MJardin Group, Inc. — Management Reports 2021

Apr 30, 2021

MJardin Group, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian dollars, unless otherwise stated)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

This Management’s Discussion and Analysis (“ MD&A ”) reports on the financial condition and operating results of MJardin Group, Inc. (the “ Company ” or “ MJardin ”) for the years ended December 31, 2020 and 2019. The MD&A should be read in conjunction with the Company’s audited and consolidated financial statements for the years ended December 31, 2020 and 2019 as filed on SEDAR on April 29, 2021 (the “ Annual Financial Statements ”), which were prepared in accordance with International Financial Reporting Standards (“ IFRS ”) as issued by the International Accounting Standards Board. This MD&A provides information on the operating activities, performance and financial position of the Company and is intended to assist in understanding the Company’s business and key factors underlying its financial results. All dollar amounts referred to in this MD&A are expressed in Canadian dollars except where indicated otherwise.

Additional information can be found on the Company’s website at www.MJardin.com.

FORWARD-LOOKING INFORMATION

This MD&A may contain “forward-looking information” and “forward-looking statements” within the meaning of Canadian securities legislation (“ forward-looking statements ”). These forward-looking statements are made as of the date of this MD&A and the Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required under applicable securities legislation. Forward-looking statements relate to future events or future performance and reflect management’s expectations or beliefs regarding future events.

In some cases, these forward-looking statements can be identified by words or phrases such as “may”, “might”, “will”, “expect”, “anticipate”, “estimate”, “intend”, “plan”, “indicate”, “seek”, “believe”, “predict” or “likely”, or the negative of these terms, or other similar expressions intended to identify forward-looking statements. The Company has based these forward-looking statements on its current expectations and projections about future events and financial trends that it believes might affect its financial condition, results of operations, business strategy and financial needs. Some examples of forward-looking statements include but are not limited to the expected costs, completion dates of the facilities, production capacity, receipt of licenses, etc.

Assumptions

Forward-looking statements are based on certain assumptions and analyses made by the Company in light of the experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate and are subject to risks and uncertainties. In making the forward-looking statements included in this MD&A, the Company has made various material assumptions, including but not limited to: (i) obtaining and maintaining necessary regulatory approvals and licenses; (ii) that regulatory requirements may or may not adversely affect the business; (iii) general business and economic conditions; (iv) the Company’s ability to successfully execute its plans and intentions; (v) the availability of financing on reasonable terms; (vi) the Company’s ability to attract and retain skilled staff; (vii) market competition and product demand; (viii) the products and technology offered by the Company’s competitors; (ix) the ability of the Company to increase its revenue to meet current working capital requirement and debt obligations; and (x) that our current good relationships with our suppliers, service providers and other third parties will be maintained.

Although we believe that the assumptions underlying these statements are reasonable, they may prove to be incorrect, and we make no assurance that actual results will be consistent with these forward-looking statements.

The Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, but there may be other factors that cause results not to be as anticipated, estimated or intended. There is 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. We do not undertake to update or revise any forward-looking statements, except as, and to the extent required by, applicable securities laws in Canada.

This MD&A contains certain financial performance measures that are not recognized or defined under IFRS (“ NonGAAP Measures ”). As a result, this data may not be comparable to data presented by other cannabis companies. For an explanation, related definitions, and reconciliation of these measures to comparable financial information presented in the consolidated financial statements prepared in accordance with IFRS, refer to the Non-GAAP Financial Measures section below. The Company believes that these Non-GAAP Measures are useful indicators of operating performance

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

and are used by management to assess the financial and operational performance of the Company. These Non-GAAP Measures include, but are not limited to, the following:

i) EBITDA

ii) Adjusted EBITDA

Non-GAAP Measures should be considered together with other data prepared in accordance with IFRS to enable investors to evaluate the Company’s operating results, underlying performance and prospects in a manner similar to the Company’s management. Accordingly, these Non-GAAP Measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

The Company’s forward-looking statements are based on the reasonable beliefs, expectations, and opinions of management as of April 29, 2021, the date of this MD&A.

BUSINESS OVERVIEW

MJardin Group, Inc. (the “ Company ” or “ MJardin ”), formerly known as Sumtra Diversified Inc. (“ Sumtra ”), was formed by amalgamation on August 30, 1978 under the laws of the province of Ontario and carried on business as a “Capital Pool Corporation”.

On September 7, 2018 MJAR Holdings Corp. and Sumtra entered into a definitive agreement to carry out a reverse takeover transaction (the “ RTO Transaction ”) via a three-cornered amalgamation for the purpose of effecting a reverse takeover of Sumtra by MJAR Holdings Corp. The RTO Transaction was completed on November 13, 2018. Shortly before the completion of the RTO Transaction, the Company consolidated its capital on a one new share for thirty-one and one-half old shares (1:31.5) basis. The Company’s subsidiary, MJAR Subco, amalgamated with MJAR Holdings Corp., with the shareholders of MJAR Holdings Corp. receiving shares of the Company on a 1:1 basis. Upon amalgamation, the name of the Company was changed to MJardin Group, Inc., its fiscal year end was changed from August 31 to December 31, and its shares were delisted from the TSX Venture Exchange. On November 15, 2018, the Company commenced trading on the Canadian Securities Exchange under the ticker symbol MJAR.

The legal acquisition of Sumtra by MJAR Holdings Corp. constituted a reverse asset acquisition as Sumtra did not meet the definition of a business and its main attribute was its public listing. The RTO Transaction was accounted for in accordance with IFRS 2 “Share Based Payment”. For accounting purposes, MJAR Holdings Corp. was deemed to have acquired 100% of the issued and outstanding shares of Sumtra by issuing 217,814 shares to shareholders of Sumtra estimated at $12.00 per share, the value of shares based on the concurrent financing. Upon completion of the RTO Transaction, the former shareholders of Sumtra held approximately 1% of the Company.

From inception through December 31, 2017, the Company operated as a single segment providing managed services to license owners in the form of project management services for cultivation, licensure support, facility design, systems implementation, equipment leasing, construction oversight, facility ramp-up, and day-to-day personnel management and oversight.

In 2018, the Company made the strategic decision to add principal ownership of cultivation facilities and acquired GrowForce Holdings Inc. (“ GrowForce ”). GrowForce has significant ownership in cannabis cultivation facilities and engages in either retrofit or construction of production facilities to meet Health Canada cultivation license requirements. GrowForce also engages in the cultivation and sale of cannabis products from cannabis facilities in Canada, as all cultivation facilities are licensed by Health Canada.

BUSINESS SEGMENTS

The Company has two primary lines of business:

1) the cultivation, harvesting and processing of cannabis in licensed facilities located in Canada for sale as bulk flower and/or trim to other Canadian licence holders and as packaged products into the Canadian recreational cannabis market under the Company’s brands or the brands of other licence holders; and

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

2) providing consulting services, including strategic capital and financing, project management services for cultivation, licensure support, facility design, systems implementation, facility & equipment leasing, construction oversight, facility ramp-up, and access to intellectual property held by the Company to licensed cannabis operators with cultivation and retail businesses, primarily in the state of Colorado, through management services agreements (“ MSAs ”).

1) Cultivation operations in Canada

WILL Cannabis (“WILL”)

WILL was founded on July 22, 2013 and construction of its initial facility (the “ WILL Facility ”) was completed in November 2017. Prior to February 2020, the WILL Facility was fully constructed but waiting on licensing approval to expand the operations and begin cultivation activities in the entire facility. On February 24, 2020, the Company received approval from Health Canada to significantly increase its current operational space and production supply to full facility capacity. The 32,800 square-foot facility received approval for eight additional grow areas and four additional operations areas which include grow, vegetative and mother rooms, as well as trim, dry and packaging rooms. This amendment to its licence, which previously authorized two rooms, allows WILL to produce at its full capacity of 3,000 kg of dried flower per year, depending on the mix of strains. The facility started operating at full capacity during the third quarter of 2020. The Company is cultivating cannabis plants in all ten licensed grow rooms in the facility.The facility is equipped with optimal HVAC and fertigation systems that ensure workflow efficiency and consistency in cultivation of product.

Grand River Organics Inc. (“GRO”)

The Company has a 75.51% equity interest in GRO, which owns an indoor cultivation facility in Dunnville, Ontario (the “ Dunnville Facility ”). The facility was fully operational by the third quarter of 2020.At full capacity, the 11,000 squarefoot facility is estimated to produce 1,200 kg of premium flower per year. Cannabis produced at the facility is bulk packaged and shipped to the WILL Facility for testing and processing. The Dunnville Facility houses five compartmentalized flower rooms of equal size and required supporting rooms. The facility is equipped with optimal HVAC and fertigation systems that ensure workflow efficiency and consistency in cultivation of product.

Warman

In April 2018, the Company acquired a 120,000 square foot building in Winnipeg, Manitoba (the “ Warman Facility ”), which previously operated as a food processing plant. A portion of the building has been retrofitted with enclosed indoor cultivation grow facilities of approximately 11,000 square feet. A cultivation license for this Phase 1 development was issued in 2019, but no cannabis was produced in that year. The Warman Facility is currently being used primarily as a research and development centre for phenotyping and strain selection. The Company has initiated development for the build out of Phase 2, which is intended to increase the Warman Facility’s cultivation capabilities, enable a diversified product base and allow for the facility to process cannabis into products for sale in the retail market. The Company expects to finance the remainder of the project through the completion of a joint venture agreement with Peguis First Nation (“ Peguis ”) in 2021.

AtlantiCann Medical Inc. (“AMI”)

The Company holds a 39% equity interest in AMI, an operator of a recently expanded (completed in early 2020) 68,000 square-foot indoor cultivation facility located in Nova Scotia. The facility has a total production capacity of 6,300 kg of product per year. In 2020, AMI began selling to the retail market through licenses with the provinces of Nova Scotia, Ontario, British Columbia, Saskatchewan, and New Brunswick. Prior to Q2 2020, sales were limited to other license holders. The facility produced and sold 2,600 kg of product in 2020. The Company has representation on the board of AMI but does not participate in its management.

2) Cultivation Management

The Company leverages over 10 years of cultivation and design experience in building and enhancing cultivation and extraction assets. Since 2009, the Company has designed over 100 cannabis cultivation and extraction facilities. The Company is transitioning the business away from cultivation management as its in-house cultivation operations ramp up. Currently, the Company employs approximately 10 people relating to its MSA business.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

KEY BUSINESS DEVELOPMENTS

The following activities occurred during the year ended December 31, 2020 and up to the date of this MD&A:

Agreement with Ontario Cannabis Store (“ OCS ”)

On October 7, 2020, the Company announced the execution of a master services agreement with the OCS, which enables MJardin to make its product available to retail consumers in Ontario. It is an important step in MJardin’s evolution from a cultivator and provider of management services to a consumer-centric company, servicing the needs of retail consumers, in-line with the Company’s 2020 strategic plan. As a result, the Company expects increased revenues from the same flower production, given the higher realized price per gram from retail sales compared to wholesale transactions, while gaining market recognition and consumer brand awareness under the Flint & Embers brand. For the year ended December 31, 2020, the Company earned $1.6 million in revenue from cannabis produced (2019 - $2.1 million).

Supply Agreement with the British Columbia Liquor Distribution Branch (“ BCLDB ”)

On January 6, 2021, the Company announced the completion of a major supply agreement with the BCLDB to supply the provincial wholesaler with premium cannabis products in two formats: 3.5 grams of whole flower and 5 x 0.5 grams pre-rolls. The Company is entering the British Columbia market with its new flagship brand, Flint & Embers. The Flint & Embers brand is recognized for its high-quality cannabis varieties and has received interest from both consumers as well as Cannabis retailers across Canada.

Standing Offer Agreement with Alberta Gaming, Liquor, and Cannabis (“ AGLC ”) and First Shipment of Recreational Cannabis to Alberta

On January 28, 2021, the Company announced that it has been registered to sell cannabis through AGLC and has entered into a standing offer agreement with AGLC for the sale of its premium high-quality cannabis in the Alberta market under the Flint & Embers and BLLRDR brands. On March 29, 2021, the Company announced that it has made its first shipment of recreational cannabis to the province of Alberta. The initial shipment included Flint & Embers Hyperion, the Company’s unique take on the GSC x Conspiracy Kush cultivar, Flint & Embers Orion, the Company’s unique take on the Whiteberry cultivar, BLLRDR Afghani Bullrider, and BLLRDR Wedding Cake. As the third significant province the Company has recently entered for the supply of retail cannabis, the AGLC agreement demonstrates the Company’s continued development in the Canadian recreational cannabis market.

Gain on Disposition of GreenMart

In 2019, the Company entered into a definitive purchase and sale agreement (the “ PSA ”) to sell all of its interest in GreenMart of Nevada, LLC (“ GreenMart ”) to Harvest Health and Recreation Inc. (“ Harvest ”) for total consideration of US $34.3 million, comprised of US $30 million received by the Company on December 31, 2019 plus US $4.3 million final payment (the “Final Payment” ) due upon the license transferring to Harvest, subject to regulatory approvals. Effective August 14, 2020, the Company signed a managed services agreement (“ Harvest MSA ”) between the Company and Harvest to transfer the risk and rewards associated with GreenMart’s continuing operations. As a result of entering into the Harvest MSA, the Company relinquished control of GreenMart as defined under IFRS 10, resulting in a gain on disposition in the amount of $23.3 million (US $17.7 million) recognized in the consolidated statements of loss and other comprehensive loss. The closing conditions associated with the PSA, mainly the approval of the license transfer by the State of Nevada, are expected to be fulfilled in 2021.

In April 2021, the Company and Harvest agreed to a final settlement and reduction of the previously disclosed US$5.0 million Final Payment to the amount of US $4.3 million with Harvest to make the Final Payment to the Company despite the approval of the license transfer not yet having occurred. In accordance with the requirements of the Company’s existing credit facility, the Company shall cause certain of its subsidiaries to use the Final Payment to repay a portion of the accrued interest owing to the Company’s senior lender. In connection with this debt repayment, the senior lender has agreed to the establishment of a new revolving credit facility in favour of such subsidiaries of the Company in an aggregate maximum principal amount of $5.3 million (the “ Maximum Amount ”). This facility is established as a subfacility under the existing credit facility between the senior lender and such subsidiaries of the Company and will bear interest at a rate of 15% per annum, compounded monthly, with a one-time work fee of 2% of the Maximum Amount paid to the senior lender.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Warman Construction and Promissory Notes

In 2019, the Company entered into a non-binding letter of intent to form a joint venture with Peguis, whereby Peguis would fund the Phase 2 build-out of the Warman Facility in exchange for a 51% stake in the project. Pursuant to the agreement, Peguis would also acquire the Warman real property consisting of land and a building (the “ Property ”) for approximately $11 million.

In that same year, the Company received $11 million from Peguis in advance of the closing of the Property through the form of a promissory note (the “ First Note ”). In 2020, Peguis closed on the land portion of the Property for proceeds of approximately $5.9 million, which was deducted from the First Note. $2.3 million was also advanced in respect of a second promissory note (the “ Second Note ”) during the year ended December 31, 2020. The Second Note has the intention of being converted to common shares in the capital of GrowForce Peguis Joint Venture Ltd. Accrued interest for the year ended December 31, 2020 was $0.7 million. As of December 31, 2020, $8.6 million remains outstanding on the First Note and Second Note. The promissory notes payable are due on August 7, 2023.

In 2019, MJardin announced that the Warman Facility had received its cultivation and processing license from Health Canada and that Phase 1 construction of the building was complete. Going forward, in 2021, the Company plans to complete the remaining Phase 2 construction in two tranches. The first tranche of Phase 2 relates to the construction of the greenhouse and indoor water-hash processing facility. This is expected to yield approximately 270,000 grams of resin and other concentrates annually. The Company is currently in discussions with Peguis to receive additional funding for a portion of the project. Pending the receipt of additional financing, the Company anticipates the first tranche of Phase 2 construction to be completed in Q3 2021. The second tranche of Phase 2 will involve the construction of additional indoor grow rooms at the Warman Facility, with an estimated annual output of approximately 4,500 kg from these rooms. While the Company continues to work towards securing funding from Peguis to complete this project, the Company is exploring alternative financing options to ensure that the Phase 2 construction continues to advance towards full completion.

