Mission Ready Solutions Inc. — Management Reports 2021

May 1, 2021

MISSION READY SOLUTIONS INC.

Management Discussion and Analysis For the year ended December 31, 2020

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MISSION READY SOLUTIONS INC. Management’s Discussion and Analysis For the Year Ended December 31, 2020

Introduction

The following management discussion and analysis (“ MD&A ”), prepared as of April 30, 2021, is a review of the operations, current financial position and outlook for Mission Ready Solutions Inc. and should be read in conjunction with the Company’s most recently issued audited consolidated financial statements for the year ended December 31, 2020, copies of which are filed on the SEDAR website: www.sedar.com.

The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards (“ IFRS ”). All dollar figures included herein and in the following discussion and analysis are quoted in Canadian dollars unless otherwise noted.

Management is responsible for the information contained in this MD&A and its consistency with information presented to the Audit Committee and Board of Directors. All information in this document has been reviewed and approved by the Audit Committee and Board of Directors. This review was performed by management with information available as of April 30, 2021.

The financial information in this MD&A is derived from the Company’s consolidated financial statements prepared in accordance with IFRS. This MD&A may contain forward looking statements based on assumptions and judgments of management regarding events or results that may prove to be inaccurate as a result of risk factors beyond its control. Actual results may differ materially from the expected results.

Forward-Looking Information

This MD&A may include certain “forward-looking statements” within the meaning of applicable Canadian securities legislation. Other than statements of historical facts, all statements included in this MD&A that address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as future business strategy, competition, strengths, goals, expansion and growth of the Company’s businesses, operations, plans and other such matters are forward looking statements. When used in this MD&A, the words “estimate”, “plan”, "anticipate", “expect”, “intend”, "believe", “pipeline”, and similar expressions are intended to identify forward-looking statements. Forwardlooking information is based in part, on assumptions that may change, thus causing actual results or anticipated events to differ materially from those expressed or implied in any forward-looking information. Such assumptions include the stability or improvement of general economic conditions. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward statements are made as of the date of this MD&A and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the Company does not assume any obligation to update or revise them to reflect new events or circumstances. Such factors include, among others, risks related to unavailability of financing, unfavorable market conditions and other factors. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements 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 statements.

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MISSION READY SOLUTIONS INC. Management’s Discussion and Analysis For the Year Ended December 31, 2020

Description of the Company’s Business

Mission Ready serves to prevent injuries and enhance the performance of military personnel, first-responders and all those serving on the front lines by equipping them with the next generation of personal protective equipment (“ PPE ”).

Mission Ready Solutions Inc. (“ Mission Ready ”) specializes in providing personal protective solutions to the global defense, security and first-responder markets as a product manufacturer and an experienced government contractor. Mission Ready leverages its privileged access to valuable federal procurement vehicles including the Multiple Award Schedule (“ MAS ”) contracts administered by the US General Services Administration (“ GSA ”).

Mission Ready trades on the TSX Venture Exchange under the symbol MRS and OTCQX Best Market under the symbol MSNVF.

Mission Ready’s operations are conducted through its wholly-owned subsidiaries including Mission Ready Holdings Ltd., Mission Ready Holdings USA Inc., 10-20 Services Inc. Protect The Force, Inc., No-Contact LLC (dba PTF Innovations), PTF Manufacturing Inc. and Unifire, Inc. (collectively, the “ Company ”).

As at December 31, 2020, the Company had a corporate office in Vancouver, British Columbia, Canada, a manufacturing facility in Jacksboro, Tennessee, USA, and a Unifire, Inc. office in Spokane, Washington, USA.

DISCUSSION OF OPERATIONS

Unifire, Inc. (“Unifire”)

Founded in 1987 and headquartered in Spokane, Washington, Unifire is a designated Small Business that distributes fire, military, emergency, and law enforcement products through established relationships with over 500 vendors representing approximately 1.5 million products. As a Prime Contractor with extensive knowledge and experience in providing solutions to the US Federal Government, Unifire utilizes its highly-efficient, scalable technology infrastructure to provide procurement solutions for program managers, military and federal contracting offices, base supply centers, and other governmental supply agencies.

