Highmark Interactive Inc. — Interim / Quarterly Report 2022

Nov 29, 2022

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2022

DATED NOVEMBER 29, 2022

Highmark Interactive Inc. Management’s Discussion and Analysis For the three and nine months ended September 30, 2022

This Management’s Discussion and Analysis (“MD&A”) has been prepared by the management of Highmark Interactive Inc. (“Highmark” or the “Company”) and should be read in conjunction with Highmark’s condensed interim consolidated financial statements and notes for the three and nine months ended September 30, 2022 (the “Financial Statements”) and the audited consolidated financial statements and notes as at and for the years ended December 31, 2021 and 2020 (the “Annual Financial Statements”). The financial statements comprise the financial statements of the Company and its subsidiaries and companies under common control and the subsidiaries they control. The Company has prepared the Financial Statements using International Financial Reporting Standards (“IFRS”). All amounts are in Canadian dollars unless otherwise specified.

Certain information and discussion included in this MD&A constitutes forward- looking information. Readers are encouraged to refer to the cautionary notes contained in the section Forward-Looking Statements at the end of this MD&A.

The Annual Financial Statements are available at www.sedar.com. All amounts disclosed are in Canadian dollars.

This MD&A contains disclosure of material changes related to Highmark occurring up to and including November 29, 2022.

Company Overview

Highmark Interactive Inc. (formerly Stormcrow Holdings Corp.) was incorporated November 6, 2019 pursuant to the provisions of the Business Corporations Act (Ontario).

The Company was previously carrying on business as a Capital Pool Corporation (“CPC”), as such term is defined in TSX Venture Exchange Inc. (the “Exchange”) Policy 2.4 – Capital Pool Companies (“CPC Policy 2.4”). The Company’s principal purpose was the identification, evaluation and acquisition of assets, properties or businesses or participation therein subject, in certain cases, to shareholder approval and acceptance by the Exchange.

On November 11, 2021, the Company incorporated a wholly owned subsidiary under the Business Corporations Act (Ontario), 2845009 Ontario Inc. (“Subco”), for the sole purpose of completing the proposed Qualifying Transaction. The Qualifying Transaction was completed on November 11, 2021 by way of a three-cornered amalgamation, pursuant to which Subco amalgamated with Highmark Innovations Inc (“Highmark Innovations”) and the Company, which now holds the assets of Highmark Innovation as a wholly-owned subsidiary, changed its name to Highmark Interactive Inc. Immediately prior to the close of the Qualifying Transaction, the Company consolidated its common shares on a 6 to 1 basis (the “Share Consolidation”). The Share Consolidation has been applied retrospectively in the consolidated financial statements, including a share exchange in connection with the Qualifying Transaction of 1.40235 post-consolidation shares of the Company for every one share of Highmark, and as a result, the common shares (the “Common Shares”), broker warrants and option amounts of the Company presented herein

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are stated in an adjusted post-share consolidation basis. Upon the close of the Qualifying Transaction, the Company successfully became listed on Tier 1 of the TSX Venture Exchange under the symbol “HMRK”.

The subsidiaries of the Company include:

Entity	% of ownership
Highmark Innovations Inc.	100%
Highmark Interactive (US) Inc.1	100%
BrainFx Inc.	100%
BrainFx USA Inc.1	100%
Highmark Health Corporation	100%
Highmark Health Mississauga	100%
Complex InjuryRehab Inc.	100%

1 Entity has been dormant throughout the entire reporting period.

As part of the Company’s initial growth strategy, Highmark competed the acquisition of BrainFx on May 17, 2021. BrainFx was incorporated on February 17, 2012 in the province of Ontario. BrainFx designs and develops mobile and virtual neurological performance testing software applications. BrainFx collects normative neurologic functional data focused on improving and supporting a clinician’s ability to diagnose (if within their scope of practice) and treat, thus improving patient outcomes.