Cannabella Acquisition Termination

On April 18, 2019, the Company entered into a definitive agreement (the “ Cannabella Acquisition Agreement ”) to acquire Carson City Agency Solutions, dba Cannabella, an operator of an extraction facility and producer of edibles and topicals in Carson City, Nevada. The transaction would allow the Company to add extraction capabilities to its cultivation assets in Nevada, which would further allow the Company to use a portion of the cultivation output in the production of extracts for edibles, topicals and potentially vapes. The Company provided notice to Cannabella on April 17, 2020 of the termination of the Cannabella Acquisition Agreement, prior to closing of the transaction, which was conditional upon the transfer of Cannabella’s license to the Company within a specified timeframe. On August 31, 2020, a further agreement was reached whereby Carson Cannabella will return 50% of the shares that were issued as part of the purchase consideration (a return to the Company of 370,882 MJardin common shares) and will repay $10,000 as settlement of amounts due to the Company for services that had been provided under the Cannabella Acquisition Agreement, in equal monthly instalments, over a 12-month period.

Termination of MSAs with 2G Ventures, LLC and 3B Ventures, LLC (the “ Buddy Boy Brands ”)

As part of the Company’s ongoing review, evaluation, and turnaround process, the MSAs between the Company and Buddy Boy Brands were terminated on November 24, 2020. The termination of the MSAs do not affect the promissory notes, intellectual property agreements, and lease obligations currently in place between the Company and Buddy Boy Brands but did result in the termination of the Company’s employees providing services to Buddy Boy Brands under the MSAs. Termination of the MSAs will substantially reduce U.S. segment revenues and ongoing management obligations, thus reducing costs, which will place fewer cash flow demands on the Company. The Company remains committed to exploring growth opportunities in the Colorado market while maintaining strict discipline in its approach to capital deployment.

Termination of MSA with AMI

On August 5, 2020, AMI bought out the previously signed MSA with the Company, which had a ten-year term and was executed in 2019. In lieu of ongoing license fee payments that were required under the MSA, the Company received $1.8 million from AMI with an additional $0.2 million due upon completion of services outlined in the termination agreement. The Company’s cultivation management support for the AMI operation has been substantially reduced in connection with the buyout and is expected to be discontinued by the end of 2020. The Company continues to hold its 39% equity interest in AMI.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Strategic Review Process

In April 2021, the Board of Directors formed a special committee of independent directors to explore, review and evaluate a broad range of strategic alternatives for the Company due to its limited capital resources, with a view to identifying a transaction that is in the best interests of shareholders. These alternatives may include continuing as a standalone public company, going private, undertaking a recapitalization or other restructuring transaction, or being purchased by a strategic partner. The Company has not made any decisions related to strategic alternatives at this time, and there can be no assurance that the evaluation of strategic alternatives will result in any transaction or change in strategy. The Company does not intend to comment further unless and until the Board of Directors of the Company has approved a specific course of action or the Company has determined further disclosure is appropriate or necessary.

OPERATING RESULTS

WILL

During Q4 2020, the WILL Facility made its first sale through retail channels, selling approximately 266 kg in total, generating total revenue of $0.8 million. Total sales for 2020 were approximately 474 kg generating total revenue of $1.6 million (2019 – 413 kg, $2.0 million). Sales are expected to increase as the Company sells through additional retail channels. On March 29, 2021, the Company made its first shipment of recreational cannabis to the province of Alberta.

The WILL Facility was operating at full capacity during Q4 2020 with approximately 487 kg of dried flower harvested. Total dried flower harvested for the full year 2020 was approximately 934 kg. On October 20, 2020, the Company finished all hiring activities. The WILL Facility is now fully staffed and split shifts have been implemented for COVID-19 mitigation procedures; however, this is not expected to impact production.

GRO

Production at the Dunnville Facility continued to operate at full capacity during Q4 2020 with approximately 228 kg of dried flower being harvested, which was comparable to the prior quarter. Total dried flower harvested for the full year 2020 was approximately 576 kg. Further processing of the bulk flower will be completed at the WILL Facility. Cannabis produced at the facility is bulk packaged and shipped to the WILL Facility for testing and further processing. There was no production at the facility during 2019 due to the construction and licensing activities.

Warman

The Company continues to explore financing options for the construction of Phase 2 of the Warman Facility. COVID19 has caused bans on all council meetings for Peguis, which has halted discussions regarding the potential joint venture. As a result, construction activities at the Warman Facility were limited during most of 2020. The facility is presently being used primarily as a research facility for the development of new phenotypes. The facility has identified several desirable cultivars that tested high in THC and have unique terpene profiles.

AMI

Retail sales were first made during Q2 2020 and have continued to expand as a percentage of total sales in 2020. The products have been well received in Ontario and Nova Scotia, and AMI is expected to sell 100% of its product through retail channels going forward. The higher margin retail sales led to an overall increase in the net earnings from AMI for the year ended December 31, 2020 of $4.2 million compared to $2.8 million for the same period in 2019. As at December 31, 2020, AMI’s cash position was $6.3 million. For the year ended December 31, 2020, AMI’s revenues earned was $13.3 million (2019 - $6.3 million).

Cultivation Management

During the year ended December 31, 2020, the Company generated cultivation fees revenue of $0.8 million (2019 - $nil). The decrease in revenue was due to the Company’s strategic decision to renegotiate MSAs and focus on the cultivation segment of the Company’s business. The Company incurred a one-time gain of $2.0 million during Q3 2020 from the termination of the MSA with AMI as the Company gave up the rights to future license fee payments that were required under the MSA.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

FINANCIAL RESULTS

Consolidated statements of loss and comprehensive loss

The table below summarizes information regarding the Company’s consolidated statements of loss and comprehensive loss:

The table below summarizes information regarding the loss:	Company’s consolidated statements of loss and comprehensive
	Three months ended December 31, Year ended December 31,
	2020 2019 2020 2019
	$ $ $ 2,284,570 1,397,394 11,436,269 26,696,824 (1,699,065) (1,745,182) (7,211,318) (17,277,518) (260,634) – (1,988,564) –
Revenues Direct operating costs Inventory write-down
Gross margin before fair value adjustments Fair value adjustment on the sale of cultivated inventory Unrealized(gain)loss on changes in fair value of biological assets	324,871 (347,788) 2,236,387 9,419,306 131,666 (886,187) 385,480 612,586 (1,714,496) 2,401,350 (3,827,226) (689,782)
Gross margin	1,907,701 (1,862,951) 5,678,133 9,496,502
Operating expenses Sales, general and administrative Share-based compensation Depreciation and amortization Expected credit (recovery) loss	3,185,447 7,271,713 14,448,799 21,527,552 475,292 3,233,273 2,772,367 19,180,400 295,362 293,653 1,394,157 1,469,384 (348,652) 24,591,813 1,673,154 26,213,378
Total operating expenses	3,607,449 35,390,452 20,288,477 68,390,714
Loss from operations	(1,699,748) (37,253,403) (14,610,344) (58,894,212)
Interest expense Loan initiation fees (recovery) Net loss (earnings) from equity investment Loss (gain) on disposition of equity investment Impairment Loss (gain) on loan modifications Foreign exchange loss Gain on disposition of GreenMart of Nevada, LLC Other (income) loss	5,752,747 4,655,612 21,898,303 19,529,929 (351,487) (1,929,920) – 540,091 477,447 (206,866) (4,240,817) (2,757,155) – 279,104 – (897,100) 15,980,224 191,653,185 15,980,224 191,653,185 390,402 5,396,420 (363,720) (161,504) 1,405,590 2,584,240 1,120,388 2,646,211 (1,848,198) – (23,345,642) – (2,087,701) 2,160 (728,572) (206,723)
Total other expenses	19,719,024 202,433,935 10,320,164 210,346,934
Loss before income tax, discontinued operations Income tax (expense) recovery	(21,418,772) (239,687,338) (24,930,508) (269,241,146) (953,510) 8,107,832 (5,509,602) 4,302,996
Loss before discontinued operations Loss from discontinued operations	(22,372,282) (231,579,506) (30,440,110) (264,938,150) 903,385 (2,529,777) (4,400,424) (2,529,777)
Net loss	(21,468,897) (234,109,283) (34,840,534) (267,467,927)
Other comprehensive income(loss)	1,222,910 (1,069,390) 1,703,393 (2,368,821)
Total comprehensive loss	(20,245,987) (235,178,673) (33,137,141) (269,836,748)
Total comprehensive loss attributable to: Shareholders of MJardin Group, Inc. Non-controllinginterest	(20,272,774) (234,844,075) (33,125,040) (269,436,091) 26,787 (334,598) (12,101) (400,657)
Total comprehensive loss	(20,245,987) (235,178,673) (33,137,141) (269,836,748)

Revenue

Revenue for the year ended December 31, 2020 was $11.4 million, a decrease of 57% or $15.3 million compared to the same period in the prior year. The Company either cancelled or amended several MSAs and reduced the breadth of services offered to customers leading to a corresponding reduction in the revenues for the year. This will allow for greater focus on the development of the Canadian cannabis cultivation business. Revenue from managed services decreased to $6.2 million, a decrease of 64% or $10.8 million, for the year ended December 31, 2020 when compared to the prior year revenue from managed services of $17.0 million. This decline in revenue from managed services resulted from the Company’s strategy to exit the MSA business in 2020.

Revenues from Canadian cannabis cultivation operations resumed in the third quarter, selling approximately 458 kg through wholesale channels and 16 kg through retail channels, generating total revenue of $1.6 million. The Company made its first sale to the OCS in Q4 2020.

Sales made to significant customers have made up an increasing percentage of the Company’s gross revenue. During the year ended December 31, 2020, one significant customer represented 55% of the Company’s gross revenue compared to four customers who represented 82% for the same period in 2019. The significant customers obtain services from cultivation management in the USA business segment.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Inventory write-down

The Company recorded a write-down of inventory during the year ended December 31, 2020 related to dried cannabis that was old and unsellable inventory in the amount of $1,988,564 (2019 - $nil), which is on the consolidated statements of loss and other comprehensive loss.

Operating Expenses

Sales, general, and administrative expenses for the year ended December 31, 2020 decreased $7.1 million, or 33%, to $14.4 million from $21.5 million in the prior year. The reduction in sales, general, and administrative expenses was primarily due to a $3.2 million reduction in payroll and benefits costs because of effectively integrating two senior management teams after the GrowForce business combination. Additional reductions have been realized through decreased travel as a result of COVID-19 and less professional and consulting fees.

Impairment

The following table summarizes the impairment recognized on the consolidated statement of loss and comprehensive loss:

loss:
	December 31,	December 31,
	2020	2019
	$	$
Impairment of goodwill	-	139,308,995
Impairment of licenses, permits and applications	8,571,376	43,560,000
Impairment of brands and trademarks	1,506,635	2,833,700
Impairment of property, plant and equipment	5,902,213	5,950,490
Total	15,980,224	191,653,185

Will CGU

The Company’s WILL CGU represents its cash flows from its Brampton, Ontario facility dedicated to the cultivation and sale of cannabis products within Canada. This CGU is attributed to the Company’s operating segment for the cultivation operations in Canada. To determine the FVLCD, the Company reviewed precedent transactions over the past 12 months involving indoor cultivation facilities in Canada. The Company determined that the FVLCD was below the carrying value of the CGU. The Company first allocated the impairment of $8.6 million during the year ended December 31, 2020 (2019 - $nil) to licenses, permits, and applications. The remaining amount was than allocated to property, plant and equipment using the replacement cost method resulting in an impairment of $0.9 million during the year ended December 31, 2020 (2019 - $nil). No individual asset was reduced below its fair value. There were no other assets to allocate the remaining impairment from the FVLCD approach, and therefore, no further impairment recorded.

GRO CGU

The Company’s GRO CGU represents its cash flows from its Dunnville, Ontario facility dedicated to the cultivation and sale of cannabis products in Canada. This CGU is attributed to the Company’s operating segment for the cultivation facilities in Canada. To determine the FVLCD, the Company reviewed precedent transactions over the past 12 months involving indoor cultivation facilities in Canada. The Company determined that the FVLCD was below the carrying value of the CGU. The Company allocated the impairment to property, plant and equipment using the replacement cost method resulting in an impairment of $0.1 million during the year ended December 31, 2020 (2019 - $nil). No individual assets were reduced below its fair value. There were no other assets to allocate the remaining impairment from the FVLCD approach, and therefore, no further impairment recorded. During the year ended December 31, 2019, the Company recorded an impairment of $2.3 million to licenses, permits and applications.

Warman CGU

The Company’s Warman CGU represents its cash flows from its Winnipeg, Manitoba facility dedicated to the cultivation and sale of cannabis products in Canada. This CGU is attributed to the Company’s operating segment for the cultivation facilities in Canada. The Company used the replacement cost method to determine the fair value of property, plant and equipment. As a result of the impairment test, management concluded that the carrying amount was higher than the fair value and recorded an impairment of $5.0 million during the year ended December 31, 2020 (2019 - $nil) to the CGU’s property, plant, and equipment. Management allocated the impairment loss to specific property, plant and equipment identified to have carrying value above its fair value. No individual assets were reduced below its fair value. During the year ended December 31, 2019, the Company recorded an impairment of $41.3 million to licenses, permits

9

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

and applications.

Cultivation management in USA CGU

The Company’s cultivation management in USA CGU represents its operations related to its rental properties to licensed cannabis producers and the use of brands, trademarks, and any professional services for the cultivation and sale of cannabis products in the United States. This CGU is attributed to the Company’s operating segment for managed services. As a result of the impairment test, management concluded that the carrying value was higher than the recoverable amount and recorded an impairment of $1.5 million during the year ended December 31, 2020 (2019 - $2.8 million) to its brands and trademarks. In addition, during the year ended December 31, 2019, the Company recorded an impairment of $5.9 million to property, plant and equipment.

Gain on Disposition of GreenMart

The Company entered into a PSA with Harvest on December 31, 2019 for the sale of GreenMart. The closing of the transaction is conditional on the transfer of the GreenMart License to Harvest which requires approval by the State of Nevada. Effective August 14, 2020, the Company signed a MSA between the Company and Harvest to transfer the risk and rewards associated with GreenMart. As a result, the Company has relinquished control of GreenMart as defined under IFRS 10, resulting in a gain on disposition in the amount of $23.3 million (US $17.7 million) recognized in the consolidated statements of loss and other comprehensive loss. The closing conditions associated with the PSA, mainly the approval of the license transfer by the State of Nevada, are expected to be fulfilled in 2021. The PSA was amended in April 2021. See “Key Business Developments – Gain on Disposition of GreenMart ”.

Indemnity Liability, Appellate Bond, and Litigation Recovery

In 2018, the Company acquired the debt of 2G Ventures, LLC (“2G”); 3B Ventures, LLC; and various legal entities who owned the trademark and trade name of ‘Buddy Boy Brands’ and the land and building located at 2426 South Federal and 5040 York St. in Denver, Colorado. Upon completion of the acquisition, US $2 million of the total purchase price was held back and deposited into an escrow account to settle undisclosed liabilities and other closing conditions.

2G was informed of an adverse court judgment from a claim initiated in 2016. The damages awarded were approximately US $3.7 million. This lawsuit was not disclosed as part of the acquisition. Further, 2G decided to appeal the judgment. In the event of an appeal, the appellant is required to post a bond on a dollar-for-dollar basis plus 30% to cover costs and interest that may have accrued. As a result, 2G required US $3.9 million to post the appellate bond, which was paid by the Company on behalf of 2G.

The Company reached a settlement agreement with the vendors of the acquisition. As part of the settlement, both the vendors and the Company would equally share in the loss, although funding of the bond was US $1.7 million by the vendors and US $2.2 million by the Company, totaling up to US $3.9 million as required by the appellant. The Company fronted the US $1.7 million cash amount, which is the vendors’ US $1.7 million contribution that was agreed by both parties to be funded from releasing the funding from the escrow. The Company’s US $2.2 million was funded from cash resources on hand.

At the time of the settlement, 2G believed that the court decision had a likelihood of not being overturned, so therefore, the Company wrote off the full US $3.9 million bond in 2018 due to the uncertainty around the decision being overturned under appeal.

In the fourth quarter of 2020, the court ruled that the initial judgment would not be reversed, and the appellate bond would not be recovered. As a result of that court judgment and the settlement agreement, the Company no longer needs to replenish the escrow funds towards the 2018 acquisition. Therefore, the reversal of the indemnity liability was recorded as a non-cash litigation recovery of the previously recognized US $3.9 million impairment. As confirmed by the bond insurer, the Company has an outstanding receivable of US $175,450 as at December 31, 2020, which means, in effect, the Company will recover that amount from the lawsuit.

For the year ended December 31, 2020, the Company recognized $223,383 (US $175,450) for the appellate bond in prepaid expenses and other assets within the statements of financial position and a non-cash litigation recovery of $2,515,822 (US $1,875,450) included in other income on the consolidated statements of loss and other comprehensive loss.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Net Income and Loss

During the year ended December 31, 2020, the Company’s net loss decreased to $34.8 million from $267.5 million in the prior year. The reduction in net loss was primarily due to the one-time gain during the year for the disposition of GreenMart for $23.3 million and the $191.7 million impairment loss recognized in the prior year. In addition, sharebased compensation declined by $16.4 million for the year ended December 31, 2020 compared to the same period in 2019 because of the decline in share price and conversion of restricted share units to options priced at a lower dollar value. These factors were offset by a decline in gross margin of $3.8 million due to the cancellation of MSAs and a reduction in the breadth of services offered to customers as the Company transitions its resources to focus on cultivation activities in Canada.