Protect the Force Inc. (“PTF”)

PTF brings innovative products, manufacturing and entrepreneurial expertise together into one unified business with a focus on developing and sustaining strong relationships within the protective products industry. Developing, manufacturing and fielding premier protective innovations to government and industry clients, PTF is led by a team with over a century of combined experience in management, production, operations, research and development, marketing and product sales. Protect the Force – Protection is in our DNA™.

PTF Manufacturing Inc. (“PTFM”)

PTFM is headquartered in Jacksboro Tennessee and serves as the Company’s manufacturing headquarters to develop and grow its product lines for introduction to the marketplace. Offering a full range of products dedicated to the tactical and defense industry, PTFM’s portfolio of products include tactical outerwear, canine armor, bomb suits/blankets, riot control protection, carriers, textiles with integrated electronics and ballistic panels. Prospective Clients/Markets include the Department of Defense, State Department, General Services Administration, Department of Homeland Security, law enforcement agencies, fire & rescue, tactical distributors/dealers, private security, and GSA support companies.

No-Contact LLC (dba “PTF Innovations”)

PTF Innovations pioneers new and advanced technologies to meet the needs of the global defense, security and personal protection markets. PTF Innovations’ team of subject matter experts create leading, tech-centric solutions within the protective services sphere, and utilize their patented technologies – including Flex9Armor and No-Contact – to redefine the standards of tactical protection and performance.

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MISSION READY SOLUTIONS INC. Management’s Discussion and Analysis For the Year Ended December 31, 2020

10-20 Services Inc. (“10-20 Services”)

As part of the Company’s mandate to redirect resources to its growing government contracting and distribution division, during the period, management decided to wind down its decontamination and repair business operated by 10-20 Services. The Company intends to liquidate the remaining assets at the cleaning and repair facility in Fayetteville, North Carolina, USA.

Corporate Overview

Mission Ready manufactures and distributes leading defense and tactical solutions to prevent injuries and enhance the performance of military personnel, first-responders and all who serve on the front lines by equipping them with the next generation of personal protective technologies. Mission Ready consists of a diverse team of industry veterans with a united vision to establish the Company as a leader in government contracting, manufacturing and distributing personal protective solutions.

SUMMARY OF RECENT EVENTS

Board Changes

In October 2020, the Company received the resignation of Jeffery Schwartz as a director of the Company.

In November 2020, Mark Bishop departed Mission Ready’s board of directors as he did not stand for re-election at its Annual General and Special Meeting of Shareholders (“ AGSM ”) held on November 4, 2020.

Subsequent to the AGSM, during November 2020, Terrace Nixon, Buck Marshall and William Bratton were appointed as directors of the Company.

Appointment of President and Chief Executive Officer

In October 2020, Mission Ready announced the appointment of Buck Marshall as President and Chief Executive Officer of the Company. To facilitate this change, James Marks relinquished his role as interim Chief Executive Officer and was concurrently appointed to the position of Chairman of the Company’s board of directors.

New Contract Awards Valued at an Estimated $127 Million

In September 2020, Mission Ready announced that, through its wholly-owned subsidiary, Unifire, Inc., the Company was awarded a total of 7 government contracts – for personal protective equipment consisting of disposable level 2 and level 3 isolation gowns (the “ Isolation Gowns” ) – with an estimated value of $127,878,307 and a maximum value of $435,723,020 (the “ C&T Contracts ”) to be fulfilled over a 12-month period.

As part of its COVID-19 pandemic response, the Contracts were awarded to the Company through the United States Defense Logistics Agency Troop Support Clothing & Textiles (“ DLA C&T ”) supply chain to facilitate the delivery of the Isolation Gowns to the United States Department of Health and Human Services (“ HHS ”) for the Strategic National Stockpile (“ SNS ”). The Company is facilitating the fulfillment of purchase orders through its established network of Berrycompliant (Made in America) product manufacturers and vendor partners.