On November 11, 2021, the Corporation completed the acquisitions of Complex Injury Rehab Inc. ("Complex Injury") and Highmark Health Corporation. ("Highmark Health"). Complex Injury is a community-based multidisciplinary rehabilitation clinic focused on providing integrated specialty care to patients with a variety of injuries, with a specific focus on neurological or complex injuries. Highmark Health is a community-based multidisciplinary healthcare clinic focused on providing integrated specialty care to patients with a variety of injuries, with a principal focus on patients who had suffered traumatic brain injury with a significant emphasis on the use of medical device technology. Highmark Health and Complex Injury will continue to operate as the clinical healthcare segment offering expert clinical services and unique digital technologies to augment clinical care for better patient outcomes.

The resulting consolidated Company delivers best-in-class digital health tools and hybrid clinical care solutions focused on human neurological and psychological function. Highmark’s technology division derives growth through the licensing of its innovative, disruptive, and clinically relevant software modules. These modules include EQ’s US Food and Drug Administration (“FDA”) cleared Class 2 Software as a Medical Device (“SAMD”) platform.

Business Strategy

The Company’s business strategy is to deploy its proprietary software solutions into the North American markets through a combination of channel partners and its own salesforce. The tactics employed vary by geography; specifically Canada and USA.

US Strategy

Highmark’s technology represents a new Remote Physiologic Monitoring (“RPM”) platform that doesn’t require our customers (i.e. clinic network) to make a large capital expenditure to begin offering our RPM solution since a smart phone is sufficient. Typically RPM solutions require an investment in hardware devices for monitoring patient results remotely which can be a hurdle to implementation. Also, Highmark

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has the potential to drive significant novel and incremental revenue for the clinic while achieving better patient outcomes. By starting with Highmark’s platform, clinics can begin integrating the concept of remote care with their patient base, which ensures strong buy-in before the clinic network decides to further expand their RPM services with other vendors which typically requires investing in expensive medical devices that require a significant capital expenditure

Highmark’s US strategy is heavily driven by the fact that Highmark’s FDA Cleared software qualifies for reimbursement under the Medicare/Medicaid RPM code. RPM is the use of devices to monitor patients’ key health metrics while they are at home. There is overwhelming evidence that proactive remote inhome monitoring of individuals who have health issues drives healthcare savings by proactively identifying problems before they become serious enough to cause patients to be hospitalized. As such the U.S. Centres for Medicare and Medicaid Services (“CMS”) established new RPM codes in 2021. Those codes were, for the most part, augmented at the start of 2022. Highmark is looking to capitalize on several resulting new opportunities.

Highmark’s software is covered by CMS, and thus there is no cost to the clinician. Reimbursement by CMS represents a new source of revenue for clinicians, as they can begin to monetize their patients without being required to physically meet them.

Highmark is leveraging the large number of initiatives recently launched that are specifically focused on preventing falls in the over 65 years old population. The US Centres for Disease Control (“CDC”) reported the following trends:

• 36,000,000 falls annually in individuals over 65 years

• 1 in 5 falls causes a surgical treatment due to hip fracture or head injury

• Cost of falls, in the over 65 years group is over $50 Billion/annum

To address this highly preventable, costly issue, multiple organizations are working on finding solutions. A sample of these are:

• CDC has created the Stopping Elderly Accidents Deaths & Injuries (“STEADI”). This is a program providing education. And training to healthcare providers to prevent falls

• American Orthopedics Association (“AOA”) launched the “Own the Bone Program”, whose focus is to “change physician and patient behavior to reduce the incidence of future fractures” due to falls.

Highmark has a competitive advantage as an RPM vendor, as our balance module has been cleared by the FDA as a Class 2 Software as a Medical Device (“SAMD”) and requires no additional capital expenditure by practitioners or patients. Highmark’s approval and cost effectiveness places it’s technology in a very select group, thus limiting the competitive landscape. Highmark has started to work with practitioners in the US to deploy the RPM technology, with revenues expected by Q1 2023.

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Canadian Strategy

Highmark’s strategy in Canada is to work directly with employers, insurance companies, and law firms to provide brain injury rehabilitation services. Domestically, these will be provided through the utilization of Highmark’s physical locations and the large mobile clinical workforce, all using the Highmark technology platform. In addition, Highmark is intending to leverage the large number of rehab clinics in Canada using its technology to provide return to work services to the employer market.