Consolidated statements of financial position

The table below summarizes information regarding the Company’s consolidated statements of financial position:

	December 31,	December 31,
	2020	2019
	$	$
Cash	1,511,921	10,019,356
Biological assets	1,612,817	148,209
Inventory	4,486,483	516,360
Total debt	152,974,065	128,074,544
Total assets	100,784,733	163,821,461
Total liabilities	190,548,165	224,542,093
Working capital	(161,944,812)	(28,456,108)

Biological Assets

The following table is a summary of the biological assets movement for the years ended December 31, 2020 and 2019:

	$ Amount
Balance at January 1, 2019	139,744
Unrealized gain on changes in fair value of biological assets	689,782
Production costs capitalized	546,200
Transferred to inventoryupon harvest	(1,227,517)
Balance at December 31, 2019	148,209
Production costs capitalized	3,417,909
Unrealized gain on changes in fair value of biological assets	3,827,226
Transferred to inventoryupon harvest	(5,780,527)
Balance at December 31, 2020	1,612,817

Inventory

Inventory is comprised of the following and is valued at the lower of cost and net realizable value:

11

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

==> picture [492 x 71] intentionally omitted <==

Debt

	December 31,	December 31,
	2020	2019
	$	$
Term revolving loan – Bank of Nova Scotia prime rate (“BNS
Prime Rate”) + 9.55% (a)	118,163,970	102,864,797
Term loan – BNS Prime Rate + 9.55%(b)	34,810,095	25,209,747
Total	152,974,065	128,074,544
Currentportion of long-term debt	(152,974,065)	(15,082,074)
Long-term debt	-	112,992,470

On April 29, 2020, the Company and its senior lender executed amendments to its existing loan agreements. The interest payable on the existing loan balances was to accrue and be added to the loan principal until December 31, 2020. Interest payments were required to be paid monthly commencing January 1, 2021. The loan was to mature April 2021. The amended loan agreement provided the Company with up to $7 million of additional borrowing capacity. As of the date of this MD&A, the full $7 million has been drawn from this amended loan facility.

During the year ended December 31, 2020, the Company did not meet its financial covenants pursuant to the debt facilities. On April 21, 2021, the Company received a signed waiver from the senior lender for the breach of its financial covenants under the loan agreements in-force as at December 31, 2020. Under the terms of the waiver, the entirety of the principal balance, including accrued interest payable up until the repayment date, is extended to and due on May 1, 2022.

OUTLOOK

The Company has been focused on expanding and upgrading its various cannabis facilities, and developing relationships with new customers, mainly through retail channels. The MJardin team has decades of combined experience in designing, building and operating cannabis facilities. Management is confident in their projections of meeting the following key operating deliverables in 2021:

• Provincial approvals for the retail distribution of both the Flint & Embers brand as well as ROBES branded

• products across all major Canadian markets.

• Continued pursuit of long-term supply agreements to ensure uptake of full production capability.

• Completion of Greenhouse and Water-Hash extraction at Warman Facility.

The objectives listed above are subject to the risk factors identified below as well as the potential impact that the ongoing COVID-19 pandemic may have.

LIQUIDITY AND CAPITAL RESOURCES

The Company relies primarily on loans to finance its operations and meet its capital requirements. The Company’s objectives when managing its liquidity and capital resources are to maintain a sufficient capital base to fund its working capital requirements and business development plans.

Total current assets and total current liabilities as at December 31, 2020 are $22.8 million and $184.7 million, respectively (2019 - $76.0 million and $104.5 million). Working capital as at December 31, 2020 was in a deficit position of $161.9 million, compared to a working capital deficit of $28.5 million as at December 31, 2019 primarily due to the change in classification of long-term debt to current debt in the first quarter of 2020. Total cash position was $1.5 million

12

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

as at December 31, 2020 compared to $10.0 million as at December 31, 2019.

Management acknowledges that there is significant uncertainty over the Company’s ability to meet its funding requirements as they fall due. For the Company to satisfy its current debt requirements, a debt restructuring, additional term debt, an asset sale, or equity financing will be required. However, the outcome of these matters cannot be predicted with certainty at this time. Please see the Risk Factors section of this MD&A for further discussion. The Company has successfully ramped up production at its Canadian cultivation facilities, and management believes they will be successful in ramping up sales of cannabis through retail channels to generate more cash to meet the demands of current liabilities.

Financial Covenants

During the year ended December 31, 2020, the Company did not make a scheduled repayment of the term loans and did not meet its financial covenants pursuant to the debt facilities. On April 21, 2021, the Company received a signed waiver from the senior lender for the breach of its financial covenants under the loan agreements in-force as at December 31, 2020. Under the terms of the waiver, the entirety of the principal balance, including accrued interest payable up until the repayment date, is due May 1, 2022.

Operating Activities

Cash used in operating activities during the year ended December 31, 2020 was $10.1 million compared to $43.2 million in the prior year. The Company expects that cash flow from operations will improve as the facilities are now fully operational with the first retail sales that occurred in the fourth quarter of 2020. Changes in working capital brought in $5.3 million of cash during the year ended December 31, 2020 compared to an inflow of $2.0 million in the prior year.

Investing Activities

During the year ended December 31, 2020, cash used from investing activities was $3.0 million compared to an inflow of $28.6 million in the prior year. Proceeds from the disposition of the Warman Facility land asset held for sale were $5.9 million, which was offset by $6.8 million from the Company’s purchases of property, plant and equipment during the year ended December 31, 2020 primarily for the upgrade, expansion, and development of the Canadian cannabis facilities.

Financing Activities

Cash generated from financing activities during the year ended December 31, 2020 was $4.6 million, consisting of (i) $9.3 million proceeds from debt and promissory notes payable, (ii) $1.0 million in new issuances of common shares, offset by (i) $5.4 million repayment of promissory notes payable, and (ii) $0.3 million repayment of finance leases. Cash used from financing activities during the year ended December 31, 2019 was $7.1 million, consisting of $38.3 million repayment of debt and finance leases offset by $31.0 million proceeds from debt and promissory notes payable and $0.2 million cash acquired from the acquisition of GreenMart in 2019.

Cash outflows from discontinued operation

During the year ended December 31, 2020, the impact on the consolidated statements of cash flows was an outflow of $2,041,646 (2019 - $226,680) from investing activities as the discontinued operations required funding from the continuing operations. The Company is no longer required to fund GreenMart effective August 14, 2020.

13

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

SELECTED QUARTERLY FINANCIAL INFORMATION

Quarterly Results		Q4 2020		Q3 2020		Q2 2020		Q1 2020
Revenue	$	2,284,570	$	4,843,102	$	2,105,015	$	2,203,582
Direct operating costs		(1,699,065)		(2,090,877)		(1,503,416)		(1,917,960)
Inventory write-down		(260,634)		(1,442,554)		(285,376)		–
Gross margin before fair value adjustments		324,871		1,309,671		316,223		285,622
Net loss		(21,468,897)		7,238,054		(12,496,455)		(8,113,236)
Basic and diluted loss per share - continuing operations		(0.34)		0.09		(0.08)		(0.12)
Basic and diluted loss per share - discontinued operations		(0.05)		(0.01)		(0.04)		(0.01)
Basic and diluted loss per share		(0.39)		0.08		(0.12)		(0.13)
EBITDA		(14,467,279)		18,814,137		(7,582,405)		(2,802,925)
Adjusted EBITDA		(2,026,945)		70,831		(1,897,262)		(3,218,720)
Assets		100,784,733		117,621,559		148,758,545		157,354,414
Liabilities	190,548,165 $		187,641,081 $		228,409,106 $		226,867,091 $
Quarterly Results		Q4 2019		Q3 2019		Q2 2019		Q1 2019
Revenue	$	1,397,294	$	7,643,293	$	6,877,231	$	10,779,006
Direct operating costs		(1,258,360)		(4,581,298)		(4,714,005)		(6,723,855)
Inventory write-down		–		–		–		–
Gross margin before fair value adjustments		138,934		3,061,995		2,163,226		4,055,151
Net loss	(234,109,282)			(12,431,699)		(6,101,256)		(14,825,690)
Basic and diluted loss per share - continuing operations		(3.27)		(0.11)		(0.19)		(0.23)
Basic and diluted loss per share - discontinued operations		(0.03)		–		(0.05)		–
Basic and diluted loss per share		(3.30)		(0.11)		(0.24)		(0.23)
EBITDA	(237,267,850)			(2,963,882)		(8,499,553)		(2,404,327)
Adjusted EBITDA		(12,085,905)		507,377		(4,129,701)		(3,156,756)
Assets		163,821,461		407,535,964		360,736,698		326,682,855
Liabilities	224,542,093 $		232,363,548 $		181,328,753 $		175,120,360 $

FOURTH QUARTER RESULTS

Revenue for the three months ended December 31, 2020 of $2.3 million was $0.9 million greater than the three months ended December 31, 2019 of $1.4 million. This was primarily due to $2.8 million and $1.7 million increases in cultivation fees and revenue from cannabis produced, respectively, offset by a $3.7 million decrease in management fees due to the cancellation of MSAs. Direct operating costs for the three months ended December 31, 2020 of $1.7 million was $0.4 million greater than the three months ended December 31, 2019 of $1.3 million. This was due to greater revenue earned during the three months ended December 31, 2020 and the corresponding relationship between revenue and direct operating costs. An inventory write-down of $0.3 million was recorded for the three months ended December 31, 2020 ($nil – 2019) because of a fourth quarter $0.2 million provision recorded for slow-moving inventory and $0.1 million from a net realizable value analysis.

During the three months ended December 31, 2020, the Company recorded $16.0 million of impairment on its CGUs, which is a decrease of $175.7 million compared to the $191.7 million impairment recognized in the three months ended December 31, 2019. The impairment recognized for 2020 is broken down as follows: $8.6 million on licenses, permits, and applications; $1.5 million on brands and trademarks; and $5.9 million on property, plant, and equipment. Within other income of $0.7 million for the three months ended December 31, 2020, the Company recognized a $2.5 million litigation recovery on the 2G court case and a $1.4 million loss on termination of the Cannabella arrangement. These items were not present in other income of $0.2 million for the three months ended December 31, 2019.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

NON-GAAP FINANCIAL MEASURES

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are not recognized, defined, or standardized measures under IFRS and may not be compared to similar measures presented by other issuers. EBITDA is an operational metric used by management, calculated as net loss before finance charges, depreciation and amortization, and income taxes. Adjusted EBITDA is an operational and financial metric used by management, calculated as and including, but not limited to: net loss before fair value adjustment to biological assets and inventory; acquisition costs; share-based compensation; depreciation and amortization; (gain) loss on revaluation of derivative liabilities; finance and investment expense (income); interest (income) expense; loss on sale of assets; loss due to rare events; insurance proceeds; foreign exchange loss; impairment of inventory; impairment of property, plant and equipment; impairment of intangible assets and goodwill; current income tax (recovery) expense; and deferred income tax recovery. Management believes adjusted EBITDA is a useful financial metric to assess the Company’s operating performance before the impact of non-cash items and acquisition related activities, as well as generally non-recurring gains and losses.

The following is a reconciliation of Adjusted EBITDA to EBITDA and to net income (loss), which is a GAAP financial measure contained herein.

	31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 (21,468,898) (234,109,283) (34,840,534) (267,467,927) 953,510 (8,107,832) 5,509,602 (4,302,996) 5,752,747 4,655,612 21,898,303 19,529,929 295,362 293,653 1,394,157 1,469,384 (14,467,279) (237,267,850) (6,038,472) (250,771,610) 260,634 - 1,988,564 - 475,292 3,233,273 2,772,367 19,180,400 e (881,037) 2,401,350 (3,827,226) (689,782) (903,385) 2,529,777 4,400,424 2,529,777 (1,848,198) - (23,345,642) - (351,487) (1,929,920) - 540,091 - 839,495 136,071 873,341 - 279,104 - (897,100) 15,980,224 191,653,185 15,980,224 191,653,185 390,402 5,396,420 (363,720) (161,504) (2,087,701) 2,160 (728,572) (206,723) 1,405,590 2,584,240 1,120,388 2,646,211 (2,026,945) (30,278,766) (7,905,594) (35,303,714) Three months ended Year ended
Net loss Adjustments: Income tax expense Interest expense Depreciation and amortization
EBITDA
Inventory write-down Share-based compensation Unrealized (gain) loss on changes in fair value of biological ass Loss from discontinued operation Gain on disposition of GreenMart of Nevada, LLC Loan initiation fees (recovery) Severance costs Loss (gain) on disposition of equity investment Impairment Loss (gain) on loan modification Other (income) loss Foreign exchange loss
Adjusted EBITDA

OFF-BALANCE SHEET ARRANGEMENTS

As at the date of this MD&A, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the financial performance or financial condition of the Company.

CONTRACTUAL OBLIGATIONS

In the normal course of business, the Company had the following obligations to make future payments as at December 31, 2020:

15

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

	Within 1 year	2 to 5 years More than 5 years	2 to 5 years More than 5 years	Total
	$	$	$	$
Accounts payable and accrued liabilities	9,362,942	-	-	9,362,942
Due to related parties	353,919	-	-	353,919
Income taxes payable	15,321,326	-	-	15,321,326
Promissory notes payable	6,285,109	2,302,840	-	8,587,949
Finance leases	436,849	1,739,237	1,102,985	3,279,071
Currentportion of long-term debt	152,974,065	-	-	152,974,065
Total	184,734,210	4,042,077	1,102,985	189,879,272

TRANSACTIONS WITH RELATED PARTIES

a) Key management and directors’ compensation

Key management and directors are those who have the authority and responsibility for planning, directing and controlling activities of the entity, directly or indirectly. The key management and directors’ compensation of the Company is the Company’s executive management team and board of directors. Compensation provided to key management and directors is as follows:

management and directors is as follows:
	December 31,	December 31,
	2020	2019
	$	$
Key management salaries and benefits	1,740,164	2,453,964
Directors fees	427,030	324,515
Totalpayroll and benefits	2,167,194	2,778,479
Share-based compensation	2,709,100	11,759,966
Total compensation	4,876,294	14,538,445

b) Transactions with related parties

In the ordinary course of business, under market terms and conditions comparable to those provided to unrelated third parties, the Company generates revenue from the following related parties; PotCo LLC, Next 1 Labs, Cloud 9 Support LLC, and F&L Warm Springs LLC. These transactions are considered related party in nature since a director on the board of the Company co-founded and is the managing partner of PotCo LLC and owns Next1 Labs, Cloud 9 Support LLC, and F&L Warm Springs LLC. A summarized table of the amounts as at the year ended December 31, 2020 and December 31, 2019 are as follows:

==> picture [498 x 129] intentionally omitted <==

(i) Interest is payable in monthly installments at a rate of 15% per annum with the full principal amount of US $500,000 due on demand.

(ii) The Company provides consulting, design, operational and other management services to AMI. The Company holds an investment in AMI as described in Note 8. The following table provides a summary of the amounts owed for services provided:

16

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Due to related parties as at December 31, 2020 is $353,919 (2019 - $340,030). The amount is owed to directors of the Company.

the Company.
	December 31,	December 31,
	2020	2019
	$	$
Fees from cultivation and management services	2,420,621	11,584,631
Interest income	100,609	99,516
Total revenues from related parties	2,521,230	11,684,147
Director fees	427,030	324,515
Total costs from related parties	427,030	324,515

The Company sources funding from a senior lender and has loans outstanding and has made interest payments to the senior lender as at December 31, 2020 and December 31, 2019. A director of the Company is an executive of the senior lender.

GOING CONCERN

The audited and consolidated financial statements have been prepared on the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business.

For the year ended December 31, 2020, the Company reported a net loss of $34,840,534 (December 31, 2019 – $267,467,927), cash outflow from operating activities of $10,080,034 (December 31, 2019 – outflow of $43,164,327), working capital deficit of $161,944,812 (December 31, 2019 – $28,456,108) and an accumulated deficit of $383,713,486 (December 31, 2019 – $348,872,952).

These conditions create a material uncertainty which may cast a significant doubt on the Company’s ability to continue as a going concern. These consolidated financial statements do not include adjustments to amounts and classifications of assets and liabilities, which may be necessary should the Company be unable to continue as a going concern.