In October 2020, Mission Ready reported that it had received an aggregate of approximately $112 million in purchase orders across the C&T Contracts since.

Appointment of Interim Chief Executive Officer

In July 2020, James A. Marks was appointed the role of Interim Chief Executive Officer of the Company. Since joining the Company’s Board in June 2018, Major General (Retired) James A. Marks has contributed immeasurable value to Mission Ready, lending extraordinary insights and expertise gained throughout 30 years of service with the United States Army. To facilitate this change, Jeffery L. Schwartz tendered his resignation as the Company’s President and CEO, effective August 7, 2020.

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MISSION READY SOLUTIONS INC. Management’s Discussion and Analysis For the Year Ended December 31, 2020

SELECTED ANNUAL INFORMATION

For theyear ended December 31, 2020 2019	2018
$ $ Revenues 105,069,731 21,192,948 Operating expenses (11,095,554) (8,570,984) Other income (expenses) 1,696,836 (1,286,650) Net loss (1,340,773) (7,437,558) Comprehensive loss (1,015,201) (7,695,738) Current assets 12,252,603 7,556,162 Total assets 33,801,135 27,370,483 Total current liabilities 26,041,824 19,505,642 Total liabilities 27,031,021 21,422,733 Total equity 6,770,114 5,947,750	$ 3,081,581 (5,437,011) (69,004) (4,864,933) (4,797,973) 792,486 2,686,227 2,353,380 2,356,971 329,256

RESULTS OF OPERATIONS

Results of Operations for the Year Ended December 31, 2020

The Company’s gross revenues for the year were $105.07 million, an increase of $83.88 million from the $21.19 million realized in the same period in 2019, a 396% increase. This is a direct result of the closing of the acquisition of Unifire and reporting the revenues of Unifire from April 2019 and new contracts awarded to Unifire as discussed above. The Company recorded a cost of goods sold of $97.01 million for the year ended December 31, 2020 compared to $18.77 million in 2019. The gross margin was 7.67% for the year.

Total operating expenses expressed in dollars was higher in 2020 as compared to 2019, however as compared to total revenues in the same periods, total operating expenses were reduced to 11% compared to 40%. This demonstrates the Company’s focus on expense management. The increase in total expenses can be attributed to significant interest expense and professional fees related to both the acquisition of Unifire in April 2019, and the requirement to fund Unifire Operations on contracts.

The Company’s corporate head office costs increased by $0.32 million, mainly due to an increase in salaries and benefits and offset against a gain on settlement of debts of $0.95 million related to the Company issuing 14,604,387 common shares to settle balances outstanding to certain creditors of $2.20 million, resulting in a gain on settlement of debts of $0.95 million.

Net loss for year ended December 31, 2020 was $1.34 million, a decrease of $6.10 million from a net loss of $7.44 million in the prior year. The decrease in net loss is mainly due to an increase in revenue and gross profit from the Unifire operations and a gain on the settlement of debt as discussed above. In addition, the Company recognized current income tax expense and deferred income tax recovery of $2.40 million and $2.22 million, respectively, mainly related to the Unifire operations for the year ended December 31, 2020. In addition, adjusted EBITDA, consisting of earnings before interest, taxes, depreciation, amortization and stock-based compensation, for the year ended December 31, 2020 was $2.80 million, an increase of $6.6 million from an adjusted EBITDA of ($3.90 million) in the prior year. This increase in adjusted EBITDA is mainly due to the positive results from the Unifire operations and focus on reducing operating expenditures.

The Company derives approximately 97% of its revenues from customers and clients where the end customer is the US Department of Defense, law enforcement or private security.

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MISSION READY SOLUTIONS INC. Management’s Discussion and Analysis For the Year Ended December 31, 2020

Results of Operations for the Three Months Ended December 31, 2020

The Company’s gross revenues for the three months were $42.63 million, an increase of $29.16 million from the $13.47 million realized in the same period in 2019, a 216% increase. This is a direct result of the revenue recognized from the Unifire operations during the period. The Company recorded a cost of goods sold of $40.11 million for the three months ended December 31, 2020 compared to $12.32 million in 2019. The gross margin was 5.91% for the period.