The overall strategy is based on organic growth and strategic acquisitions of medical technology companies. Ongoing efforts, in a software-as-a-service model, to capture Business-to-Business (“B2B”) customers in differentiated market verticals include:

• Providing virtual or in-person clinical services to patients utilizing Highmark’s technology solutions;

• Identification and acquisition of synergistic medical device technology development organizations;

• Identification of similar clinical services businesses that are suitable as a channel for technology sales;

• Implementation of Highmark’s medical device technology in the standard operating procedures of large community-based hospitals;

• Continued research and development of digital medicine technology using insights from an expanded clinical services organization’s day to day observations of the neurological, physical and psychological impacts of injury on patient populations.

Highmark launched Phase 1 of the THINK AHEAD Pathways Program (“TAPP”) with the Emergency Room (“ER”) at a GTA hospital on June 14, 2022 with the program being deployed and live as of July 2022. The program offers physician follow-up and remote monitoring of neurological function to patients over the age of 12 and who have suffered a head injury. The physician can immediately review their current symptoms, balance and cognitive status using the Highmark telehealth portal, creating a more efficient clinical session without compromising quality. Highmark aims to launch in 8 locations by the end of 2022, and expand nationally by the end of 2023.

Key milestones during the nine months ended September 30, 2022 include:

• In Q1, the Company established a distribution partnership with US Orthopedic Alliance (“USOA”) in the United States. The Company is pleased to note that the two organizations have begun integrating to develop an optimal go to market strategy. Highmark and USOA have been coexhibiting at two of the largest medical orthopedic conferences in 2022. This has led to a robust pipeline of prospects that the Company is working to onboard.

• Revenue growth in the third quarter of 2022 as compared to the third quarter of 2021 was driven by integrating the acquisitions in 2021, ongoing wins in the marketplace of the Company’s software platform, return to pre-Covid patient volumes, and new software wins in the market.

• Further integration of the BrainFx and EQ modules, enabling the Company to provide an end-toend solution for the customer. The resulting platform is being closely evaluated by one of the largest providers of specialty care clinical services globally. The integration will be an ongoing process in 2022 and 2023 to optimize the technology for a streamlined user experience.

• Leveraging the collective platform, a framework has been developed for how Highmark’s software can be integrated quickly into the patient flow within Canadian hospital emergency departments.

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The evolution of this framework would lead to emergency departments using the EQ platform, which would generate additional software subscription sales into the Highmark Partner Network (“HPN”), virtual and clinical services revenue.

• Highmark launched Phase 1 of the THINK AHEAD Pathways Program with the Emergency Room (“ER”) at a Greater Toronto Area (“GTA”) hospital on June 14, 2022, with the program being deployed and live as of July 2022. In addition, Highmark went live with 5 additional hospitals in the Niagara region bringing the total group count to 6 in the quarter. During the third quarter of 2022, the Company notes referrals are trending below the original forecast, but that is possibly due to seasonality of lower ER caseloads in summer months and being early in the adoption cycle for the hospital. Subsequent to September 30, 2022 and up to the date of the MD&A, the Company has averaged closer to expected referral numbers as a result of more engagement with the hospital staff and awareness of the program in the community.

Financial Highlights

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Total revenue increased 455% and 403% for the three and nine months ended September 30, 2022, respectively, compared to the prior comparable period. The increase is mainly due to the acquisition of Complex Injury Rehab Inc. on November 9, 2021, which has generated clinical services revenues of $678,662 and $1,669,962 during the three and nine months ended September 30, 2022, respectively.

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Selected Financial Information

Clinical Services

Clinical services revenue is paid by patients and third-party payors for medical services provided through the Company’s clinics. Clinical services revenues increased by 781% and 680% during the three and nine months ended September 30, 2022, respectively, and was primarily the result of the inclusion of Complex Injury clinical services revenue following the November 9, 2021 acquisition.