Management acknowledges that there is significant uncertainty over the Company's ability to meet its funding requirements as they fall due. The Company’s ability to continue in the normal course of operations is dependent on its ability to raise additional capital through debt and equity financings and to start generating positive cash flow from operating activities. While the Company has been successful in raising capital in the past, there is no assurance that it will be successful in closing further financing in the future.

a) Debt facilities

During the year ended December 31, 2020, the Company executed an amendment to its loan agreement (“Amending Agreement’) with its senior lender allowing it to defer principal and interest payments. Details of the amendments are provided in Note 14 of the audited and consolidated financial statements for the year ended December 31, 2020.

As at December 31, 2020, the Company is not in compliance with its Senior Leverage Ratio and Fixed Charge Coverage Ratio for both its loans owed by Canadian and U.S. facilities. Refer to Note 14(c) of the audited and consolidated financial statements for the year ended December 31, 2020 for a description of how these covenants are determined. As at December 31, 2019, the Company was in compliance with its financial covenants.

On April 21, 2021, the Company received a signed waiver from the senior lender for the breach of its financial covenants under the loan agreements in-force as at December 31, 2020. Under the terms of the waiver, the entirety of the principal balance, including accrued interest payable up until the repayment date, is due May 1, 2022. Although management believes the Company will be successful in ramping up production at its cultivation facilities to generate cash flows to begin to meet future debt requirements, the outcome of these matters cannot be certain at this time. In the event that the Company cannot meet its repayment obligation on May 1, 2022, the Company will look to alternative sources of financing, delay capital expenditures and/or evaluate potential asset sales, and potentially could be forced to curtail or cease operations or seek relief under applicable bankruptcy or insolvency laws.

b) COVID-19 contagious disease

During the year ended December 31, 2020, COVID-19 had an adverse impact on local economics and the global economy. COVID-19 affected the Company’s ability to continue its construction at its facilities, particularly Will, and resulted in temporary shortages of staff to the extent its workforce is impacted. Construction activities at Will were completed during the third quarter of 2020. The Company made active efforts to minimize the impact of COVID-19.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Facilities were professionally cleaned to support the staff’s return to work and mitigate any potential facility outbreak. Additional equipment vendors were sourced to address suppliers who became no longer available or had a lack of supplies on hand. A potential facility outbreak, if uncontrolled, could have a material adverse effect on our business, financial condition, results of operations, and cash flows including lost revenue. The Company’s operations are considered an essential service in all jurisdictions and all facilities are continuing to operate with protocols in place to prevent the spread of the virus. There was no significant impact on revenues from COVID-19. The Company continues to monitor and assess the impact that COVID-19 will have on the business and its revenues.

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

See Note 2 aa) from the audited and consolidated financial statements for the years ended December 31, 2020 and 2019 for more information. There were no changes to existing accounting policies of the Company for the year ended December 31, 2020.

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Fair Value Hierarchy

The estimated fair values of the cash, restricted cash, accounts receivable, due from related parties, accounts payable and accrued liabilities, due to related parties, promissory notes payable, and indemnity liabilities approximate their carrying values due to the relatively short-term nature of the instruments. The estimated fair values of long-term deposits and long-term debt approximate carrying values since effective interest rates are not significantly different from market rate. The carrying value of the debt differs from the fair value due to transaction costs.

Financial instruments recorded at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 – valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 – valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Since DNA Genetics is not listed on an exchange, the Company determined the fair value of the equity investment using valuation techniques using inputs that are not based on observable market data. It was, therefore, categorized as Level 3 in the fair value hierarchy. The Company uses the latest market transaction price for these securities derived from private placements, which are not publicly observable, and any available independent valuation reports obtained from the entity. Increases (decreases) in the latest market transaction prices will result in a direct increase (decrease) to the fair value of the equity instrument. The Company reviewed DNA Genetics’ shareholders update presentation for the year ended December 31, 2020 to assess whether any change in fair value, other than due to the foreign exchange movement in the investment balance, was to be recorded.

There have been no changes to the classification of financial instruments using the fair value hierarchy as shown below:

$	Level 1	Level 2	Level 3	Total
As at December 31, 2020
Investment in DNA Genetics	-	-	1,910,101	1,910,101
As at December 31, 2019
Investment in DNA Genetics	-	-	1,948,500	1,948,500

(a) Credit risk

Credit risk is the risk of a potential loss to the Company if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company is moderately exposed to credit risk from its cash, restricted cash, accounts receivable, and related parties receivable. The Company assessed the collectability of its accounts receivable and related party receivable and for the year ended December 31, 2020 recognized an expected credit loss of $739,314 and $201,226 for accounts receivable and related parties receivable, respectively (December 31, 2019 - $103,904 and $74,795). See Note 22 on the rationale for why an expected credit loss was recognized. The risk for cash is mitigated

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

by holding these instruments with highly rated financial institutions. The Company does not invest in asset-backed deposits or investments and does not expect any credit losses. Accounts receivable primarily consist of amounts due from the sales tax credits that the Company expects to fully recover. The risk exposure is limited to their carrying amounts at the statements of financial position date. As at December 31, 2020 and 2019, the Company’s maximum percentage exposure to credit risk is represented by its largest customer in dollar value. This amounts to 46% and 33%, respectively, of consolidated accounts receivable. As at December 31, 2020 and 2019, the Company’s maximum dollar value exposure to credit risk is $10,163,990 and $22,246,589, respectively. This is determined as the total amount of cash, restricted cash, accounts receivable, and due from related parties as at the date of the consolidated statements of financial position.

(b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company actively manages its liquidity through cash and equity management strategies. Such strategies include continuously monitoring forecasted and actual cash flows from operating, financing, and investing activities.

The Company's cash flow is generated from cannabis sales and debt financing or equity raises. The Company monitors cash on a regular basis and reviews accounts payable, expenses, taxes, and overhead to ensure costs and commitments are being paid in a timely manner. Management has worked with and negotiated with vendors to ensure payment arrangements are satisfactory to all parties and that monthly cash commitments are managed within the Company’s operating cash flow capabilities. The Company has generated $1,589,516 revenue from cannabis produced for the year ended December 31, 2020 (2019 - $2,052,258), which provides operating cash flow to address liquidity risk. See Note 20. The Company also repaid $5,852,665 of principal and interest amounts on the promissory note payable during the year ended December 31, 2020 (2019 - $nil), which reduces the liquidity risk for the year.

In the second quarter of 2020, the Company and its senior lender executed amendments to its existing loan agreements. During the year ended December 31, 2020, the Company did not make a scheduled repayment of the term loans and did not meet its financial covenants pursuant to the debt facilities. On April 21, 2021, the Company received a signed waiver from the senior lender for the breach of its financial covenants under the loan agreements inforce as at December 31, 2020. Under the terms of the waiver, the entirety of the principal balance, including accrued interest payable up until the repayment date, is due May 1, 2022.

As at December 31, 2020, the Company had a cash balance of $1,511,921. The following table summarizes amounts and maturity dates of the Company's contractual obligations as at December 31, 2020:

	Within 1 year	2 to 5 years More than 5 years	2 to 5 years More than 5 years	Total
	$	$	$	$
Accounts payable and accrued liabilities	9,362,942	-	-	9,362,942
Due to related parties	353,919	-	-	353,919
Income taxes payable	15,321,326	-	-	15,321,326
Promissory notes payable	6,285,109	2,302,840	-	8,587,949
Finance leases	436,849	1,739,237	1,102,985	3,279,071
Currentportion of long-term debt	152,974,065	-	-	152,974,065
Total	184,734,210	4,042,077	1,102,985	189,879,272

(c) Market risk

Currency risk

Currency risk arises due to fluctuations in the fair value or cash flows of financial instruments due to changes in foreign exchange rates. As at December 31, 2020, the Company had functional currencies of Canadian dollars and US dollars for US subsidiaries’ financial assets and liabilities for which cash flows were denominated in foreign currencies. Management closely monitors the fluctuation of the Company’s foreign currency and believes the foreign currency exchange risk derived from its other activities is low, so therefore, does not hedge the foreign currency exchange risk arising from these activities. The impact on net income (loss) from changes in the foreign exchange rates are shown in the table below:

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

USD/CAD	Net income(loss)	Net income(loss)
	2020	2019
	-100 bps + 100 bps	- 100 bps + 100 bps
	(347,936) $ 347,936 $ (252,483) $ 252,483 $

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has no interest-bearing assets other than cash. The Company's debt facilities carry interest at prime rate plus a fixed rate. The Company is exposed to fluctuations in the prime rate.

The table below details the effect on income (loss) before tax of a 100-basis points strengthening or weakening of the BNS Prime Rate on the debt facilities. 100-basis points sensitivity is the sensitivity rate used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates:

BNS Prime rate	Net income(loss)	Net income(loss)
	2020	2019
	-100 bps + 100 bps	- 100 bps + 100 bps
	1,827,368 $ (1,844,014) $ 1,564,722 $ (1,578,976) $

ISSUERS WITH U.S. CANNABIS-RELATED ASSETS

On February 8, 2018, the Canadian Securities Administrators revised their previously released Staff Notice 51-352 Issuers with U.S. Marijuana-Related Activities (the “ Staff Notice ”) which provides specific disclosure expectations for issuers that currently have, or are in the process of developing, cannabis-related activities in the United States as permitted within a particular State’s regulatory framework. All issuers with United States cannabis-related activities are expected to clearly and prominently disclose certain prescribed information in prospectus filings and other required disclosure documents in order to fairly present all material facts, risks and uncertainties about issuers with U.S. cannabis-related activities.

Such disclosure includes, but is not limited to: (i) a description of the nature of a reporting issuer’s involvement in the U.S. cannabis industry; (ii) an explanation that cannabis is illegal under U.S. federal law and that the U.S. enforcement approach is subject to change; (iii) a statement about whether and how the reporting issuer’s U.S. cannabis-related activities are conducted in a manner consistent with U.S. federal enforcement priorities; and (iv) a discussion of the reporting issuer’s ability to access public and private capital, including which financing options are and are not available to support continuing operations. Additional disclosures are required to the extent a reporting issuer is deemed to be directly or indirectly engaged in the U.S. cannabis industry, or deemed to have “ancillary industry involvement”, all as further described in the Staff Notice.

As a result of the Company’s existing operations and acquisitions in the United States, MJardin provides the following disclosure.

Regulatory Overview

Below is a discussion of the federal and state-level U.S. regulatory regimes in those jurisdictions where the Company is currently directly involved through its subsidiaries. The Company or its subsidiaries are directly engaged in the manufacture, possession, use, sale, or distribution of cannabis in the State of Nevada and indirectly in the state of Colorado. The Company is in compliance with the applicable enacted regulatory framework and licensing requirements for each of the States of Nevada and Colorado.

The Company or its subsidiaries are or are expected to be directly engaged in the manufacture, possession, use, sale, or distribution of cannabis in the medicinal cannabis marketplace in the State of Nevada. The Company is not aware of any non-compliance with any applicable licensing requirements or regulatory framework enacted by the State of Nevada.

The Company also has indirect involvement in the marijuana industry through the products and services it provides to customers in the State of Colorado.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

The Company will evaluate, monitor and reassess this disclosure, and any related risks, on an ongoing basis and the same will be supplemented and amended to investors in public filings, including in the event of government policy changes or the introduction of new or amended guidance, laws or regulations regarding marijuana regulation. Any noncompliance, citations or notices of violation which may have an impact on the Company’s license, business activities or operations will be promptly disclosed by the Company.

Legal Advice

Legal advice has been obtained by the Company regarding applicable U.S. federal and state law.

Regulation of Cannabis in the United States Federally

The United States federal government regulates drugs through the Controlled Substances Act (21 U.S.C. § 811) (the “ CSA ”). Pursuant to the CSA, cannabis is classified as a Schedule I controlled substance. A Schedule I controlled substance is defined as a substance that has no currently accepted medical use in the United States, lacks safety for use under medical supervision and a high potential for abuse. The Department of Justice defines Schedule I drugs, substances or chemicals as “drugs with no currently accepted medical use and a high potential for abuse.”

The United States Food and Drug Administration has not approved cannabis as a safe and effective drug for any use.

Canada has federal legislation which uniformly governs the cultivation, processing, distribution, sale and possession of both medical and recreational cannabis under the Cannabis Act, as well as various provincial and territorial regulatory frameworks that further govern the distribution, sale and consumption of recreational cannabis within the applicable province or territory. In contrast, cannabis is only permissively regulated at the state level in the United States.

State laws in the United States regulating cannabis are in direct conflict with the CSA, which prohibits cannabis use and possession. Although certain states and territories of the U.S. authorize medical or recreational cannabis cultivation, manufacturing, production, distribution, and sales by licensed or registered entities, under U.S. federal law, the cultivation, manufacture, distribution, possession, use, and transfer of cannabis and any related drug paraphernalia, unless specifically exempt, is illegal and any such acts are criminal acts under the CSA. Although the Company’s activities are compliant with applicable United States state law, strict compliance with state laws with respect to cannabis may neither absolve the Company of liability under United States federal law, nor may it provide a defense to any federal proceeding which may be brought against the Company.

The risk of federal enforcement and other risks associated with the Company’s business are described in “Risk Factors”.

Company Compliance Program

The Company is classified as having direct and indirect involvement in the U.S. marijuana industry and is in material compliance with applicable licensing requirements and the regulatory framework enacted by each U.S. state in which it operates. The Company is not subject to any citations or notices of violation with applicable licensing requirements and the regulatory framework enacted by each applicable U.S. state which may have an impact on its licenses, business activities or operations.

The Company’s CEO or any other individual appointed by him oversees, maintains, and implements the Company’s compliance program and personnel. In addition to the Company’s internal legal and compliance departments, the Company has state and local regulatory/compliance counsel engaged in every jurisdiction in which it operates.

The Company’s CEO or any other individual appointed by him oversees training for all employees, such training includes, but is not limited to, the following topics:

• compliance with state and local laws;

• safe cannabis use;

• security and safety policies and procedures;

• inventory control;

• quality control;

• transportation procedures; and

• extensive ingredient and product testing, often beyond that required by law to assure product safety and accuracy.

The Company’s compliance program emphasizes security and inventory control to ensure strict monitoring of cannabis

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

and inventory from delivery by a licensed distributor to sale or disposal.

The Company’s CEO or anyone appointed by him monitors all compliance notifications from the regulators and inspectors in each market, timely resolving any issues identified. The Company keeps records of all compliance notifications received from the state regulators or inspectors and how and when the issue was resolved.

Further, the Company has created comprehensive standard operating procedures that include detailed descriptions and instructions for receiving shipments of inventory, inventory tracking, recordkeeping and record retention practices related to inventory, as well as procedures for performing inventory reconciliation and ensuring the accuracy of inventory tracking and recordkeeping. The Company maintains accurate records of its inventory at all licensed facilities.

Adherence to the Company’s standard operating procedures is mandatory and ensures that the Company’s operations are compliant with the rules set forth by the applicable state and local laws, regulations, ordinances, licenses and other requirements. The Company ensures adherence to standard operating procedures by regularly conducting internal inspections and ensures that any issues identified are resolved quickly and thoroughly.

The Company will continue to monitor compliance on an ongoing basis in accordance with its compliance program and standard operating procedures. While the Company’s operations are in full compliance with all applicable state laws, regulations and licensing requirements, such activities remain illegal under United States federal law. For the reasons described above and the risks further described in the “Risk Factors” section below, there are significant risks associated with the business of the Company. Readers are strongly encouraged to carefully read all of the risk factors contained in “Risk Factors”.

The Company’s Balance Sheet and Operating Statement Exposure to U.S. Marijuana Related Activities

The portion of the Company’s audited and consolidated financial statements that pertain to U.S. cannabis activity for the year ended December 31, 2020 is outlined on pages 7, 8, and 9 of this MD&A.

Readers are cautioned that the foregoing financial information, though extracted from the Company’s financial systems that supports its Annual Financial Statements, has not been audited in its presentation format and accordingly is not in compliance with IFRS based on consolidation principles.