Total operating expenses was slightly lower by $0.47 million in Q4-2020 compared to Q4-2019. This is mainly attributed to a decrease in bad debt of $0.57 million and interest and bank charges of $0.25 million and offset by an increase in professional fees by $0.45 million and salaries and wages of $0.09 million in Q4-2020 compared to the same period in Q42019.

Net income for three months ended December 31, 2020 was $1.14 million, an increase of $3.71 million from the $2.57 million in the prior year, a 69% increase. The increase in net income is mainly due to the increased volume of revenue, a higher gross profit in Unifire’s operations and incurring no write-down of inventory compared to $1.26 million in the prior period.

SUMMARY OF QUARTERLY FINANCIAL RESULTS

The following table provides a summary of the Company’s eight quarterly results ending on December 31, 2020:

	December 31,	September 30,	June 30,	March 31,
	2020	2020	2020	2020
	$	$	$	$
Revenue	42,627,964	20,145,225	27,210,102	15,086,440
Net comprehensive income (loss)	1,582,284	(655,000)	52,034	(1,994,519)
Basic and diluted net loss per share	(0.01)	(0.00)	(0.00)	(0.01)
	December 31,	September 30,	June 30,	March 31,
	2019	2019	2019	2019
	$	$	$
Revenue	13,471,754	4,956,622	2,271,698	492,874
Net comprehensive loss	(2,454,010)	(3,325,892)	(1,198,683)	(612,916)
Basic and diluted net loss per share	(0.01)	(0.02)	(0.01)	(0.00)

During the three months ended December 31, 2019, the Company recognized a write-down of inventory of $1,260,167 resulting in a lower net comprehensive loss for the period.

During the three months ended March 31, 2020, the Company recognized a gain on settlement of debts of $949,285 related to the issuance of 14,604,387 common shares to settle balances outstanding to certain creditors of $2,190,658, resulting in a lower net comprehensive loss for the period.

During the three months ended June 30, 2020, the Company recognized foreign currency translation adjustments of $405,686 included in other comprehensive income related to the translation of the Company’s US operations into Canadian dollars for consolidation purposes, resulting in a higher net comprehensive income for the period.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2020, the Company had working capital deficit of $13,789,221 (2019 – working capital deficit of $11,949,480) including cash and cash equivalents of $1,631,390 (2019 - $645,965). The Company’s working capital deficit increased mainly due to an increase in trade and other payables which was partially offset by the repayment of notes payable to SOS Capital and Capstone Capital Group, LLC, partial repayment of promissory notes related to the acquisition of Unifire and the gain on debt settlement of $0.95 million related to the Company issuing 14,604,387 common shares of the Company valued at $1,241,373 to settle certain outstanding creditors of the Company for an aggregate amount of $2,190,658 of which $1,983,750 was included in notes payable and $206,908 was included in trade and other payables. Included in trade and other payables is $9,039,720 (US$7,100,000) related to a balance outstanding to a vendor in which the Company is currently disputing. Excluding this balance, working capital deficit would be reduced to $4,749,501 (2019 - $11,949,480) mainly due to the settlement of promissory notes and trade and other payables by the issuance of common shares of the Company as discussed above.

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MISSION READY SOLUTIONS INC. Management’s Discussion and Analysis For the Year Ended December 31, 2020

FINANCIAL INSTRUMENTS

Classification of financial instruments

	December 31,	December 31,
	2020	2019
	$	$
FVTPL financial asset	1,631,390	645,965
Financial assets at amortized costs	6,513,954	3,560,203
Financial liabilities at amortized costs	27,031,021	21,422,733

The fair value of the Company’s financial assets and liabilities approximates the carrying amount.

