LQWD Technologies Corp. — Interim / Quarterly Report 2022

Jul 29, 2021

TSXV: LQWD | OTCQB: LQWDF

LQWD FINTECH CORP. (formerly INTERLAPSE TECHNOLOGIES CORP.)

MANAGEMENT’S DISCUSSION AND ANALYSIS

FORM 51-102F1

FOR THE THREE MONTHS ENDED MAY 31, 2021

LQWD FINTECH CORP.

885 West Georgia St., Suite 2040 Vancouver, BC, Canada, V6C 3E8

LQwD Technologies Corp.

885 West Georgia St., Suite 2040

Vancouver, BC, Canada, V6C 3E8

Table of Contents

CURRENT DEVELOPMENTS .......................................................................................................................... 3 CORPORATE ............................................................................................................................................... 3 COMPANY OVERVIEW .................................................................................................................................. 3 OVERALL PERFORMANCE ............................................................................................................................ 3 FINANCIAL RESULTS OF OPERATIONS ....................................................................................................... 4 SUMMARY OF QUARTERLY RESULTS ..................................................................................................... 4 LIQUIDITY AND CAPITAL RESOURCES ........................................................................................................ 4 RELATED PARTY TRANSACTIONS ............................................................................................................... 5 SHARE CAPITAL .............................................................................................................................................. 5 SUBSEQUENT EVENTS .................................................................................................................................. 5 CAPITAL MANAGEMENT .............................................................................................................................. 6 COMPETITION ................................................................................................................................................ 6 CRITICAL ACCOUNTING ESTIMATES .......................................................................................................... 6 PROPOSED TRANSACTIONS ........................................................................................................................ 7 FINANCIAL INSTRUMENTS RISK .............................................................................................................. 7 FINANCIAL INSTRUMENTS ........................................................................................................................... 8 RISKS ........................................................................................................................................................... 8 ADDITIONAL INFORMATION ....................................................................................................................... 9 FORWARD LOOKING STATEMENTS ............................................................................................................ 9

The following Management’s Discussion and Analysis (“MD&A”) is dated July 30, 2021, for the period ended May 31, 2021 and should be read in conjunction with LQwD Fintech Corp. (formerly Interlapse Technologies Corp.) (“LQwD” or the “Company”) accompanying audited consolidated financial statements for the years ended February 28, 2021 and February 29, 2020.

These condensed consolidated financial statements for the period ended May 31, 2021 have been prepared in accordance with and comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and its interpretation of the International Financial Reporting Interpretations Committee (“IFRIC”), including IAS 34, Interim Financial Reporting. These consolidated financial statements have been prepared on a historical cost basis and have been prepared using the accrual basis of accounting, except for cash flow information. The MD&A supplement does not form part of the unaudited condensed consolidated interim financial statements for the three month period ended May 31, 2021 or the audited financial statements of the Company and the notes thereto for the year ended February 28, 2021. All amounts are expressed in Canadian dollars unless otherwise indicated. In addition, readers are directed herein to discussions under the headings “Forward-Looking Statements”, “Critical Accounting Estimates” and “Risk Factors”.

LQwD management is responsible for the integrity of the information contained in this report and for the consistency between the MD&A and the financial statements.

2022 MANAGEMENT’S DISCUSSION AND ANALYSIS

LQWD FINTECH CORP.

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CURRENT DEVELOPMENTS

CORPORATE

On June 9, 2021, the Company acquired 100% of the issued and outstanding shares of LQwD Financial Corp. (the “Transaction”). Under the agreement, each outstanding LQwD Financial Corp. share was exchanged for one LQwD Fintech Corp. (“LQwD”) share, resulting in an aggregate issuance of 22,400,001 LQwD shares at a deemed price of $0.25 per share. Upon completion of the Transaction, LQwD Financial Corp. became a wholly owned subsidiary of LQwD.

In conjunction with the Transaction, the Company has changed its name from "Interlapse Technologies Corp." to "LQwD FinTech Corp.".

COMPANY OVERVIEW

The Company was incorporated under the Business Corporations Act (British Columbia) and its head office is in Vancouver, British Columbia, Canada. LQwD is a technology company that is focused on developing various webbased platforms, solutions and applications. The Company’s common shares trade on the TSX Venture Exchange (the “TSX-V”) under the symbol “LQWD” and on the OTCQB market under the symbol “LQWDF” and as at May 31, 2021, had 31,266,521 common shares issued and outstanding.

The executive team of the Company is as follows:

• Shone Anstey – Chief Executive Officer

• Barry MacNeil – Chief Financial Officer

• Albert Szmigielski – Chief Technology Officer

• Giuseppe (Pino) Perone – Corporate Secretary.