Regulation of Cannabis at State Levels

The following chart is a summary of the Company’s material assets and investments in the United States. The Company is in compliance with the licenses that has been issued to it in the United States. References to “Direct”, “Indirect” or “Ancillary” classifications of each asset or investment have the meanings ascribed thereto in the Staff Notice. All of the Company’s material investments that give the Company “Direct”, “Indirect” and “Ancillary” involvement in the U.S. marijuana industry are included in the table below:

Asset Name and Name of Organization	Description	Type of Relationship, Jurisdiction, and Classification
GreenMart of Nevada, LLC Cheyenne Acquired July 2019	GreenMart is a 30,000 sq. ft indoor facility located in Las Vegas, Nevada. The facility is licensed for cultivation and distribution, and produces 5,760 kg/year.	Type of Relationship:Wholly owned subsidiary of MJardin Group, Inc.Parties entered into a Management Interest Purchase Agreement on December 31, 2019 with a closing date upon license transfer to the purchaser expected in Q1 2021. The Company has relinquished control over GreenMart. Refer to the Key Business Developments section of this MD&A. Jurisdiction:Nevada Classification:Indirect

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Asset Name and Name of Organization Description Type of Relationship, Jurisdiction, and Classification Buddy Boy Brands Financial interest in promissory notes acquired January 2018 and provides services since January 2018 Denver based Buddy Boy operates five cannabis grow operations and seven retail locations in the greater Denver area. Type of Relationship:The Company has a financial interest through holding promissory notes and accrued interest recorded at December 31, 2020 as approximately $29 million, net of ECL provisions of approximately $29 million. Jurisdiction:Colorado Classification:Indirect	Asset Name and Name of Organization Description Type of Relationship, Jurisdiction, and Classification Buddy Boy Brands Financial interest in promissory notes acquired January 2018 and provides services since January 2018 Denver based Buddy Boy operates five cannabis grow operations and seven retail locations in the greater Denver area. Type of Relationship:The Company has a financial interest through holding promissory notes and accrued interest recorded at December 31, 2020 as approximately $29 million, net of ECL provisions of approximately $29 million. Jurisdiction:Colorado Classification:Indirect	Asset Name and Name of Organization Description Type of Relationship, Jurisdiction, and Classification Buddy Boy Brands Financial interest in promissory notes acquired January 2018 and provides services since January 2018 Denver based Buddy Boy operates five cannabis grow operations and seven retail locations in the greater Denver area. Type of Relationship:The Company has a financial interest through holding promissory notes and accrued interest recorded at December 31, 2020 as approximately $29 million, net of ECL provisions of approximately $29 million. Jurisdiction:Colorado Classification:Indirect	Asset Name and Name of Organization Description Type of Relationship, Jurisdiction, and Classification Buddy Boy Brands Financial interest in promissory notes acquired January 2018 and provides services since January 2018 Denver based Buddy Boy operates five cannabis grow operations and seven retail locations in the greater Denver area. Type of Relationship:The Company has a financial interest through holding promissory notes and accrued interest recorded at December 31, 2020 as approximately $29 million, net of ECL provisions of approximately $29 million. Jurisdiction:Colorado Classification:Indirect
	Asset Name and Name of Organization	Description	Type of Relationship, Jurisdiction, and Classification
	Buddy Boy Brands Financial interest in promissory notes acquired January 2018 and provides services since January 2018	Denver based Buddy Boy operates five cannabis grow operations and seven retail locations in the greater Denver area.	Type of Relationship:The Company has a financial interest through holding promissory notes and accrued interest recorded at December 31, 2020 as approximately $29 million, net of ECL provisions of approximately $29 million. Jurisdiction:Colorado Classification:Indirect

Below is a summary of the licensing and regulatory framework in the markets where, as of December 31, 2020, the Company held licenses and/or had direct or indirect involvement with the U.S. cannabis industry followed by outlines of the regulatory framework in each of the relevant states.

Nevada

In 2013, the Nevada legislature passed SB374, codified as N.R.S. Chapter 453A, providing for state licensing of medical marijuana establishments. On November 8, 2016, Nevada voters passed Ballot Question 2, codified as N.R.S. Chapter 453D, allowing for the sale of marijuana for adult use starting on July 1, 2017. Under N.R.S. Chapter 453A, medical marijuana establishment registration certificates are available for the following activities: cultivation, production of edible and infused products, dispensing, and laboratory testing. Under N.R.S. Chapter 453D, adult-use marijuana establishment registration certificates are available for the following activities: cultivation, product manufacturing, distribution, retailing, and laboratory testing. All marijuana establishments must apply to the Nevada Department of Taxation (“ DOT ”) for registration. Local jurisdictions are also allowed to establish municipal licensing requirements, in which case final DOT licensure is contingent on receipt of all necessary municipal licenses.

The Company is advised by U.S. legal counsel and/or other advisors in connection with Nevada’s cannabis regulatory framework. The Company, through its wholly-owned subsidiaries GreenMart of Nevada, LLC, holds one license for the cultivation of medical marijuana and one license for the cultivation of recreational marijuana. The Company is in compliance with Nevada state law and the related licensing framework.

Colorado

Colorado’s medical cannabis program was introduced in November 2000, when 54% of voters approved “Amendment 20”. Colorado became the first state in the nation to legalize adult-use cannabis when 55% of voters approved “Amendment 64” in November 2012. The first adult-use dispensaries opened in January 2014. The Colorado Marijuana Enforcement Division regulates Colorado’s cannabis regulatory program. The market is divided into three main classes of licenses: cultivation, processing, and retail. Extracted oils, edibles and flower products are permitted.

The Company is advised by U.S. legal counsel and/or other advisors in connection with Colorado’s cannabis regulatory framework. The Company is in compliance with Colorado state law and the related licensing framework.

RISK FACTORS

This section discusses risk factors relating to the business of the Company that should be considered by both existing and potential investors. The information in this section is intended to serve as an overview and should not be considered comprehensive and the Company may face risks and uncertainties not discussed in this section, or not currently known to us, or that we deem to be immaterial. All risks to the Company’s business have the potential to influence its operations in a materially adverse manner. The following is a description of important factors that may cause our actual results of operations in future periods to differ materially from those currently expected or discussed in the forward-looking statements set forth in this report relating to our financial results, operations and business prospects. Except as required by law, we undertake no obligation to update any such forward-looking statements to reflect events or circumstances after the date of this MD&A.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

As stated above, the Company has announced it is evaluating strategic alternatives available to the Company, include continuing as a standalone public company, going private, undertaking a recapitalization or other restructuring transaction, or being purchased by a strategic partner. There can be no assurances that any transaction will result from these matters and the Company will make updates when circumstances warrant. In addition, there can be no assurance that the Company’s senior lender will not exercise any rights or remedies in relation to the event of default under the Company’s loan facilities. Also, there can be no assurance that current cash and cash equivalents are sufficient to meet the Company’s forecasted expenditures for the foreseeable future. Finally, there can be no assurance on the success or the sufficiency of the Company being able to secure additional financing in order to meet the Company’s forecast expenditures.

As stated above, the material uncertainties raise significant doubt as to the ability of the Company to continue as a going concern. The Company may be unable to realize its assets or discharge its liabilities in the normal course of business, and may incur significant dilution to the holdings of existing shareholders in any restructuring and financing, or may be required to seek relief under a court-approved restructuring process.

Limited Operating History

We have a very limited history of operations and are considered a start-up company. As such, we are subject to many risks common to such enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources and lack of revenues. There is no assurance that we will be successful in achieving a return on shareholders’ investment and the likelihood of our success must be considered in light of our early stage of operations.

The Company’s actual financial position and results of operations may differ materially from management’s expectations. The Company has experienced some changes in its operating plans and certain delays in its plans. As a result, the Company’s revenue, net income and cash flow may differ materially from the Company’s projected revenue, net income and cash flow. The process for estimating the Company’s revenue, net income and cash flow requires the use of judgment in determining the appropriate assumptions and estimates. These estimates and assumptions may be revised as additional information becomes available and as additional analyses are performed. In addition, the assumptions used in planning may not prove to be accurate, and other factors may affect the Company’s financial condition or results of operations.

The Company expects to incur significant ongoing costs and obligations related to its investment in infrastructure and growth and for regulatory compliance, which could have a material adverse impact on the Company’s results of operations, financial condition and cash flows. In addition, future changes in regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to the Company’s operations, increased compliance costs or give rise to material liabilities, which could have a material adverse effect on the business, results of operations and financial condition of the Company. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses. We may incur significant losses in the future for a number of reasons, including the other risks described in this MD&A, and unforeseen expenses, difficulties, complications and delays, and other unknown events. If we are unable to achieve and sustain profitability, the market price of our Common Shares may significantly decrease. The cannabis industry and market are relatively new in Canada and this industry and market may not continue to exist or grow as anticipated or the Company may be ultimately unable to succeed in this new industry and market.

There are factors which may prevent the Company from the realization of growth targets

The Company is currently in development stage. The Company’s growth strategy contemplates the completion of buildout of the Warman Facility. There is a risk that this additional facility will not be achieved on time, on budget, or at all, as this can be adversely affected by a variety of factors, including some that are discussed elsewhere in these “Risk Factors” and the following:

• delays in obtaining, or conditions imposed by, regulatory approvals;

• facility design errors;

• environmental pollution; non-performance by third party contractors; increases in materials or labour costs; construction performance falling below expected levels of output or efficiency;

• breakdown, aging or failure of equipment or processes;

• contractor or operator errors;

• operational inefficiencies;

24

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

• labour disputes, disruptions or declines in productivity; inability to attract sufficient numbers of qualified workers; disruption in the supply of energy and utilities; and

• major incidents and/or catastrophic events such as fires, explosions, storms, pandemics, or physical attacks.

Macroeconomic and other geo-political risks

The Company’s business is subject to risks associated with adverse economic conditions in Canada and globally, including economic slowdown, inflation, and the disruption, volatility and tightening of credit and capital markets. Increases in unemployment rates, taxes, governmental spending cuts or a return of high levels of inflation could adversely affect consumer spending patterns and result in a reduction in consumption of cannabis products in Canada and elsewhere in the world, including the Company’s products. The Company’s business, prospects, financial condition, results of operations and prospects may suffer as a result. These conditions could also worsen cash flows, liquidity and access to capital for the Company and cause other financial hardships for the Company and its suppliers, distributors, retailers and clients, thereby adversely impacting the Company’s ability to produce and distribute its products. In addition, natural disasters, pandemic outbreaks, boycotts, civil unrest and other geopolitical disruptions could adversely affect the Company. These events may damage the Company’s properties, deny the Company access to an adequate workforce, increase the cost of energy and other raw materials, temporarily or permanently close the Company’s facilities, disrupt the production, supply and distribution of the Company’s products and potentially disrupt information systems.

Ability to Repay Outstanding Debt

The Company has incurred significant liabilities and is exposed to liquidity risk with respect to credit facilities. The Company’s ability to repay these liabilities will be contingent upon our success in achieving sufficient revenues from operating segments. There is no assurance that we will be able to secure future additional financing should cash flows from operations be insufficient to repay liabilities. Our inability to repay outstanding debt when due would have a material adverse impact on our business. Although the Company seeks to ensure that there is sufficient liquidity to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash, there is no assurance sufficient liquidity can be maintained. If our actual cash flows from operations differ significantly from our anticipated cash flows for these purposes, such as a result of the COVID-19 pandemic, we may have insufficient liquidity to meet our financial commitments.

Construction Risk Factors

The Company is subject to a number of risk factors, including the availability and performance of engineering and construction contractors, suppliers and consultants, the receipt of required governmental approvals and permits in connection with the construction of the Warman Facility. Any delay in the performance of any one or more of the contractors, suppliers, consultants or other persons on which the Company is dependent in connection with its construction activities, a delay in or failure to receive the required governmental approvals and permits in a timely manner or on reasonable terms, or a delay in or failure in connection with the completion and successful operation of the operational elements in connection with construction could delay or prevent the construction and start-up of the Warman Facility as planned. There can be no assurance that current or future construction plans implemented by the Company will be successfully completed on time, within budget and without design defect; that available personnel and equipment will be available in a timely manner or on reasonable terms to successfully complete construction projects; that the Company will be able to obtain all necessary governmental approvals and permits; or that the completion of the construction, the start-up costs and the ongoing operating costs will not be significantly higher than anticipated by the Company. Any of the foregoing factors could adversely impact the operations and financial condition of the Company.

The Company is reliant on cultivation licenses to produce cannabis products in Canada and to obtain new licenses or approvals that may be required for the Company’s business and future plans. The Company’s ability to grow, store and sell cannabis in Canada is dependent on obtaining a license. A license is subject to ongoing compliance, reporting requirements and renewal. Although the Company believes it will meet the requirements of Health Canada to obtain and retain required licenses, there can be no guarantee that Health Canada will grant and renew licenses. Licenses are also specific to individual facilities and an adverse change or development affecting any facility could have a material and adverse effect on the Company’s business, financial condition and prospects. Should the Company fail to comply with the requirements of a license or should Health Canada or a state regulator not grant or renew a license when required, or renew a license on different terms or revoke a License, there would be a material adverse effect on the Company’s business, financial condition and results of operations.

Government licenses are currently, and in the future may be, required in connection with the Company’s operations, in

25

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

addition to other unknown permits and approvals which may be required. To the extent such permits and approvals are required and not obtained, the Company may be prevented from operating and/or expanding its business, which could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company cannot predict the time required to secure all appropriate regulatory approvals for its products, including the approval of new products developed in the future, or the extent of testing and documentation that may be required by governmental authorities. Any delays in obtaining, or failure to obtain the necessary regulatory approvals will significantly delay the development of the Company’s markets and products and could have a material adverse effect on the business, results of operations and financial condition of the Company.

Environmental Laws and Regulation

Environmental laws and regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for noncompliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company’s operations.

Government environmental approvals and permits are currently and may in the future be required in connection with the Company’s operations. To the extent such approvals are required and not obtained, the Company may be curtailed or prohibited from its proposed business activities or from proceeding with the development of its operations as currently proposed.

Failure to comply with applicable environmental laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. The Company may be required to compensate those suffering loss or damage due to its operations and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Risks Associated with Packaging, Labelling and Advertising Cannabis Products

The Cannabis Regulations set out requirements pertaining to the packaging and labelling of cannabis products which are intended to promote informed consumer choices and allow for the safe handling and transportation of cannabis, while also reducing the appeal of cannabis to youth and promoting safe consumption. These requirements prescribe plain packaging for cannabis products, including strict requirements for logos, colours and branding, as well as packaging that is tamper-proof and child-resistant. The Cannabis Regulations further require mandatory health warnings, standardized cannabis symbols and specific product information. Cannabis package labels must include specific information, such as: (i) product source information, including the class of cannabis and the name, phone number and email of the cultivator; (ii) a mandatory health warning, rotating between Heath Canada’s list of standard health warnings; (iii) the Health Canada standardized cannabis symbol; and (iv) information specifying THC and CBD content. The Cannabis Act also introduces restrictions regarding the promotion and advertising of cannabis products. Subject to a few exceptions, all promotions and advertising of cannabis products are prohibited unless authorized by the Cannabis Act. Any failure by the Company to comply with the Cannabis Regulations in respect of the packaging, labelling and advertising of its cannabis products could result in Health Canada taking enforcement action against the Company, including the suspension or revocation of the Company’s licenses, which could have a material and adverse effect on the Company’s business, prospects, financial position and results of operations.

Failure to Develop Products or Execute on Business Plan

If the Company cannot successfully develop, manufacture and distribute its products, or if the Company experiences difficulties in the development process, such as capacity constraints, quality control problems or other disruptions, the Company may not be able to develop market-ready commercial products at acceptable costs, which would adversely affect the Company’s ability to effectively enter the market. A failure by the Company to achieve a low-cost structure through economies of scale or improvements in cultivation and manufacturing processes would have a material adverse effect on the Company’s commercialization plans and the Company’s business, prospects, results of operations and financial condition.

Public Health Crises, including the COVID-19 Pandemic

The Company’s business, operations and financial condition could be materially adversely affected by public health

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

crises, including epidemics, pandemics and or other health crises, such as the outbreak of COVID-19. The current COVID-19 global health pandemic is significantly impacting the global economy and commodity and financial markets. The full extent and impact of the COVID-19 pandemic is unknown and to date has included extreme volatility in financial markets, a slowdown in economic activity, and has raised the prospect of a global recession. The international response to COVID-19 has led to significant restrictions on travel, temporary business closures, quarantines, global stock market volatility, and a general reduction in consumer activity, globally. Public health crises, such as the COVID-19 outbreak, can result in operating, supply chain and project development delays that can materially adversely affect the operations of third-parties in which the Company has an interest. Operations could be suspended for precautionary purposes or as governments declare states of emergency or other actions are taken in an effort to combat the spread of COVID-19. If the operation or development of one or more facility from which the Company expects to receive significant revenue is suspended, it may have a material adverse impact on the Company’s profitability, results of operations, financial condition and the trading price of the Company’s securities.

The risks to the Company’s business include without limitation, the risk of breach of material contracts and customer agreements, employee health, workforce productivity, increased insurance premiums, limitations on travel, the availability of industry experts and personnel, prolonged restrictive measures put in place in order to control an outbreak of contagious disease or other adverse public health developments globally and other factors that will depend on future developments beyond the Company’s control, which may have a material and adverse effect on the Company’s business, financial condition and results of operations. In addition the Company may experience business interruptions as a result of suspended or reduced relating to the COVID-19 outbreak or such other events that are beyond the control of the Company, which could in turn have a material adverse impact on the Company’s business, operating results, financial condition and the market for its securities. As at the date of this MD&A, the duration of any business disruptions and related financial impact of the COVID-19 outbreak cannot be reasonably estimated. It is unknown whether and how the Company may be affected if such pandemic, such as the COVID-19 outbreak, persists for an extended period of time.