Management of Industry and Financial Risk

The Company’s financial instruments are exposed to certain financial risks, which include the following:

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfil its payment obligations. The Company limits its exposure to credit loss for cash by placing its cash with high quality financial institutions and for trade receivables by performing standard credit checks. The credit risk for cash and trade receivables is considered negligible since the counterparties are reputable banks with high quality external credit ratings and customers with no history of default.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations when they become due. The Company ensures, as far as reasonably possible, that it will have sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and the Company’s holdings of cash. The Company has working capital deficit of $13,789,221 as of December 31, 2020. There can be no assurance that the Company will be successful with generating and maintaining profitable operations or will be able to secure future debt or equity financing for its working capital and expansion activities.

Foreign exchange risk

The Company operates internationally and is exposed to foreign currency risk arising from currency exposures to Canadian dollars. The main currency to which the Company has an exposure is the U.S. dollar. The Company is exposed to currency risk to the extent of its cash, trade and other payables, purchase agreements payable, and loan payable that are denominated in U.S. dollars. The Company does not hedge its exposure to fluctuations in the related foreign exchange rates. The Company’s exposure to currency risk is currently considered insignificant.

Interest Rate Risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Interests on the Company’s promissory notes payable and loan payable are based on fixed rates, and as such, the Company is not exposed to significant interest rate risk.

Capital management

The Company's policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of equity, net of cash and cash equivalents. There were no changes in the Company's approach to capital management during the period. The Company is not subject to any externally imposed capital requirements.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

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MISSION READY SOLUTIONS INC. Management’s Discussion and Analysis For the Year Ended December 31, 2020

TRANSACTIONS WITH RELATED PARTIES

Compensation of Key Management Personnel

The compensation paid or payable to directors and key management personnel, including consulting and professional fees for administrative, management, accounting, and legal services provided by these related parties, during the year ended December 31, 2020 and 2019 are as follows:

	2020	2019
	$	$
Option pricing differential compensation	992,500	-
Salaries and other short-term employee benefits	1,307,033	628,195
Director fees	138,362	78,068
Stock-based compensation	140,738	1,085,196
	2,578,633	1,791,459

All related party transactions were in the ordinary course of business and were measured at their exchange amount as agreed between the related parties.

During the year ended December 31, 2020, the Company paid or accrued wages and benefits of $80,490 (2019 - $Nil) and director fees of $7,818 (2019 - $Nil) to Buck Marshall, Chief Executive Officer and a Director of the Company.

During the year ended December 31, 2020, the Company paid or accrued consulting fees of $60,000 (2019 - $60,000) to Dong Shim, Chief Financial Officer of the Company.

During the year ended December 31, 2020, the Company paid or accrued wages and benefits of $339,428 (2019 - $251,503) and director fees of $7,818 (2019 - $Nil) to Terrace Nixon, Chief Compliance Officer of the Company.

During the year ended December 31, 2020, the Company paid or accrued wages and benefits of $268,300 (2019 - $Nil) and director fees of $23,727 (2019 - $Nil) to Daniel Raczykowski, a Director of the Company.

During the year ended December 31, 2020, the Company paid or accrued director fees of $29,727 (2019 - $24,000) to Paul Litchfield, a Director of the Company.

During the year ended December 31, 2020, the Company paid or accrued director fees of $20,000 (2019 - $24,000) to Mark Bishop, a former Director of the Company.

During the year ended December 31, 2020, the Company paid or accrued consulting fees of $89,328 (2019 - $Nil) and director fees of $37,545 (2019 - $24,000) to James Marks, the former Interim Chief Executive Officer and a Director of the Company.

During the year ended December 31, 2020, the Company paid or accrued director fees of $11,727 (2019 - $4,068) and consulting fees of $Nil (2019 - $18,139) to William Bratton, a Director of the Company.

During the year ended December 31, 2020, the Company paid or accrued director fees of $Nil (2019 - $2,000) to Anthony Walton, a former Director of the Company.

During the year ended December 31, 2020, the Company paid or accrued wages and benefits of $469,487 (2019 - $298,553) to Jeffery Schwartz, former Chief Executive Officer of the Company.

During the year ended December 31, 2020, the Company recognized stock-based compensation to officers and directors of the Company in the amount of $140,738 (2019 - $1,085,196) related to the granting and vesting of stock options during the year.