Subscription and Support

The Company enters into contracts with enterprises and end-users to provide subscription services for the right to access Highmark’s software platforms through its application (“App”) and online dashboard as well as provide the related customer support services. The average duration of these initial contracts is one year and spans the period between the customer obtaining access to the Company’s software platforms and expiry of the contract. The contracts have an annual evergreen clause subject to notice of termination being provided in advance. Therefore, under IFRS, subscription and support revenue are impacted by the unearned revenue from previous periods being recognized in the current period. Subscription and support revenue increased by 13% and 56% for the three and nine months ended September 30, 2022, respectively. The increase in revenue was primarily related to the inclusion of subscription revenue from BrainFx following the May 17, 2021 acquisition.

Virtual Services

The Company generates revenue from virtual patients’ access to the Company’s medical practitioners. Revenue is generated through the provision of insured remote services to patients. With the easing of Covid-19 restrictions, virtual patient visits have decreased, while in-person visits have increased during the nine months ended September 30, 2022. It is expected that virtual services will continue to be an important source of long-term revenue for the Company as patient care is delivered through a hybrid approach of virtual and in person visits.

Cost of Revenue

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Cost of revenue from subscription, support and other services consists of the costs of hosting the Company’s software platform as well as the commissions and fees paid on the Company’s software platform sales. Cost of revenue expenses from BrainFx are included in the three and nine months ended September 30, 2022, following the May 17, 2021 acquisition.

Subscription, support and other services gross margins decreased to 50% from 75% for the nine months ended September 30, 2022 and 2021, respectively, due to the inclusion of BrainFx results in the nine months ended September 30, 2022. BrainFx has lower gross margins due to higher hosting and third-party

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licensing costs. The Company’s software development team is working on a project to reduce these costs in the second half of 2022.

Clinical services cost of revenue consists of the fees paid to the various medical clinicians providing the clinical services, cleaning services, clinic administration costs and cost of product sold. The increase in medical services cost during the first half of 2022, compared to the prior year comparable period, was primarily related to the inclusion of Complex Injury clinical services costs.

Clinical services gross margins decreased to 24% from 51% for the nine months ended September 30, 2022 and 2021, respectively, due to the inclusion of Complex Injury clinical services costs following the November 9, 2021 acquisition which has traditionally been a lower gross margin service business.

Operating Expenses

The following table presents the Company’s operating expenses.

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Salaries

The increase in salaries expense is mainly attributable to the inclusion of the salaries of BrainFx and Complex Injury during the three and nine months ended September 30, 2022.

Professional and Legal Fees

Professional and legal fees decreased primarily due to the 2021 prior comparable period incurring the legal and accounting expenses associated with the costs of the Qualifying Transaction with Stormcrow and the acquisitions of BrainFx, Complex Injury and Highmark Health. The decrease was partially offset by an increase in professional fees associated with the costs of being a public company in 2022 versus only two months in 2021.

General and Administrative

General and administrative expenses during the nine months ended September 30, 2022 were comparable to the prior year comparable period despite an increase in corporate teams and overhead post acquisition and go-public in 2022.

Depreciation and Amortization

The increase in depreciation and amortization is primarily attributable to the amortization of the customer relationship, technology based and brand intangible assets recognized through the business acquisitions.

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Sales and Marketing

Sales and marketing expense decreased during the three and nine months ended September 30, 2022, compared to the prior year comparable period. During the first half of 2021, the Company undertook a redesign of its website and other corporate digital marketing collateral to support the Company’s marketing efforts.

Operating Loss

Loss from operations was $1,166,767 and $3,716,181 for the three and nine months ended September 30, 2022 (September 30, 2021 - $1,101,163 and $2,960,400), respectively. The increase was the cumulative result of the various items discussed above.

Other Income (Expenses)

The following table presents the Company’s other income and expenses:

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Other Income

Other income also includes the Canadian Emergency Wage Subsidy (“CEWS”). During the three and nine months ended September 30, 2022, the Company received $nil and $8,580 (September 30, 2021 - $67,063 and $83,998), respectively. The 2022 CEWS relates entirely to BrainFx.