Costs Incurred for Employee Health and Safety Regulation

Due to the nature of the Company’s business, including agricultural practices and the necessary handling and disposal of hazardous and non-hazardous materials and wastes, the Company will incur ongoing costs and obligations related to compliance with employee health and safety matters. Changes in safety laws and regulations or other unanticipated events could require extensive changes to the Company’s operations or give rise to material liabilities, which could have a material adverse effect on the Company’s business, financial condition and/or results of operations.

Competition in the Industry

An increase in the companies competing in this industry could limit the ability of the Company to expand its operations. Current and new competitors may be better capitalized, have a longer operating history, more expertise and be able to develop higher quality products, at the same or a lower cost. The Company cannot provide assurances that it will be able to compete successfully against current and future competitors. Competitive pressures faced by the Company could have a material adverse effect on its business, operating results and financial condition. In addition, despite Canadian federal and state-level legalization of marijuana, illicit or “black-market” operations remain abundant and present substantial competition to the Company. Illicit operations, despite being largely clandestine, are not required to comply with the extensive regulations that the Company must comply with to conduct business, and accordingly may have significantly lower costs of operation.

Inability to Develop New Products and Keep Pace with Market Developments

The cannabis industry is in its early stages and it is likely that the Company and its competitors will seek to introduce new products in the future. In attempting to keep pace with any new market developments, the Company will need to expend significant amounts of capital in order to successfully develop and generate revenues from, new products. The Company may also be required to obtain additional regulatory approvals from Health Canada and other applicable authorities which may take significant time. The Company may not be successful in developing effective and safe new products, bringing such products to market in time to be effectively commercialized, or obtaining any required regulatory approvals, which together with capital expenditures incurred for such product development and regulatory approval processes, may have a material adverse effect on the Company’s business, financial condition and results of operations.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Ability to Attract and Retain Key Personnel

The Company’s success has depended and continues to depend upon its ability to attract and retain key management, technical experts and sales personnel. The Company will attempt to enhance its management and technical expertise by continuing to recruit qualified individuals who possess desired skills and experience in certain targeted areas. The Company’s inability to retain employees and attract and retain sufficient additional employees or engineering and technical support resources could have a material adverse effect on the Company’s business, results of operations, sales, cash flow or financial condition. Qualified individuals are in high demand and shortages in qualified personnel or the loss of key personnel could adversely affect the financial condition of the Company, results of operations of the business and could limit the Company’s ability to develop and market its cannabis related products. In addition, certain individuals occupying a key position must hold certain security clearances and there is no assurance that new personnel who require a security clearance would be able to obtain one quickly, or at all. The loss of any of the Company’s senior management or key employees and the potential inability of the Company to provide an adequate replacement could materially adversely affect the Company’s ability to execute our business plan and strategy, and the Company may not be able to find adequate replacements on a timely basis, or at all. The Company does not maintain key person life insurance policies on any of our employees.

The Company’s Target Market is difficult to Quantify and Certain Segments may not Materialize

Because the cannabis industry is in a nascent stage with uncertain boundaries, there is a lack of information about comparable companies available for potential investors to review in deciding about whether to invest in the Company and, few, if any, established companies whose business model the Company can follow or upon whose success the Company can build. Accordingly, investors will have to rely on their own estimates in deciding about whether to invest in the Company. There can be no assurance that the Company’s estimates are accurate or that the market size is sufficiently large for its business to grow as projected, which may negatively impact its financial results. The Company regularly purchases and follows market research.

The Company targets users of cannabis in the Canadian recreational adult-use cannabis market who are looking for premium products; however, such a market may not materialize or be sustainable. If this premium market does materialize, the Company may not be successful in creating and maintaining consumer perceptions of the value of premium products. The promotion of cannabis is strictly regulated in Canada. For example, promotion is largely restricted to the place of sale and subject to prescribed conditions set out in the Cannabis Act and the Cannabis Regulations. Among other restrictions, the Cannabis Act prohibits testimonials and endorsements, lifestyle branding, and promotion that is appealing to young persons. Such restrictions on advertising, marketing and the use of logos and brand names, and other restrictions on advertising imposed by Canadian federal or provincial laws or regulations, or similar regulations imposed in other jurisdictions, may prevent the Company from creating and maintaining consumer perceptions in the value of its premium products and establishing itself as a premium producer. If we cannot successfully compete in the premium market, we may face significant challenges in gaining or maintaining a market share in Canada or in other cannabis markets in which it operates, or may be forced to sell products at a lower price, which may materially adversely affect results of operations.

The Company’s success depends on its ability to attract and retain customers. There are many factors which could impact the Company’s ability to attract and retain customers, including but not limited to its ability to continually produce desirable and effective product, the successful implementation of customer-acquisition plans and the continued growth in the aggregate number of customers. The failure to acquire and retain customers would have a material adverse effect on the Company’s business, operating results and financial condition.

Rapid Industry Growth and Consolidation

The cannabis industry is undergoing rapid growth and substantial change, which has resulted in an increase in competitors, consolidation and formation of strategic relationships. Acquisitions or other consolidating transactions could harm the Company in a number of ways, including by losing strategic partners if they are acquired by, or enter into relationships with, a competitor, losing customers, revenue and market share, or forcing the Company to expend greater resources to meet new or additional competitive threats, all of which could harm the Company’s operating results. As competitors enter the market and become increasingly sophisticated, competition in the Company’s industry may intensify and place downward pressure on retail prices for its products and services, which could negatively impact its profitability.

The Company may also enter into acquisitions or investments with third parties that it believes will complement or

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

augment its existing business. The Company’s ability to form strategic alliances is dependent upon, and may be limited by, the availability of suitable candidates and capital. In addition, strategic alliances could present unforeseen integration obstacles or costs, may not enhance the Company’s business, and/or may involve risks that could adversely affect the Company, including significant amounts of management time that may be diverted from operations to pursue and complete such transactions or maintain such strategic alliances. Future strategic alliances could result in the incurrence of additional debt, costs and/or contingent liabilities, and there can be no assurance that future strategic alliances will achieve the expected benefits to the Company’s business or that the Company will be able to consummate future strategic alliances on satisfactory terms, or at all.

Complexity and Costs of Insurance Coverage

The Company believes that it currently has insurance coverage with respect to workers’ compensation, general liability, directors’ and officers’ insurance, fire and other similar policies customarily obtained for businesses to the extent commercially appropriate; however, because the Company is engaged in and operates within the cannabis industry, there are exclusions and additional difficulties and complexities associated with such insurance coverage. In addition, no assurance can be given that such insurance will be adequate to cover the Company’s liabilities or will be generally available in the future or, if available, that premiums will be commercially justifiable. The exclusions could cause the Company to suffer uninsured losses, which could adversely affect the Company’s business, results of operations, and profitability.

Risks Inherent to the Cultivation of Cannabis

The Company’s future business involves the growing of cannabis, an agricultural product. Such business will be subject to the risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks. Although the Company expects that any such growing will be completed indoors under climate-controlled conditions, there can be no assurance that natural elements will not have a material adverse effect on any such future production.

Wholesale price Volatility

The cannabis industry is a margin-based business in which gross profits depend on the excess of sales prices over costs. Consequently, profitability is sensitive to fluctuations in wholesale and retail prices caused by changes in supply (which itself depends on other factors such as weather, fuel, equipment and labour costs, shipping costs, economic situation and demand), taxes, government programs and policies for the cannabis industry (including price controls and wholesale price restrictions that may be imposed by government agencies responsible for the sale of cannabis), and other market conditions, all of which are factors beyond the control of the Company. The Company’s operating income may be significantly and adversely affected by a decline in the price of cannabis and will be sensitive to changes in the price of cannabis and the overall condition of the cannabis industry, as the Company’s profitability is directly related to the price of cannabis. There is currently not an established market price for cannabis and the price of cannabis is affected by numerous factors beyond the Company’s control. Any price decline may have a material adverse effect on the Company.

Reliance on Third Party Transportation

In order for customers of the Company to receive their product, the Company will rely on third party transportation services. The Company depends on fast and efficient transportation and any prolonged disruption or delay in transportation can cause logistical problems for the Company and delays in customers obtaining their orders. The Company cannot directly control these delays and disruptions and any delay or disruption by third party transportation services may adversely affect the Company’s financial performance.

Moreover, security of the product during transportation to and from the Company’s facilities is critical due to the nature of the product. A breach of security during transport could have material adverse effects on the Company’s business, financials and prospects. Any such breach could impact the Company’s future ability to continue operating under its licenses or the prospect of renewing its licenses.

Failure to Obtain Security Clearances

Under the Cannabis Act, an individual with security clearance must be physically present in any space where other individuals are conducting activities with cannabis. Furthermore, under the Cannabis Act, a security clearance cannot be valid for more than five years and must be renewed before the expiry of a current security clearance. There is no assurance that any of the Company’s existing personnel, or its directors or officers, who presently or may in the future

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

require a security clearance will be able to obtain or renew such clearances or that new personnel who require a security clearance will be able to obtain one. A failure by an individual in a key operational position, or by any director or officer, to maintain or renew his or her security clearance could result in a reduction or complete suspension of the Company’s operations. Currently, all required security clearances are in place to enable the Company to carry on operations; however, if an individual in a key operational position leaves, and the Company is unable to find a suitable replacement who is able to obtain a security clearance required by the Cannabis Act in a timely manner, the Company may not be able to conduct its operations at planned production volume levels.

Product Recalls

Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling disclosure. If any of the Company’s products are recalled due to an alleged product defect or for any other reason, the Company could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. The Company may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention. Although the Company has detailed procedures in place for testing its products, there can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. A recall for any of the foregoing reasons could lead to decreased demand for the Company’s products and could have a material adverse effect on the results of operations and financial condition of the Company. Additionally, product recalls may lead to increased scrutiny of the Company’s operations by Health Canada or other regulatory agencies, requiring further management attention and potential legal fees and other expenses.

Potential Litigation

The Company may be named as a defendant in a lawsuit or regulatory action and from time to time, may be involved in various claims, legal proceedings and disputes arising in the ordinary course of business. The Company may be unable to resolve these disputes favourably, which may have a material adverse effect on the Company. Even if the Company resolves the disputes favourably, litigation can redirect significant resources and can create a negative perception of the Company. We may also incur uninsured losses for liabilities which arise in the ordinary course of business, or which are unforeseen, including, but not limited to, employment liability and business loss claims. Any such losses could have a material adverse effect on the Company’s business, results of operations, sales, cash flow or financial condition.

Product Liability

As a manufacturer and distributor of products designed to be ingested by humans, the Company faces an inherent risk of exposure to product liability claims, regulatory action and litigation if its products are alleged to have caused significant loss or injury. In addition, the manufacture and sale of the Company’s products involve the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Previously unknown adverse reactions resulting from human consumption of the Company’s products alone or in combination with other among others, that the Company’s products caused injury or illness, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with other substances. A product liability claim or regulatory action against the Company could result in increased costs, could adversely affect the Company’s reputation with its clients and consumers generally, and could have a material adverse effect on our results of operations and financial condition of the Company.

There can be no assurances that the Company will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all. The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of the Company’s potential products. As of the current date, the Company has insurance coverage for product liabilities.

Unknown Defects and Impairments

A defect in any business arrangement may arise to defeat or impair the Company’s claim to such transaction, which may have a material adverse effect on the Company. It is possible that material changes could occur that may adversely affect management’s estimate of the recoverable amount for any agreement the Company enters into. Impairment estimates, based on applicable key assumptions and sensitivity analysis, will be based on management’s best

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

knowledge of the amounts, events or actions at such time, and the actual future outcomes may differ from any estimates that are provided by the Company. Any impairment charges on the Company’s carrying value of business arrangements could have a material adverse effect on the Company.

Reliance on Key Inputs

The Company’s business is dependent on a number of key inputs and their related costs including raw materials and supplies related to its growing operations, as well as electricity, water and other local utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact the business, financial condition and operating results of the Company. Any inability to secure required supplies and services or to do so on appropriate terms could have a materially adverse impact on the business, financial condition and operating results of the Company.

The ability of the Company to compete and grow will be dependent on having access, at a reasonable cost and in a timely manner, to skilled labour, equipment, parts and components. No assurances can be given that the Company will be successful in maintaining the required supply of skilled labour, equipment, parts and components. It is also possible that the expansion plans contemplated by the Company may cost more than anticipated, in which circumstance the Company may curtail, or extend timeframes for completing the expansion plans. This could have a material adverse effect on the financial results and operations of the Company.

Fraudulent or Illegal Activity by Employees, Contractors, or Consultants

The Company is exposed to the risk that its employees, independent contractors and consultants may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to the Company that violates: (i) government regulations; (ii) manufacturing standards; (iii) federal and provincial healthcare fraud and abuse laws and regulations; or (iv) laws that require the true, complete and accurate reporting of financial information or data. It is not always possible for the Company to identify and deter misconduct by its employees and other third parties, and the precautions taken by the Company to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting the Company from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against the Company, and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of the Company’s operations, any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.

Information Technology Risks, including Cyber-attacks

The Company has entered into agreements with third parties for hardware, software, telecommunications and other information technology (“ IT ”) services in connection with its operations. The Company’s operations depend, in part, on how well it and its suppliers protect networks, equipment, IT systems and software against damage from a number of threats, including, but not limited to, cable cuts, damage to physical plants, natural disasters, intentional damage and destruction, fire, power loss, hacking, computer viruses, vandalism and theft. The Company’s operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as preemptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact the Company’s reputation and results of operations.

The Company has not experienced any material losses to date relating to cyber-attacks or other information security breaches, but there can be no assurance that the Company will not incur such losses in the future. The Company’s risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access is a priority. As cyber threats continue to evolve, the Company may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

Breaches of Security at Facilities

Given the nature of the Company’s product and its lack of legal availability outside of channels approved by the

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Government of Canada, as well as the concentration of inventory in its facilities, despite meeting or exceeding Health Canada’s security requirements, there remains a risk of shrinkage as well as theft. A security breach at one of the Company’s facilities could expose the Company to additional liability and to potentially costly litigation, increase expenses relating to the resolution and future prevention of these breaches and may deter potential patients from choosing the Company’s products.

Conflicts of Interest of Officers and Directors

The Company may be subject to various potential conflicts of interest because some of its officers and directors may be engaged in a range of business activities. In addition, the Company’s executive officers and directors may devote time to their outside business interests, so long as such activities do not materially or adversely interfere with their duties to the Company. In some cases, the Company’s executive officers and directors may have fiduciary obligations associated with these business interests that interfere with their ability to devote time to the Company’s business and affairs and that could adversely affect the Company’s operations. These business interests could require significant time and attention of the Company’s executive officers and directors. In addition, the Company may also become involved in other transactions which conflict with the interests of its directors and the officers who may from time to time deal with persons, firms, institutions or companies with which the Company may be dealing, or which may be seeking investments similar to those desired by it. The interests of these persons could conflict with those of the Company and in certain circumstances, the Company’s reputation could be damaged. In addition, from time to time, these persons may be competing with the Company for available investment opportunities. Conflicts of interest, if any, will be subject to the procedures and remedies provided under applicable laws. In particular, if such a conflict of interest arises at a meeting of the Company’s directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In accordance with applicable laws, the directors of the Company are required to act honestly, in good faith and in the best interests of the Company.

Reputational Risk

Damage to the Company’s reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity, whether true or not. The increased usage of social media and other webbased tools used to generate, publish and discuss user-generated content and to connect with other users has made it increasingly easier for individuals and groups to communicate and share opinions and views regarding the Company and its activities, whether true or not. Although the Company believes that it operates in a manner that is respectful to all stakeholders and that it takes care in protecting its image and reputation, the Company does not ultimately have direct control over how it is perceived by others or how the general industry is perceived. Reputational loss may result in decreased investor confidence, increased challenges in developing and maintaining community relations and an impediment to the Company’s overall ability to advance its projects, thereby having a material adverse impact on financial performance, financial condition, cash flows and growth prospects.

Reliance on Related Parties

A significant portion of the Company’s revenue in 2020 was obtained from US customers that are partially owned and operated by a board member, or from a Canadian entity partially owned by the Company. The revenue from related parties do not have preferential terms, conditions or guarantees as compared to those of third party customers.