OVERALL PERFORMANCE

The Company’s objective has been to pursue value generating opportunities for the shareholders. The overall performance for the three-month period ended May 31, 2021, reflected a net loss of $495,351 and working capital of $5,818,432. LQWD can fund its operations for a further 12 months. The Company recorded revenue of $35,210 from transaction fees from its coincurve.com platform for the three month period ended May 31, 2021.

2022 2021 Q1 **Q4 **	2021 **Q1 **
Revenue $ 35,210( $ 34,505( Loss for theperiod $ (495,351) $ (204,214)	$ 37,663( $ (171,382)

The largest cash expenditures incurred by the Company during the period included legal fees of $174,436, marketing of $75,906 and transfer and filing fees of $67,578. The Company recorded total non-cash expenses of $101,459 for share-based compensation, amortization of intangible assets, and amortization of property and equipment. During the three month period ended May 31, 2021, the Company had increased costs due to the Transaction.

2022 MANAGEMENT’S DISCUSSION AND ANALYSIS

LQWD FINTECH CORP.

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FINANCIAL RESULTS OF OPERATIONS

SUMMARY OF QUARTERLY RESULTS

Revenue Gross profit Loss for the period Loss per share Revenue Gross profit Loss for the period Lossper share		Three Months Ended	Three Months Ended
	May 31, 2021 $ 35,210( $ 35,210( $ (495,351) $ (0.02)	February 28, 2021 $ 34,505( $ 34,505( $ (204,214) $ (0.01)	November 30, 2020 $ 22,590) $ 22,590) $ (230,125) $ (0.01)	August 31, 2020
				$ 31,361) $ 31,361) $ (207,476) $ (0.01)
	May 31, 2020 $ 37,663) $ 37,663) $ (171,382) $ (0.01)	February 29, 2020 $ 19,726( $ 19,726( $ (173,016) $ (0.01)	November 30, 2019 $ 19,649( $ 19,649( $ (394,677) $ (0.02)	August 31, 2019
				$ 13,256( $ 13,256( $ (519,828) $ (0.03)

The Company’s operations for the three months ended May 31, 2021 produced a loss of $495,351 compared to a loss of $171,382 for the same quarter in the previous year.

LIQUIDITY AND CAPITAL RESOURCES

	2022	2021	2021
	**Q1 **	**Q4 **	**Q1 **
Cash and cash equivalents	$ 461,111	$ 1,836,827	$ 811,165
Workingcapital	$818,432	$ 2,247,241	$896,323

As at the date of this report, the Company has adequate cash and working capital to fund its operations and planned capital expenditures for the next 12 months. Any additional material capital expenditures or commitments may require a source of additional financing, which may come from funds through equity financing.

	2022	2021	2021
	**Q1 **	**Q4 **	**Q1 **
Issued and outstanding shares	31,266,521	30,683,189	25,678,977
Issued and outstandingshares,fullydiluted	38,077,401	36,497,401	26,588,977

During the period ended May 31, 2021, 583,332 warrants, redeemable for one share at a price of $0.20 per share, were exercised.

The technology business may affect the Company’s ability to raise capital to acquire properties and/or pursue other opportunities in the future.

2022 MANAGEMENT’S DISCUSSION AND ANALYSIS

LQWD FINTECH CORP.

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RELATED PARTY TRANSACTIONS

The aggregate value of transactions and outstanding balances relating to key management personnel were as follows:

	2022	2021	2021
	**Q1 **	**Q4 **	**Q1 **
Consulting fees	$ 12,000	$ 19,500	$ 30,000
Directors fees	-	2,500	-
Share-based compensation	53,271	12,458	19,902
	$65,271	$34,458	$49,902

During the three month period ended May 31, 2021, the Company was charged $nil (2020 - $9,809) by a Canadian related company with similar key management personnel for management fees. At May 31, 2021, $nil (2020 - $27,370) is owing to the Canadian related company with similar key management personnel and is included in accounts payable and accrued liabilities.

All transactions and balances are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

SHARE CAPITAL

• a. At May 31, 2021, there were 31,266,521 common shares, 1,870,000 stock options and 4,320,880 warrants outstanding.

• b. At July 30, 2021, there were 73,751,522 common shares, 1,830,000 stock options and 19,000,380 warrants outstanding.

The Company has one class of common shares. No class A or class B preference shares have been issued.

SUBSEQUENT EVENTS

On May 25, 2021, the Company announced the grant of 1 million stock options exercisable for a period of five years at a price of $0.65 per share to various directors and officers. The stock options will be subject to deferred vesting over two years.