Other income also includes the Canadian Emergency Rent Subsidy (“CERS”). BrainFx participated in this program and received $nil and $484 during the three and nine months ended September 30, 2022 (September 30, 2021 - $4,609 and $6,181), respectively.

Other income also includes rental income of $6,918 and $20,754 during the three and nine months ended September 30, 2022 (September 30, 2021 - $6,837 and $20,738), respectively, from a sublease arrangement at Complex Injury.

Interest Expenses (net)

Interest expense net of interest income increased during the three and nine months ended September 30, 2022, compared to the prior year comparable period, due to higher levels of debt during 2022.

Accretion Expense

Accretion expense during the first half of 2022 is mainly related to a bridge loan and convertible debt obtained in May 2021.

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Loss and Comprehensive Loss

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Segments

The Company’s senior management team has been identified as the chief operating decision maker. They evaluate the performance of the Company and allocate resources based on the information provided by the Company’s internal management system at a separate company level. As such, the Company has determined that it has three operating and reportable segments, being the “Subscription, Support and Other” segment, “Clinical Services and Other” segment and the “Corporate” segment.

Information related to reportable segments is set out below. Segment profit (loss) before tax is used to measure performance because management believes that this information is the most relevant in benchmarking results of the respective segments relative to other Companies that operate in the same industries.

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Liquidity and Capital Resources

As at September 30, 2022, cash was $159,506 (September 30, 2021 - $207,700). Changes in cash are described below.

Operating Activities

Cash used in operating activities was $2,652,936 for the nine months ended September 30, 2022 (September 30, 2021 - $1,604,563), resulting in an increase of $1,048,373. The increase consisted of a $834,702 increase in cash used in operations and a $213,671 increase in the use of non-cash working capital.

Financing Activities

Cash used by financing activities was $582,087 for the nine months ended September 30, 2022 (September 30, 2021 – provided $2,333,809). Cash used in financing activities for the nine months ended September 30, 2022 was related to $1,151,817 in debt repayment (September 30, 2021 - $1,552), $20,271 in payment of lease liabilities (September 30, 2021 - $6,171), partly offset by deposits in trust for future financing activities of $590,000 (September 30, 2021 - $nil). During the nine months ended September 30, 2021, cash used in financing activities was offset by proceeds from debt issued of $2,341,532.

Investing Activities

Cash used in investing activities was $1,290 for the nine months ended September 30, 2022 (September 30, 2021 - $1,434,598). In 2021, the Company had completed two acquisitions whereas in 2022, no acquisitions had been completed.

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Working Capital

The Company defines working capital as current assets, less accounts payable and accrued liabilities and the current portion of long-term debt. During the nine months ended September 30, 2022, the Company experienced significant operating losses. The Company’s ability to fund operating expenses and debt service requirements will depend on, among other things, future operating performance and the Company’s ability to raise additional funding through equity and debt financing. The Company’s working capital deficit as at September 30, 2022 was $3,007,548 (September 30, 2021 – working capital of $1,585,233). Despite the working capital deficit, management and insiders continue to support the business through an announced insider’s investment round on August 12, 2022. In addition, the Company continues to work with investors to raise additional capital to support its short term and long term vision.

Capital Resources

The Company’s strategy includes organic growth of its business through ongoing effort to sell software as a service to enterprise customers in differentiated market verticals including medical clinics, medical technology platform providers, universities, sports teams and workplaces and to broaden its clinical medico-legal service offerings. The Company also plans to grow through strategic acquisitions of synergistic medical device technology development organizations.

While the Company believes that its capital structure will provide it with financial flexibility to raise additional funds through future equity and debt financing, these efforts will be affected by general economic, industry, financial, and other factors, including the impact of COVID-19 and other factors beyond the Company’s control (See Risk Factors).

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Selected Quarterly Information

The following is selected quarterly information for the Company over the last eight quarterly reporting periods.