During the year ended December 31, 2020, the Company paid or accrued option pricing differential compensation to certain officers and directors of the Company in the amount of $992,500.

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MISSION READY SOLUTIONS INC. Management’s Discussion and Analysis For the Year Ended December 31, 2020

Related Party Balances

As at December 31, 2020 and 2019, the Company has the following amounts owed to related parties that are noninterest bearing, unsecured, and have no specified terms of repayment.

	December 31,	December 31,
	2020	2019
	$	$
Option pricing differential payable	707,500	-
Director fees payable	100,753	84,324
Due to officers and former officers	166,953	170,429
	975,206	254,753

As of December 31, 2020, the Company owed $7,639 (2019 – $Nil) to Buck Marshall, Chief Executive Officer and a Director of the Company.

As of December 31, 2020, the Company owed $103,813 (2019 – $18,245) to Jeffery Schwartz, former Chief Executive Officer of the Company.

As of December 31, 2020, the Company owed $643 (2019 – $26,250) to Dong Shim, Chief Financial Officer of the Company. As of December 31, 2020, the Company owed $70,137 (2019 – $53,007) to Terrace Nixon, Chief Compliance Officer of the Company.

As of December 31, 2020, the Company owed $11,459 (2019 – $12,000) to Paul Litchfield, a Director of the Company.

As of December 31, 2020, the Company owed $Nil (2019 – $24,000) to Mark Bishop, a former Director of the Company.

As of December 31, 2020, the Company owed $25,097 (2019 – $18,000) to James Marks, the Interim Chief Executive Officer and a Director of the Company.

As of December 31, 2020, the Company owed $11,459 (2019 – $89,251) to William Bratton, a Director of the Company.

As of December 31, 2020, the Company owed $23,459 (2019 – $Nil) to Daniel Raczykowski, a Director of the Company.

As of December 31, 2020, the Company owed $14,000 (2019 – $14,000) to Anthony Walton, a former Director of the Company.

As of December 31, 2020, the Company owed $707,500 (2019 - $Nil) to certain management and directors of the Company related to an arrangement with certain optionees to remedy an increase in the exercise price of certain stock options due to an administrative delay in formalizing the option terms.

OUTSTANDING SHARE DATA

The following share capital data is current as of the date of this MD&A:

	Balance
Shares issued and outstanding	189,475,361
Stock options	25,675,000
Share purchase warrants	2,323,645
FullyDiluted	217,474,006

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MISSION READY SOLUTIONS INC. Management’s Discussion and Analysis For the Year Ended December 31, 2020

Incentive Stock Option Grants

On July 28, 2020, the Company granted 400,000 stock options at an exercise price of $0.15 per share for a period of five years to a director and officer of the Company.

On October 9, 2020, the Company granted 1,000,000 stock options at an exercise price of $0.20 per share for a period of five years to an officer of the Company.

On December 14, 2020, the Company granted 850,000 stock options at an exercise price of $0.15 per share for a period of five years to certain directors and employees of the Company.

On March 19, 2021, the Company granted 4,400,000 stock options at an exercise price of $0.70 per share for a period of five years to certain directors, officers, officers and consultants of the Company.

Critical Accounting Estimates

The preparation of these consolidated financial statements requires management to make judgments and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these judgments and estimates. The financial statements include judgments and estimates that, by their nature, are uncertain. The impacts of such judgments and estimates are pervasive throughout the financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and the revision affects both current and future periods.

Significant assumptions about the future and other sources of judgments and estimates that management has made at the statement of financial position date that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

Impairment

At the end of each reporting period, the Company’s assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit of loss for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash- generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

Fair value of financial instruments

Management uses valuation techniques in measuring the fair value of financial instruments, where active market quotes are not available. Details of the assumptions used are provided in the notes regarding financial assets and liabilities.