For the year ended December 31, 2020, a total of $2.5 million (2019 - $11.7M) of revenue was derived from related party transactions which amounts to approximately 22% (2019 - 44%) of total revenue. General risks inherent with recording related party revenue include the basis of measurement and recognition, as related parties may have flexibility or influence in the pricing or commitments that are often not present in transactions between unrelated parties. Other risks associated with a majority of related party revenues would include; potential economic dependence on the related parties; collectability issues in the event of any financial hardship between any related parties; fraud, collusion and the ability to override management controls. The dedication of the Company’s capital and resources to related party transactions, could possibly affect its ability to initiate more arms-length customer relationships. To mitigate these risks the Company does not allow related party board members to be involved or commenting on commercial negotiations, strategic decision making on related party matters and business terms are based on terms that fairly represent normal business terms offered to third party customers.

Negative Operating Cash Flow

Our business has incurred losses since inception. Although we expect to become profitable, there is no guarantee that will happen, and we may never become profitable. We currently have a negative operating cash flow and may continue

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

to have that for the foreseeable future. To date, revenue generation has been limited due to facilities being under renovation resulting in cannabis production far below full capacity, and a large portion of our expenses are fixed, including expenses related to interest charges, facilities, equipment, contractual commitments and personnel. As a result, we expect our net losses from operations to improve due to the completion of facilities and as we ramp up production. Our ability to generate additional revenues and potential to become profitable will depend largely on our ability, to manufacture and market our products. There can be no assurance that any such events will occur or that we will ever become profitable. Even if we do achieve profitability, we cannot predict the level of such profitability. If we sustain losses over an extended period of time, we may be unable to continue our business.

Material Weaknesses in Internal Controls and over Financial Reporting

One or more material weaknesses in our internal controls over financial reporting could occur or be identified in the future. In addition, because of inherent limitations, our internal controls over financial reporting may not prevent or detect misstatements, and any projections of any evaluation of effectiveness of internal controls to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with our policies or procedures may deteriorate. If we fail to maintain the adequacy of our internal controls, including any failure or difficulty in implementing required new or improved controls, our business and results of operations could be harmed, we may not be able to provide reasonable assurance as to our financial results or meet our reporting obligations and there could be a material adverse effect on the price of our securities.

Vulnerability to Rising Energy Costs

The Company’s cannabis growing operations consume considerable energy, making the Company vulnerable to rising energy costs. Rising or volatile energy costs may adversely impact the business of the Company and its ability to operate profitably.

Publicity or Consumer Perception

The Company believes the cannabis industry is highly dependent upon consumer perception regarding the safety, efficacy and quality of the cannabis produced. Consumer perception of the Company’s products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the consumption of cannabis products.

There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favourable to the cannabis market or any particular product, or consistent with earlier publicity. Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favourable than, or that question, earlier research reports, findings or publicity could have a material adverse effect on the demand for the Company’s products and the business, results of operations, financial condition and the Company’s cash flows. The Company’s dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a material adverse effect on the Company, the demand for the Company’s products, and the business, results of operations, financial condition and cash flows of the Company.

Difficulties with Forecasts

The Company must rely largely on its own market research and evaluation of market trends, including the likely expansion of retail distribution in Canada to forecast sales. A failure in the demand for its products to materialize as a result of competition, technological change or other factors could have a material adverse effect on the business, results of operations and financial condition of the Company.

U.S.-Specific Regulatory Risk

The Company engages directly and indirectly in the manufacture, possession and sale of cannabis products in the United States. While some states in the United States have authorized the use and sale of cannabis in some form, it remains illegal under U.S. federal law. On January 4, 2018, the United States Attorney General issued a memorandum to United States Attorneys which rescinded previous guidance from the U.S. Department of Justice specific to cannabis enforcement in the United States, including the Cole Memorandum, which stated that the U.S. Department of Justice would not prioritize the prosecution of cannabis-related violations of U.S. federal law in jurisdictions that had 31 enacted laws legalizing medical cannabis in some form and had implemented strong and effective regulatory and enforcement systems. With the Cole Memorandum rescinded, U.S. federal prosecutors have greater discretion in determining whether to prosecute medical cannabis-related violations of U.S. federal law; there was never such a policy statement

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

in relation to United States state and territories with adult use cannabis programs. Because the Company engages in cannabis-related activities in the United States, an increase in federal enforcement efforts with respect to current U.S. federal laws applicable to cannabis could cause financial damage to the Company. In addition, the Company is at risk of being prosecuted under U.S. federal law and having its assets seized.

Enforcement of U.S. Federal Law

Violations of any United States federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings conducted by either the United States federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, cessation of business activities, civil forfeiture or divestiture. This could have a material adverse effect on the Company, including its reputation and ability to conduct business, the listing of its securities on various stock exchanges, its financial position, operating results, profitability or liquidity or the market price of its publicly traded shares. In addition, it is difficult for the Company to estimate the time or resources that would be needed for the investigation of any such matters or its final resolution because, in part, the time and resources that may be needed are dependent on the nature and extent of any information requested by the applicable authorities involved, and such time or resources could be substantial.

Unlike in Canada which has federal legislation uniformly governing the cultivation, distribution, sale and possession of cannabis under the Cannabis Act, investors are cautioned that in the United States, cannabis is largely regulated at the state level. Notwithstanding the permissive regulatory environment of cannabis at the state level, cannabis is still categorized as a controlled substance under the CSA in the United States and as such, is in violation of federal law in the United States. The inconsistency between federal and state laws and regulations is a major risk factor.

There can be no assurance that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions. It is also important to note that local and city ordinances may strictly limit and/or restrict the distribution of cannabis in a manner that will make it extremely difficult or impossible to transact business in the cannabis industry. The United States Congress has passed appropriations bills each of the last several years to prevent the federal government from using congressionally appropriated funds to enforce federal marijuana laws against regulated medical marijuana actors operating in compliance with state and local law. The 2018 Consolidated Appropriations Act was passed by Congress on March 23, 2018 and included the re-authorization of the protective amendments. The protective amendments have subsequently been reauthorized and continue in effect through the 2021 fiscal year to September 30, 2021, but there is no guarantee that they will thereafter continue in effect.

One United States federal appellate court construed these appropriations bills to prevent the federal government from prosecuting individuals when those individuals comply with state medical cannabis laws, vacated numerous convictions and sent the cases back to the trial courts for further determination. However, because this conduct continues to violate federal law, American courts have observed that should Congress at any time choose to appropriate funds to fully prosecute the CSA, any individual or business – even those that have fully complied with state law – could be prosecuted for violations of federal law. If Congress restores funding, for example by declining to include the protective amendments in the 2021 budget resolution, or by failing to pass necessary budget legislation and causing another government shutdown, the government will have the authority to prosecute individuals for violations of the law before it lacked funding under the five-year statute of limitations applicable to non-capital CSA violations. Additionally, it is important to note that the appropriations protections only apply to medical cannabis operations and provide no protection against businesses operating in compliance with a state’s recreational cannabis laws.

Although the 2018 Farm Bill, among other things, generally removes hemp from the controlled substances list under the CSA, it does not legalize CBD generally. In particular, the 2018 Farm Bill preserves the FDA’s authority to regulate products containing cannabis or cannabis-derived compounds. Pursuant to a statement released December 20, 2018, an FAQ on the FDA’s website, and numerous public statements, the FDA has taken the position that all CBD is a drug ingredient and therefore illegal to add to food or health products without its approval or further action by the FDA. The FDA considers products containing CBD or other cannabis-derived compounds the same as any other FDA-regulated products and takes the position that they are subject to the same authorities and requirements as similarly regulated products, including but not limited to required approvals for food ingredients and dietary supplements based on safety standards. Importantly, the FDA has taken the position that it is unlawful under the FDCA to introduce food containing added CBD into interstate commerce, or to market CBD products as, or in, food or dietary supplements, regardless of whether the substances are hemp derived. The FDA has however indicated that it will work towards providing ways for companies to seek approval from the FDA to market CBD products. Further, many state criminal laws and food and drug laws prohibit or restrict the production and/or sale of hemp derived CBD products. The Company’s U.S. hemp operations will be subject to FDA oversight. There is no guarantee that the Company will be able to obtain necessary approval from regulatory authorities for its products in the U.S.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

The Company’s activities and operations in the U.S. are, and will continue to be, subject to evolving regulation by governmental authorities. The approach to the enforcement of cannabis laws may be subject to change or may not proceed as previously outlined. The USDA will promulgate additional rules governing the production of hemp in the US, with many states in the process of amending state laws to regulate hemp production and the sale of hemp derived products within their borders. In addition, the FDA is expected to make determinations as to how CBD products will be regulated and is expected to issue a substantial change in its regulation of dietary supplements generally. Accordingly, there are significant changes in both federal and state law that may materially impact the Company’s operations.

Risk of Civil Asset Forfeiture

As previously discussed, the cannabis industry remains illegal under U.S. federal law and therefore, any property owned by participants in the cannabis industry which are either used in the course of conducting such business, or are the proceeds of such business, could be subject to seizure by law enforcement and subsequent civil asset forfeiture. Even if the owner of the property were never charged with a crime, the property in question could still be seized and subject to an administrative proceeding by which, with minimal due process, it could be subject to forfeiture. Any forfeiture of assets would materially impact the Company’s operations, prospects, and financial position.

Changes in Laws, Regulations, and Guidelines

The Cannabis Act came into force in Canada on October 17, 2018 along with various related regulations. The cultivation, processing, distribution and sale of cannabis, among other things, remains subject to extensive regulatory oversight under the Cannabis Act, as it was prior to its implementation. It is possible that these statutory requirements, including any new regulations that are subsequently issued, could significantly and adversely affect the business, financial condition and results of operations of the Company.

While the foregoing activities in respect of cannabis are under the regulatory oversight of the Government of Canada, the distribution of recreational use cannabis is the responsibility of the respective provincial and territorial governments. These jurisdictions have chosen varying retail frameworks with private, public and hybrid models being implemented. There is no guarantee that provincial and territorial legislation regulating the distribution and sale of cannabis for recreational purposes will be continued according to their current terms, that they will not be materially amended or that such regimes will create the growth opportunities that the Company currently anticipates.

In the United States, the operations of the Company and its subsidiaries are subject to a variety of laws, including, among other things, state and local regulations and guidelines relating to the cultivation, manufacture, management, transportation, distribution, sale, storage and disposal of cannabis. Changes to such laws, regulations and guidelines due to matters beyond the control of the Company may cause adverse effects to the Company’s business, financial condition and result of operations. Local, state and federal laws and regulations governing marijuana for medicinal and recreational purposes are broad in scope and are subject to evolving interpretations, which could require the Company to incur substantial costs associated with bringing the Company’s operations into compliance.

In addition, violations of these laws, or allegations of such violations, could disrupt the Company’s operations and result in a material adverse effect on its financial performance. It is beyond the Company’s scope to predict the nature of any future change to the existing laws, regulations, policies, interpretations or applications, nor can the Company determine what effect such changes, when and if promulgated, could have on the Company’s business. In addition, government policy changes or public opinion may also result in a significant influence over the regulation of the cannabis industry in Canada, the United States or elsewhere. The adult-use cannabis industry is in its infancy and the Company anticipates that such regulations will be subject to change as the jurisdictions in which the Company does business matures. A negative shift in the public’s perception of medical or recreational cannabis in Canada, the United States or any other applicable jurisdiction could affect future legislation or regulation. Among other things, a shift could cause state and local jurisdictions to abandon initiatives or proposals to legalize medical or recreational cannabis, thereby limiting the number of new state jurisdictions into which the Company could expand. Any inability to fully implement the Company’s expansion strategy and any failure to respond appropriately to changing regulatory landscapes may have a material adverse effect on the Company’s business, financial condition and results of operations.

U.S. State cannabis laws and enforcement are not uniform from state to state and can, and do, change constantly. State cannabis laws are inconsistent with each other and federal laws and are constantly changing. Similarly, local cannabis laws are also constantly changing. The changing and inconsistent nature of the laws may create conflict and the inability for the Company to conduct business in a particular state or across state lines. Interstate cannabis activities are currently prohibited by the CSA. With respect to hemp, local law enforcement officials in Oklahoma and Idaho seized shipments of hemp that were traveling through those states on the grounds that the products qualified as marijuana

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

and were illegal under the states’ controlled substances laws. Criminal charges were filed along with product seizure, and an argument was made that the transportation provision of the 2018 Farm Bill has not yet taken effect. Despite the intent of the 2018 Farm Bill to allow transportation of hemp products through states without hemp programs, the novelty of the 2018 Farm Bill hemp provision, and conflicts among state laws and applicable federal laws remains an area of confusion and the cause of differing interpretations for many local authorities. Accordingly, there remains risk of enforcement even when activity is lawful under federal and state law.

U.S. Border Officials may Deny Entry into the U.S. of Company Personnel

Because cannabis remains illegal under U.S. federal law, those employed at or investing in legal and licensed Canadian cannabis companies could face detention, denial of entry or lifetime bans from the U.S. for their business associations with U.S. cannabis businesses. Entry happens at the sole discretion of the U.S. Customs and Border Protection officers on duty, and these officers have wide latitude to ask questions to determine the admissibility of a foreign national. The government of Canada has started warning travelers on its website that previous use of cannabis, or any substance prohibited by U.S. federal laws, could mean denial of entry to the U.S. Business or financial involvement in the legal cannabis industry in Canada or in the U.S. could also be reason enough for U.S. border guards to deny entry.

Anti-Money Laundering Laws and Regulation Risks

The Company is subject to a variety of domestic and international laws and regulations pertaining to money laundering, financial recordkeeping and proceeds of crime, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended and the rules and regulations thereunder, the Criminal Code (Canada) and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities internationally. In the event that any of the Company’s operations or investments, any proceeds thereof, any dividends or distributions therefrom, or any profits or revenues accruing from such operations or investments were found to be in violation of money laundering legislation, such transactions may be viewed as proceeds of crime under one or more of the statutes noted above or any other applicable legislation. This could restrict or otherwise jeopardize the Company’s ability to declare or pay dividends, effect other distributions or subsequently repatriate such funds back to Canada. Furthermore, while the Company has no current intention to declare or pay dividends in the foreseeable future, in the event that a determination was made that proceeds obtained by the Company could reasonably be shown to constitute proceeds of crime, the Company may decide or be required to suspend declaring or paying dividends without advance notice and for an indefinite period of time.

Unfavourable Tax Treatment of Cannabis Businesses

Under Section 280E (“ Section 280E ”) of the United States Internal Revenue Code of 1986, as amended (the “ U.S. Tax Code ”), “no deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the CSA) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.” This provision has been applied by the United States Internal Revenue Service to cannabis operations, prohibiting them from deducting expenses directly associated with the sale of cannabis. Section 280E, therefore, has a significant impact on cannabis businesses. A result of Section 280E is that an otherwise profitable business may, in fact, operate at a loss, after taking into account its United States income tax expenses.

Lack of Access to U.S. Bankruptcy Protections

As previously discussed, the cannabis industry remains illegal under U.S. federal law and therefore, many courts have denied cannabis businesses bankruptcy protections, thus making it very difficult for lenders to recoup their investments in the cannabis industry in the event of a bankruptcy. If the Company were to experience a bankruptcy, there is no guarantee that U.S. federal bankruptcy protections would be available to the Company’s U.S. operations, which could have a material adverse effect on the business, capital, financial condition and prospects of the Company and on the rights of lenders to and securityholders of the Company.

Restricted Access to Banking

The Financial Crimes Enforcement Network bureau of the U.S. Treasury Department has issued guidance with respect to financial institutions providing banking services to cannabis business, including burdensome due diligence expectations and reporting requirements (the “ FinCEN Guidance ”). While the FinCEN Guidance is not law, most banks and other financial institutions in the United States do not appear to be comfortable providing banking services to cannabis-related businesses, or relying on this guidance, which can be amended or revoked at any time. In addition to

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

the foregoing, banks may refuse to process debit card payments and credit card companies generally refuse to process credit card payments for cannabis-related businesses. As a result, the Company may have limited or no access to banking or other financial services in the United States. The inability or limitation in the Company’s ability to open or maintain bank accounts, obtain other banking services and/or accept credit card and debit card payments may make it difficult for the Company to operate and conduct its business as planned or to operate efficiently, which may have a material adverse impact on the Company.

Ability to Access Capital

Given the current laws regarding cannabis at the federal law level in the United States, traditional bank financing is typically not available to United States cannabis companies. Specifically, the federal illegality of marijuana in the United States means that financial transactions involving proceeds generated by cannabis-related conduct can form the basis for prosecution under money laundering statutes, the unlicensed money transmitter statute and the Bank Secrecy Act. As a result, businesses involved in the cannabis industry often have difficulty finding a bank willing to accept their business. Banks who do accept deposits from cannabis-related businesses in the United States must do so in compliance with the Cole Memorandum and the FinCEN guidance, both discussed above.