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Revenue, gross profit, operating expenses and net loss increased during the fourth quarter of 2021, due to the acquisition of Complex Injury. Other expenses during the fourth quarter of 2021 and throughout 2022 thus far, is a result of interest and accretion expense due to the bridge loan and convertible debt obtained in 2021.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Related Party Transactions

The Company may enter into transactions with related parties that incur in the normal course of business. The Company’s policy is to conduct all transactions and settle all balances with related parties on market terms and conditions. Loans from shareholders totalled $212,375 and are secured. The loans from shareholders have a maturity date of three (3) years from the date of issuance and bear an interest rate of 12% payable upon maturity of the promissory note.

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The amount due to related parties relates to a hold back amount from the acquisition of BrainFx Inc., Complex Injury Rehab Inc. and Highmark Health Corporation. This amount is due within twelve months from the date of acquisition.

Compensation of key management personnel

Key management includes the Board of Directors and officers of the Company. The compensation paid or payable to key management is shown in the following table.

The remuneration of key management personnel during the period, was as follows:

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Outstanding Share Data

As of November 29, 2022, the Company had 40,032,810 common shares, 7,337,828 warrants, and 3,752,140 stock options issued and outstanding.

Critical Accounting Estimates and Judgements

The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions at the date of the consolidated financial statements that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reporting periods. Management has identified accounting estimates that it believes are most critical to understanding the consolidated financial statements and those that require the application of management’s most subjective judgments, often requiring the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. The Company’s actual results could differ from these estimates and such differences could be material. The estimates and judgments applied by the Company in these condensed interim consolidated financial statements are the same as those applied in the Company’s annual consolidated financial statements for the year ended December 31, 2021.

Risk Management

The Company is exposed to a variety of known and unknown risks in the pursuit of its strategic objectives. The impact of any risk may adversely affect, among other things, the Company’s business, reputation, financial condition, results of operations and cash flows.

The Company attempts to mitigate its strategic risks to an acceptable level through a variety of policies, systems and processes. A summary of certain significant risks that are reasonably likely to affect the

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financial performance of the Company is set forth above under the heading entitled “Financial Risk Management” and below as it pertains to the business and industry of the Company.

Risk Factors Relating to the Company’s Business and Industry

The following risk factors should be carefully considered in evaluating the Company. The risks presented below may not be all of the risks that the Company may face. It is believed that these are the factors that could cause actual results to be different from expected and historical results. Other sections of the MD&A include additional factors that could have an effect on the business and financial performance of the business. The market in which Highmark currently competes is competitive and changes rapidly. Sometimes new risks emerge, and management may not be able to predict all of them, or be able to predict how they may cause actual results to be different from those contained in any forward-looking statements. You should not rely upon forward-looking statements as a prediction of future results. In addition to the risks described elsewhere in the MD&A, the Interim Financial Statements, and the Annual Financial Statements, each of, and the cumulative effect of all of the following risks for the Company should be considered.

Risks Relating to the Business

• Revenue growth from clinics may be impacted by eligibility under provincial insurance programs;

• A majority of the Company’s revenue is derived through a narrow scope of service offerings;

• The Company’s clinic revenue is highly dependent on referrals and channel partners;

• If private or government funded insurance coverage for the Company’s clinical service offerings is reduced, the Company’s business could be harmed;

• Revenue growth in clinical services requires the Company to be able to attract, retain and motivate staff;

• Revenue growth rate is dependent on maintaining stable clinical revenue while selling digital health solutions into new markets;

• The ability to keep pace with treatment methodologies and healthcare technology;

• Challenges in geographic expansion and growth outside of Canada;

• The planned expansion of the Company’s product offerings and market reach may not succeed;

• Substantial and increasingly intense competition;

• There can be no assurance the Company’s products and services will remain competitive in the market;

• The Company’s success depends in part on the adoption of remote healthcare services;

• An inability to manage its growth effectively;

• A limited operating history and a history of losses and no historical earning, and an expectation of continuing losses as the Company invests in growth;

• Challenges integrating acquired businesses;

• Future acquisitions, partnerships or joint ventures may have a negative effect on the business;

• Changes in foreign currency exchange rates;

• An inability to maintain the quality of the Company’s product and service offerings will reduce patient demand and retention;

• Loss of key personnel;

• Dependence on positive relationships with healthcare professionals.

