,545 — 1,588 14,133	Year 2 ($) — — 1,574 1,574	Year3 ($) — — 1,580 1,580	Year 4 ($) — — 1,625 1,625	Year5+ ($) — — 4,584 4,584	Total
					($) 12,545 — 10,951
					23,496

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, 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 were entered into in 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 nor hold any collateral as security. 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 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

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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.

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 Revolving Line and Term Loan which was denominated in U.S. currencies and are exposed to such risk under our Revolving Facility. Interest on advances under the Revolving Facility as at October 31, 2021 Canadian prime rate plus 0.00%. The referenced Canadian prime rate at October 31, 2021 was 2.45%, and as of October 31, 2021, $0 was outstanding on the Revolving Facility

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 October 31, 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 Trade and other payables Income taxes payables	October 31, 2021 ($) 14,768 1,165 4,057 5,078 2,378	October 31, 2020
		($) 1,502 584 6,136 5,770 2,040

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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 managers 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 For Fiscal 2021 and 2020 was as follows:

Salaries and Bonuses Number of Senior Managers

Fiscal 2021 $ 3,195 4	Fiscal 2020 $ 6,126 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 2021 Annual Financial Statements and the 2021 Annual Information Form, particularly under the heading “Risk Factors” in the 2021 Annual Information Form, and in other filings that we have made and may make in the future with applicable securities 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

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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 2021 Annual 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.

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.

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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 2021 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 28,758,887 common shares and no preferred shares were issued and outstanding as of January 25, 2022.

As of January 25, 2022, there were 1,311,000 options, 348,500 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 and subject to the terms of our LTIP and the applicable award agreements.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

The applicable rules of the Canadian Security Administrators require our certifying officers, our Chief Executive Officer (“ CEO ”) and Chief Financial Officer (“ CFO ”), to establish and maintain disclosure controls and procedures (“ DC&P ”) and internal controls over financial reporting (“ ICFR ”), as these terms are defined in such rules. In compliance with these rules, we have filed applicable certifications signed by our CEO and CFO that, among other things, report on the design of each of DC&P and ICFR.

Disclosure Controls and Procedures

Our CFO and CEO have designed, or caused to be designed under their supervision, DC&P to provide reasonable assurance that (i) material information regarding the Company is accumulated and communicated to our management, including our CEO and CFO, in a timely manner so that appropriate decisions can be made regarding public disclosure and information, and (ii) information required to be disclosed in our annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in appliable securities legislation.

Our CEO and CFO have evaluated, or caused to be evaluated under their supervision, the effectiveness of our DC&P atg October 31, 2021, our financial year end. Based on that evaluation, our CEO and CFO concluded that our DC&P were effective at October 31, 2021.

Management’s Annual Report on Internal Controls Over Financial Reporting

In addition, our CEO and CFO have designed, or caused to be designed under their supervision, ICFR to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with our accounting and reporting standards.

Our CEO and CFO have evaluated, or caused to be evaluated under their supervision, the effectiveness of our ICFR at the financial year ended October 31, 2021, based on the criteria set forth in the Internal Control-Integrated Framework (2013), issued by the

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Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our CEO and CFO have concluded that our ICFR was effective at October 31, 2021.

Changes to Internal Control Over Financial Reporting

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 October 31, 2021 that have materially affected or are reasonably likely to materially affect our ICFR. No such changes were identified through their evaluation.

Limitation on Scope of Design

The scope of design of ICFR and DC&P excluded the controls, policies, and procedures of CineMassive, which was acquired on August 2, 2021.

CineMassives's contribution to our Consolidated Statements of Loss and Comprehensive Loss for the Fiscal 2021, excluding the amortization of intangible assets, was less than 10% of total revenues and total net loss. The amounts recognized for the assets acquired and liabilities assumed at the date of acquisition are described in note 6 of the 2021 Annual Financial Statements.

Limitation on Scope of Design

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 DC&P 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 2021 Annual Information Form, particularly under the heading “Legal Proceedings” and note 23 to the 2021 Annual Financial Statements.

FURTHER INFORMATION

Additional information relating to us and our business, including the 2021 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. — Management Reports 2022

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