The Company requires equity and/or debt financing to support on-going operations, to undertake capital expenditures or to undertake acquisitions or other business combination transactions. There can be no assurance that additional financing will be available to the Company when needed or on terms which are acceptable. The Company’s inability to raise financing through traditional banking to fund on-going operations, capital expenditures or acquisitions could limit its growth and may have a material adverse effect upon the Company’s business, results of operations, financial condition or prospects.

U.S. Tax Classification of the Company

The Company, which is a Canadian corporation, generally would be classified as a non-United States Corporation under general rules of United States federal income taxation. Section 7874 of the U.S. Tax Code, however, contains rules that can cause a non-United States Corporation to be taxed as a United States Corporation for United States federal income tax purposes. Under section 7874 of the U.S. Tax Code, a Corporation created or organized outside the United States. (i.e., a non-United States Corporation) will nevertheless be treated as a United States Corporation for United States federal income tax purposes (such treatment is referred to as an “Inversion”) if each of the following three conditions are met (i) the non-United States Corporation acquires, directly or indirectly, or is treated as acquiring under applicable United States Treasury Regulations, substantially all of the assets held, directly or indirectly, by a United States Corporation, (ii) after the acquisition, the former stockholders of the acquired United States Corporation hold at least 80% (by vote or value) of the shares of the non-United States Corporation by reason of holding shares of the United States acquired Corporation, and (iii) after the acquisition, the non-United States Corporation’s expanded affiliated group does not have substantial business activities in the non-United States Corporation’s country of organization or incorporation when compared to the expanded affiliated group’s total business activities (clauses (i) – (iii), collectively, the ““Inversion Conditions””). For this purpose, “expanded affiliated group” means a group of corporations where (i) the non-United States corporation owns stock representing more than 50% of the vote and value of at least one member of the expanded affiliated group, and (ii) stock representing more than 50% of the vote and value of each member is owned by other members of the group. The definition of an “expanded affiliated group” includes partnerships where one or more members of the expanded affiliated group own more than 50% (by vote and value) of the interests of the partnership. The Company intends to be treated as a United States Corporation for United States federal income tax purposes under section 7874 of the U.S. Tax Code and is expected to be subject to United States federal income tax on its worldwide income. However, for Canadian tax purposes, the Company is expected, regardless of any application of section 7874 of the U.S. Tax Code, to be treated as a Canadian resident company (as defined in the Tax Act) for Canadian income tax purposes. As a result, MJardin Holdings LLC will be subject to taxation both in Canada and the United States which could have a material adverse effect on its financial condition and results of operations.

U.S. Investments Subject to Heightened Scrutiny

The Company’s existing investments in the United States, and any future investments, may become the subject of heightened scrutiny by regulators, stock exchanges and other regulatory authorities. As a result, the Company may be subject to significant, potentially costly or time intensive interactions with public officials. There can be no assurance that this heightened scrutiny will not in turn lead to the imposition of certain restrictions on the Company’s ability to invest in the United States or any other jurisdiction.

The views between state legislatures and the federal government of the United States regarding cannabis are

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

conflicting, and thus, investments in cannabis businesses in the United States are subject to inconsistent legislation, regulation, and enforcement. Unless and until the United States Congress amends the United States CSA with respect to cannabis or the Drug Enforcement Agency reschedules or de-schedules cannabis (and as to the timing or scope of any such potential amendments there can be no assurance), there is a risk that federal authorities may enforce current federal law, which would adversely affect the current and future investments of the Company in the United States. As a result of the tension between state and federal law, there are a number of risks associated with the Company’s existing and future investments in the United States.

For the reasons set forth above, the Company’s existing interests in the United States cannabis market may become the subject of heightened scrutiny by regulators, stock exchanges, clearing agencies and other authorities in Canada.

It has been reported by certain publications in Canada that the Canadian Depository for Securities Limited may implement policies that would see its subsidiary, Clearing and Depository Services Inc. (“ CDS ”), refuse to settle trades for cannabis issuers that have investments in the United States. CDS is Canada’s central securities depository, clearing and settlement hub settling trades in the Canadian equity, fixed income and money markets. The TMX Group, the owner and operator of CDS, subsequently issued a statement on August 17, 2017, reaffirming that there is no CDS ban on the clearing of securities of issuers with cannabis-related activities in the United States, despite media reports to the contrary and that the TMX Group was working with regulators to arrive at a solution that will clarify this matter, which would be communicated at a later time. On February 8, 2018, following discussions with the CSA and recognized Canadian securities exchanges, the TMX Group announced the signing of a Memorandum of Understanding (“ TMX MOU ”) with Aequitas NEO Exchange Inc., the CSE, the Toronto Stock Exchange, and the TSX Venture Exchange. The TMX MOU outlines the parties’ understanding of Canada’s regulatory framework applicable to the rules, procedures, and regulatory oversight of the exchanges and CDS as it relates to issuers with cannabis-related activities in the United States. The TMX MOU confirms, with respect to the clearing of listed securities, that CDS relies on the exchanges to review the conduct of listed issuers. As a result, there is no CDS ban on the clearing of securities of issuers with cannabis-related activities in the United States. However, there can be no guarantee that this approach to regulation will continue in the future. If such a ban were to be implemented, it would have a material adverse effect on the ability of holders of Common Shares to make and settle trades. In particular, the Common Shares would become highly illiquid as until an alternative was implemented, investors would have no ability to effect a trade of the Common Shares through the facilities of a stock exchange. The Company has obtained eligibility with the Depository Trust Company (“ DTC ”) for its Common Share quotation on the OTCQB and such DTC eligibility provides another possible avenue to clear Common Shares in the event of a CDS ban.

Intellectual Property Risks

The Company may be forced to litigate to enforce or defend its intellectual property rights or to defend against third party claims relating to intellectual property rights in order to protect its trade secrets or to determine the validity and scope of other parties’ proprietary rights. Any such litigation could be very costly and could distract management from focusing on operations of the business. The existence and/or outcome of any such litigation could harm the Company’s business. The Company’s operations depend, in part, on how well networks, equipment, IT systems and software are protected against damage from a number of threats. These operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. However, if the Company is unable or delayed in maintaining, upgrading or replacing IT systems and software, the risk of a cybersecurity incident could materially increase. Any of these and other events could result in information system failures, delays and/or increases in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact the Company’s reputation and results of operations.

Cybersecurity and Privacy Risk

The Company’s information systems and any third-party service providers and vendors are vulnerable to an increasing threat of continually evolving cybersecurity risks. These risks may take the form of malware, computer viruses, cyber threats, extortion, employee error, malfeasance, system errors or other types of risks, and may occur from inside or outside of the respective organizations. Cybersecurity risk is increasingly difficult to identify and quantify and cannot be fully mitigated because of the rapid evolving nature of the threats, targets and consequences. Additionally, unauthorized parties may attempt to gain access to these systems through fraud or other means of deceiving third-party service providers, employees or vendors.

The Company may collect and store certain personal information about customers and the Company is responsible for protecting such information from privacy breaches. A privacy breach may occur through procedural or process failure, information technology malfunction, or deliberate unauthorized intrusions. In addition, theft of data is an ongoing risk

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

whether perpetrated via employee collusion or negligence or through deliberate cyber-attack. Any such privacy breach or theft could have a material adverse effect on the Corporation’s business, financial condition and results of operations.

Expansion and Operational Scaling Risks

There can be no assurance that the Company will be able to manage its expanding operations, including any acquisitions, effectively, that the Company will be able to sustain or accelerate its growth or that such growth, if achieved, will result in profitable operations, that the Company will be able to attract and retain sufficient management personnel necessary for continued growth or that the Company will be able to successfully make strategic investments or acquisitions. Demand for cannabis-based products is dependent on a number of social, political and economic factors that are beyond the Company’s control. There is no assurance that an increase in existing demand will occur, that the Company will benefit from any such demand increase or that the Company’s business will be profitable in that environment of increased demand. If the Company is unable to sustain profitability, the value of the Common Shares may significantly decrease.

Joint Venture and Strategic Alliance Risks

The Company has entered into, and intends to enter into in the future, joint ventures and strategic alliances with third parties that it believes will complement or augment the Company’s existing business. Joint ventures and strategic alliances could present unforeseen obstacles or costs, may not enhance the Company’s business and may involve risks that could adversely affect the Company, including: (i) the Company may not control the joint ventures or strategic alliances; (ii) where the Company does not have substantial decision-making authority, it may experience impasses or disputes with its joint venture or strategic alliance partners on certain decisions, which could require the Company to expend additional resources to resolve such impasses or disputes, including litigation or arbitration; (iii) joint venture or strategic alliance partners may become insolvent or bankrupt, fail to fund their share of required capital contributions or fail to fulfil their obligations as partners; (iv) joint venture or strategic alliance partners may have business or economic interests that are inconsistent with the Company’s and may take actions contrary to the Company’s interests; (v) the Company may suffer losses as a result of actions taken by its joint venture or strategic alliance partners with respect to joint venture investments or strategic alliances; and (vi) it may be difficult for the Company to exit a joint venture or strategic alliance if an impasse arises or if the Company desires to sell its interest for any reason. In addition, the Company’s ability to enter into or complete future joint ventures or strategic alliances is dependent upon, and may be limited by, the availability of suitable candidates and capital and there can be no assurance that the Company will be able to consummate any future joint venture or strategic alliance on satisfactory terms, or at all, or such future joint venture or strategic alliance will achieve the desired benefits. Any of the foregoing risks and uncertainties could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.

Tax and Accounting Requirements

The Company is subject to numerous tax and accounting requirements, and changes in existing accounting or taxation rules or practices, or varying interpretations of current rules or practices, could have a significant adverse effect on its financial results, the manner in which the Company conducts its business or the marketability of any of its products. The Company may have international operations in the future. These operations, and any expansion thereto, will require the Company to comply with the tax laws and regulations of multiple jurisdictions, which may vary substantially. Complying with the tax laws of these jurisdictions can be time consuming and expensive and could potentially subject the Company to penalties and fees in the future if it were to fail to comply.

Taxes and Excise Duties May Impact Demand and Profit

The Company is subject to numerous tax and accounting requirements, and changes in existing accounting or taxation rules or practices, or varying interpretations of current rules or practices, could have a significant adverse effect on its financial results, the manner in which the Company conducts its business or the marketability of any of its products. The Company may have international operations in the future. These operations, and any expansion thereto, will require the Company to comply with the tax laws and regulations of multiple jurisdictions, which may vary substantially. Complying with the tax laws of these jurisdictions can be time consuming and expensive and could potentially subject the Company to penalties and fees in the future if it were to fail to comply.

Risks Related to the Securities of MJardin

Securities of MJardin are subject to Price Volatility

The market price of Common Shares may be volatile and subject to wide fluctuations in response to numerous factors,

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

many of which are beyond the Company’s control. This volatility may affect the ability of holders of securities of the Company to sell their securities at an advantageous price. Market price fluctuations in securities of the Company may be due to the Company’s operating results failing to meet expectations of securities analysts or investors in any period, downward revision in securities analysts’ estimates, adverse changes in general market conditions or economic trends, acquisitions, dispositions or other material public announcements by the Company or its competitors, along with a variety of additional factors. These broad market fluctuations may adversely affect the market price of securities of the Company. Financial markets historically at times experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of companies and that have often been unrelated to the operating performance, underlying asset values or prospects of such companies. Accordingly, the market price of the Company’s publicly traded securities may decline even if the Company’s operating results, underlying asset values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. There can be no assurance that continuing fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue, the Company’s operations could be adversely impacted and the trading price of the Company’s publicly traded securities may be materially adversely affected.

In the past, following periods of volatility in the market price of a company’s securities, shareholders have instituted class action securities litigation against them. Such litigation, if instituted, could result in substantial cost and diversion of management attention and resources, which could significantly harm profitability and the reputation of MJardin.

Dilution

There is no guarantee that the Company will be able to achieve its business objectives. The continued development of the Company will require additional financing. The failure to raise such capital could result in the delay or indefinite postponement of current business objectives or the Company going out of business. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Company.

If additional funds are raised through issuances of equity or convertible debt securities, existing shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to those of holders of Common Shares. The Company’s articles permit the issuance of an unlimited number of Common Shares, and shareholders will have no pre-emptive rights in connection with such further issuance. The directors of the Company have discretion to determine the price and the terms of issue of further issuances. Moreover, additional Common Shares will be issued by the Company on the exercise of stock options that have been granted or will be granted in the future and upon the exercise of outstanding warrants. In addition, from time to time, the Company may enter into transactions to acquire assets or the shares of other companies. These transactions may be financed wholly or partially with debt, which may temporarily increase the Company’s debt levels above industry standards. Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including potential acquisitions. The Company may require additional financing to fund its operations to the point where it is generating positive cash flows. Negative cash flow may restrict the Company’s ability to pursue its business objectives.

Evolving Corporate Governance and Public Disclosure Regulations

MJardin is subject to changing rules and regulations promulgated by a number of United States and Canadian governmental and self-regulated organizations, including the United States Securities and Exchange Commission, the Canadian Securities Administrators, the CSE, and the Financial Accounting Standards Board. These rules and regulations continue to evolve in scope and complexity making compliance more difficult and uncertain. The Company’s efforts to comply with these and other new and existing rules and regulations have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

CSE Listing Requirements

The Company cannot guarantee that it will be able to meet the continued listing standards of the CSE in the future. If the Company fails to comply with the applicable listing standards and the CSE delists its Common Shares, shareholders could face significant material adverse consequences, including:

• a limited availability of market quotations for Common Shares;

• reduced liquidity for Common Shares;

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

• a determination that Common Shares are “penny stock”, which would require brokers trading in the Common Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for Common Shares;

• a limited amount of news about the Company and analyst coverage; and

• a decreased ability for the Company to issue additional equity securities or obtain additional equity or debt financing in the future.

Lack of Research from Industry Analysts

The trading market for Common Shares will depend, in part, on the research and reports that securities or industry analysts publish about the Company. The Company does not have any control over these analysts. If one or more of the analysts who cover the Company downgrade its Common Shares or publish inaccurate or unfavorable research about the Company, the price of the Company’s Common Shares would likely decline. In addition, if the operating results fail to meet the forecast of analysts, the price of the Common Shares would likely decline. If one or more of these analysts cease coverage of the Company or fail to publish reports regularly, demand for the Company’s Common Shares could decrease, which might cause the price and trading volume to decline.

Lack of Dividends

No dividends on the Company’s Common Shares have been paid to date. The Company anticipates that, for the foreseeable future, it will retain future earnings and other cash resources for the operation and development of the business and the repayment of debt. Payment of any future dividends will be at the discretion of the Board after taking into account many factors, including earnings, operating results, financial condition and current and anticipated cash needs. In addition, the ability to pay cash dividends on the Common Shares is limited by the terms of the Company’s financing arrangements. As a result, investors may not receive any return on an investment in the Common Shares unless they are able to sell their shares for a price greater than that which such investors paid for them.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

In accordance with National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (“ NI 52109 ”), the establishment and maintenance of Disclosure Controls and Procedures (“ DCP ”) and Internal Control Over Financial Reporting (“ ICFR ”) is the responsibility of management. The DCP and ICFR have been designed by management based on the 2013 Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“ COSO ”) to provide reasonable assurance that the Company’s financial reporting is reliable and that its financial statements have been prepared in accordance with IFRS.

Regardless of how well the DCP and ICFR are designed, internal controls have inherent limitations and can only provide reasonable assurance that the controls are meeting the Company’s objectives in providing reliable financial reporting information in accordance with IFRS. These inherent limitations include, but are not limited to, human error and circumvention of controls and as such, there can be no assurance that the controls will prevent or detect all misstatements due to errors or fraud, if any.

Based on the COSO control framework, the CEO and CFO concluded that the design and operation of DCP and ICFR as at December 31, 2020, other than with the scope limitation noted above, were effective and provides reasonable assurance that material information relating to the Company is made known to them, information required to be disclosed by the Company is reported within the required time periods as specified in such legislation, and that the Company’s financial reporting is reliable and its financial statements have been prepared in accordance with IFRS. The CEO and CFO are also responsible for disclosing any changes to the Company’s internal controls during the most recent period that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. There have been no changes to the Company’s internal control over financial reporting during the year ended December 31, 2020 that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

OUTSTANDING SHARE DATA

As of the date of this MD&A, the Company had the following securities issued and outstanding:

Common shares	89,741,197
RSUs	876,010
Warrants	2,119,348
Options	6,654,799
Fullydiluted	99,391,354

Please refer to the Company’s audited and consolidated financial statements for a detailed description of these securities as at December 31, 2020.

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