On June 9, 2021, the Company closed the Transaction. In connection with the Transaction, the Company closed a non-brokered private placement of 20,000,000 subscription receipts (each, a "Subscription Receipt") at a price of $0.25 per Subscription Receipt for gross proceeds of $5 million (the "Concurrent Financing"). Each Subscription Receipt entitled the holder thereof to receive one share and one-half of a share purchase warrant. Each whole warrant entitles the holder thereof to purchase one additional share at a price of $0.40 per share at any time for a period of 12 months. In connection with the Concurrent Financing, the Company paid finder's fees in the amount of $249,150, which represents a 7% cash fee on certain of the gross proceeds raised from subscriptions introduced by arm's length parties. The Company also issued finder's securities, consisting of an aggregate of (i) 672,000 broker warrants with each broker warrant being exercisable to acquire one Share at a price of $0.40 per share; and (ii) 35,000 finder's units with each finder's unit converting into one share and one-half of one share purchase warrant, with each whole such warrant entitling the holder thereof to purchase one additional share at a price of $0.40 per share.

On June 15, 2021, the Company announced the cumulative purchase of $2.8 million worth of Bitcoin at an average price of $46,500.

2022 MANAGEMENT’S DISCUSSION AND ANALYSIS

LQWD FINTECH CORP.

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On June 28, 2021, the Company announced the addition of two strategic advisors: Joost Jager, a Lightning Infrastructure Engineer with a M.Sc. in CS and specialization in artificial intelligence; and Roy Sheinfeld, co-founder and CEO of Breez Technology Inc., a privately held company that combines an LSP, point-of-sale app for merchants, and non-custodial end-user app.

On July 27, 2021, the Company announced that it filed a preliminary short form base shelf prospectus. The base shelf prospectus (the “Shelf Prospectus”) has not yet become final for the purpose of the sale of any Securities (as defined herein). When final, the Shelf Prospectus will allow LQwD to offer and issue up to $50 million of common shares, warrants, subscription receipts, units, debt securities, or any combination of such securities (collectively, the “Securities”) during the 25-month period that the Shelf Prospectus is effective. The Securities may be offered separately or together, in amounts, at prices and on terms to be determined based on market conditions at the time of sale, which will be set forth in a prospectus supplement to be filed.

CAPITAL MANAGEMENT

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support future business opportunities. The Company defines its capital as shareholders’ equity, loans and advances payable. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.

COMPETITION

Competitors for acquisition opportunities include well-capitalized companies, independent companies and other companies having financial and other resources far greater than those of LQwD, thus a degree of competition exists between those engaged in acquiring attractive assets.

CRITICAL ACCOUNTING ESTIMATES

Management is required to make decisions with respect to estimates and assumptions for certain accounting policies that affect the reported amounts of assets, liabilities, revenues and expenses. These accounting policies are discussed below and are included to highlight the critical accounting policies and practices used by the Company. Note the use of different policies and practices could create different results being reported. The Company's management reviews these estimates regularly. New information and changes in circumstance may result in changes to estimated amounts that differ materially from current estimates.

The following assessment of significant accounting policies and associated estimates is not meant to be exhaustive. In the future, the Company might realize different results from the application of new accounting standards issued by regulatory bodies.

To recognize the share-based payment expense, the Company estimates the fair value of stock options granted using assumptions related to interest rates, expected life of the option, volatility of the underlying security and expected dividend yields. These assumptions may vary over time.

The accrual method of accounting requires management to incorporate certain estimates of costs as at a specific reporting date.

2022 MANAGEMENT’S DISCUSSION AND ANALYSIS

LQWD FINTECH CORP.

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PROPOSED TRANSACTIONS

The Company has no proposed transactions that have not been disclosed.

FINANCIAL INSTRUMENTS RISK

The Company’s financial instruments are exposed to the following risks:

Credit Risk

Credit risk is the risk of financial loss to the Company if counterparties do not fulfill their contractual obligations.

Cash and cash equivalents consist of cash bank balances and short-term deposits. The Company’s short-term investments are held with a Canadian chartered bank and are monitored to ensure a stable return. The Company’s short-term investments currently consist of term deposits as it is not the Company’s policy to utilize complex, higherrisk investment vehicles.

The carrying amount of accounts receivable and cash and cash equivalents represents the maximum credit exposure. The Company does not have an allowance for doubtful accounts. As of May 31, 2021, there were no significant amounts past due or impaired.

Market Risk

Market risk is the risk that changes in foreign exchange rates and interest rates will affect the Company’s cash flows, net income and comprehensive income. The objective of market risk management is to manage and control market risk exposures within acceptable limits, while maximizing returns.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its purchases and capital commitments, and other financial obligations as they are due. The Company’s approach to managing liquidity is to ensure, to the extent possible, that it will have sufficient liquidity to meet its liabilities when due without incurring unacceptable losses or risking harm to the Company’s reputation.