In applying the valuation techniques, management makes maximum use of market inputs wherever possible, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. Such estimates include liquidity risk, credit risk, and volatility may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

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MISSION READY SOLUTIONS INC. Management’s Discussion and Analysis For the Year Ended December 31, 2020

CONTINGENCY

The Company is party to litigation (the “Claim”) filed by a former 10-20 Services employee who worked at the Company’s Barstow, California location until the facility was closed due to the lease expiry and finalization of a service contract. During the year ended December 31, 2018, the Company settled the Claim for US$75,000. Subsequent to the year ended December 31, 2020, the Company and former 10-20 Services employee entered into a general release and settlement agreement to settle and fully release all claims against the Company in the amount of US$88,620. As of December 31, 2020, the Company accrued $100,043 (US$88,620) related to this Claim, included in trade and other payables, and will be paid in equal monthly installments during the year ended December 31, 2021.

The Company has a contingent liability related to outstanding payables incurred in the amount of US$7,100,000 during the year ended December 31, 2020. This matter is in dispute and the Company plans to vigorously contest this claim. As of December 31, 2020, the Company accrued $9,039,720 (US$7,100,000) as accounts payable pending the outcome of this claim.

During the year ended December 31, 2018, Company settled a whistleblower reprisal complaint filed under Title 10, United States Code, Section 2409, “Contractor employees: protection from reprisal for disclosure of certain information,” implemented by Defense Federal Acquisition Regulation Supplement, Subpart 203.9, “Whistleblower Protections for Contractor Employees”. As of December 31, 2020, the Company accrued $57,294 (USD $45,000) related to this settlement and is included in trade and other payables.

CRITICAL RISKS AND UNCERTAINTIES

Operating History

From inception to December 31, 2020, the Company has incurred losses from operations. The Company cannot be certain that its investment strategy or development of the Company’s business will be successful. The likelihood of the Company’s success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the establishment of any business. If the Company fails to address any of those risks or difficulties adequately, business will likely suffer.

Competition

The earnings of the Company depend upon the Company’s ability to locate suitable opportunities and to bring to market the proprietary products being developed by its research and development division. Competition may restrict the Company’s share of the market, reduce rates of return and/or may reduce profit margins.

Coronavirus Global Pandemic Risk

In March 2020, the World Health Organization declared a global pandemic related to the virus known as COVID-19. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It has also disrupted the normal operations of many businesses, including the Company’s. This outbreak could decrease spending, adversely affect demand for the Company’s products and harm the Company’s business and results of operations. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations at this time.

With employees, partners and customers across multiple geographies, the Company’s management continue to closely monitor developments surrounding the COVID-19 pandemic. The Company’s focus is on the safety and well-being of its employees, customers, and partners, and is taking precautions to minimize the spread of COVID-19 in alignment with local government policies and national and international agency recommendations. To help combat the pandemic, the Company has formed an independent COVID-19 response team consisting of 15 select inside and outside Company representatives working in cooperation to source and supply mission critical product and service solutions including PPE, shelters, and thirdparty logistics services. Based on the current guidance and timelines provided by government health authorities, the increased demand for critical life-saving equipment is likely to extend through, at minimum, December 2021. In consideration of this, interim arrangements have been made to ensure the maintenance of the Company’s core operations despite the temporary reassignment of certain sales and contracting personnel.

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MISSION READY SOLUTIONS INC. Management’s Discussion and Analysis For the Year Ended December 31, 2020

FINANCIAL AND DISCLOSURE CONTROLS AND PROCEDURES

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

The Chief Executive Officer and Chief Financial Officer of the Company are responsible for establishing and maintaining appropriate information systems, procedures and controls to ensure that information used internally and disclosed externally is complete, reliable and timely. They are also responsible for establishing adequate internal controls over financial reporting to provide sufficient knowledge to support the representations made in this MD&A and the Company’s financial statements for the year ended December 31, 2020 (together the “ Annual Filings ”).

The Chief Executive Officer and Chief Financial Officer of the Company have filed the Venture Issuer Basic Certificate with the Annual Filings on SEDAR at www.sedar.com.

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

ADDITIONAL INFORMATION

Additional disclosure of the Company’s, material change reports, new releases, and other information can be obtained on SEDAR at www.sedar.com, or by requesting further information from the Company’s head office in Vancouver, BC, Canada.

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