• The Company’s insurance policies may not be sufficient to cover all claims;

• Limited public company experience;

• Management of growth;

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• An inability to successfully implement adequate internal controls over financial reporting;

• Conflicts of interest;

• Professional conflict of interest rules may impact the ability to incentivize healthcare professionals;

• Technological integration and inter-operation requirements;

• Changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies;

• Natural disaster or disease outbreaks;

• The ongoing COVID-19 pandemic, and resulting global economic uncertainty and measures taken in response to the pandemic;

Risks Relating to Intellectual Property and Technology

• Data loss, breach, or disruption could expose the Resulting Issuer to liability, protracted and costly litigation and damage to the Resulting Issuer's reputation;

• Reliance on external suppliers, contractors and development firms;

• Any failure, disruption or interference with the Company’s use of hosted cloud computing services and systems provided by third-parties;

• Obtaining, maintaining, enforcing and management proprietary intellectual property and other rights;

• Third-party claims of infringement on proprietary technology;

Risks Relating to Regulation and Litigation

• Changes in laws and regulations, and governmental action;

• Litigation, investigations or similar matters against the Resulting Issuer, or adverse facts and developments related thereto;

• Changes in, or failure or perceived failure to comply with, privacy and data protection laws or obligations;

• Regulatory or agency proceedings, investigations and audits;

Risks Relating to the Company’s Shares and Future Capital Requirements

• The Company’s operating results may be volatile and difficult to predict, and the Company’s stock price may decline if it fails to meet the expectations of securities analysts or investors;

• The Company will require additional capital to meet its financial obligations and support business growth, and this capital might not be available on acceptable terms or at all;

• If securities or industry analysts do not publish research about the Company’s business, or publish negative or misinformed reports about the Company’s business, its share price and trading volume could decline and/or become more volatile

Litigation

From time to time, during the ordinary course of business, the Company may be threatened with, or may be named as, a defendant in various legal proceedings including lawsuits. Such proceedings may include, but are not limited to product liability, personal injury, breach of contract, and lost profits or other

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consequential damage claims. Management has made an assessment of all outstanding proceedings and believes there is a low probability of losses and any resulting damages would be immaterial.

Corporate Governance

Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”), are responsible for designing a system of disclosure controls and procedures, or causing them to be designed under their supervision, to provide reasonable assurance that information required to be disclosed in reports filed with or submitted to, securities regulatory authorities is recorded, processed, summarized and reported within the time periods specified under Canadian securities laws and that material information relating to the Company is made known to them with respect to financial and operational conditions to allow timely decisions regarding required disclosure. Such controls are facilitated by the small size of the Company’s senior management team and their access to material information.

Internal Control over Financial Reporting

The Company’s Certifying Officers are responsible for designing a system of internal controls over financial reporting, or causing them to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with International Financial Reporting Standards (“IFRS”). Management of the Company was required to apply its judgement in evaluating the cost-benefit relationship of possible controls and procedures. The result of the inherent limitations in all control systems means no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Forward-Looking Statements

Certain statements contained in this MD&A constitute “forward-looking information” and “forwardlooking statements”. Such statements can, in some cases, be identified by the use of forward-looking terminology such as “expect,” “likely”, “may,” “will,” “should,” “intend,” or “anticipate,” “potential,” “proposed,” “estimate” and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussions of strategy. The forward-looking statements included in this MD&A are made only as of the date of this MD&A and the Company assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by applicable securities laws.

Forward-looking statements in this MD&A are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. Management provides forward-looking statements because it believes they provide useful information to readers when considering their investment objectives and cautions readers that the information may not be appropriate for other purposes.

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For a discussion in respect of risks and other factors that could influence forward-looking events, please refer to the factors discussed in the Company’s MD&A for the year ended December 31, 2021, under the heading "Risk Factors". These factors are not and should not be construed as being exhaustive.

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