The Company’s liquidity is dependent upon maintaining its current working capital balances, operating cash flows and ability to raise funds. To forecast and monitor liquidity, the Company prepares operating and capital expenditure budgets which are monitored and updated as considered necessary. Considering these circumstances and the Company’s cash balance liquidity risk is assessed as low.

Interest Rate Risk

The Company is exposed to interest rate risk on its cash and cash equivalents. The majority of these deposits have been in discounted instruments with pre-determined fixed yields. Interest rate movements will affect the fair value of these instruments, so the Company manages maturity dates of these instruments to match cash flow needs, enabling realization at no loss in almost all cases.

2022 MANAGEMENT’S DISCUSSION AND ANALYSIS

LQWD FINTECH CORP.

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Fair Value of Financial Instruments

The fair value of the Company’s financial assets and liabilities approximates the carrying amount. Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

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

• Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

• Level 3 – Inputs that are not based on observable market data.

The fair value classification of the Company’s financial instruments are as follows:

		May31,2021	February28,2021
	Fair
	Value	Fair value through	Fair value through
	Level	profit or loss	profit or loss
		$	$
Financial assets:
Cash and cash equivalents	1	461,111	1,836,827
		461,111	1,836,827

The Company’s cash and cash equivalents are classified as level 1. During the three month period ended May 31, 2021 and year ended February 28, 2021, there were no transfers between level 1, level 2, and level 3.

FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of short-term investments; cheques issued in excess of funds on deposit, accounts payable and accrued liabilities. Terms of the financial instruments, where relevant, are fully disclosed in the Company’s financial statements. It is management’s opinion that the Company is not exposed to significant currency, or credit risks but is exposed to interest rate cash flow risk arising from its financial instruments and that their fair values approximate their carrying values unless otherwise noted.

RISKS

The Company is a technology business and has adequate cash for its current obligations but may not have sufficient cash to sustain operations indefinitely. With limited financial resources and limited revenue, there is no assurance that future funding will be available to the Company to pursue future endeavours. There is a risk that the Company could be forced to cease operations and become insolvent.

There is no guarantee that the Company will be able to attract interest to participate in an acquisition or another business opportunity. The Company’s common shares are now trading on the TSX-V under the symbol “LQWD” and on the OTCQB market under the symbol “LQWDF”. There can be no assurance that the Company’s current activity and the liquid market for the Company's securities will develop and shareholders may find it difficult to resell the securities of the Company.

The factors identified above are not intended to represent a complete list of the risks faced by LQwD. LQwD’s management believes that the foregoing risks and uncertainties are a fair indication of the risks and uncertainties material to LQwD’s business; however, additional risks and uncertainties, including those currently unknown to LQwD or not considered to be material by LQwD, may also adversely affect the business of LQwD.

2022 MANAGEMENT’S DISCUSSION AND ANALYSIS

LQWD FINTECH CORP.

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OFF-BALANCE SHEET ARRANGMENTS

None noted.

ADDITIONAL INFORMATION

Additional information relating to the Company and results of its operations may be found under LQwD’s SEDAR profile at www.sedar.com or on LQwD’s website at www.lqwdfintech.com.

FORWARD LOOKING STATEMENTS

The foregoing information contains forward-looking statements within the meaning of securities laws. Forwardlooking statements are statements that are not historical fact and often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases, or states that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. Forward-looking information by its nature requires assumptions and involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of LQwD to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information.

Forward-looking statements in this MD&A include, but are not limited to, LQwD’s overall strategic plan for assessing acquisition opportunities. In making the forward-looking statements in this MD&A, LQwD has applied certain factors and assumptions that are based on information currently available to LQwD as well as LQwD’s current beliefs and assumptions made by LQwD, including that LQwD will maintain its business plan for the near and mid-term range. Although LQwD considers these beliefs and assumptions to be reasonable based on information currently available to it, they may prove to be incorrect, and the forward-looking statements in this release are subject to numerous risks, uncertainties and other factors that may cause future results to differ materially from those expressed or implied in such forward-looking statements. Such risk factors include, among others, that LQwD will be unable to fulfill or will experience delays in fulfilling a strategic plan for the near and mid-term range. Additional risk factors are noted under the heading “Risks”. The factors identified above and in the “Risks” section of this MD&A are not intended to represent a complete list of the factors that could affect LQwD. Although LQwD has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended.

Because forward-looking information addresses future events and conditions, it involves risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking information. These risks and uncertainties include, but are not limited to access to capital, commodity price volatility, well performance and marketability of production, transportation and refining availability and costs.

There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. LQwD does not undertake to update any forward-looking information, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.

2022 MANAGEMENT’S DISCUSSION AND ANALYSIS

LQWD FINTECH CORP.

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