New Leaf Ventures Inc.

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New Leaf Ventures, Inc.

Management Discussion and Analysis

For the Three-Month Periods Ended March 31, 2023 and 2022

(Expressed in Canadian Dollars)

New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

MANAGEMENT’S DISCUSSION AND ANLAYSIS

This management discussion and analysis (“MD&A”) of the financial condition and results of New Leaf Ventures Inc. (the “Company” or “New Leaf”) is provided to assist our readers to assess our financial condition, material changes in our financial condition and our financial performance, including our liquidity and capital resources, for the threemonth period ended March 31, 2023 compared with the year ended December 31, 2022. The information in this MD&A is current as of May 30, 2023 and should be read in conjunction with the unaudited condensed consolidated interim financial statements for the three month period ended March 31, 2023 and 2022, and the 2022 Annual MD&A. All dollar figures included therein and in the following M&DA are quoted in Canadian dollars.

FORWARD-LOOKING STATEMENTS

This discussion contains “forward-looking statements” that involve risks and uncertainties. Such information, although considered to be reasonable by the Company’s management at the time of preparation, may prove to be inaccurate and actual results may differ materially from those anticipated in the statements made. Such forwardlooking statements include, among others, statements relating to the provision of consulting services, real property, intellectual property and equipment for lease and enhanced ancillary services to the License Holder (as defined below) and completion of additional financings.

This MD&A contains forward-looking statements that reflect the Company’s current expectations and projections about its future results. When used in this MD&A, words such as “estimate”, “intend”, “expect”, “anticipate” and similar expressions are intended to identify forward-looking statements, which, by their very nature, are not guarantees of the Company’s future operational or financial performance, and are subject to risks and uncertainties and other factors that could cause the Company’s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. For a description of the assumptions upon which the forward-looking statements are based, along with a description of the risk factors that could cause such forward-looking statements to vary, see refer to the MD&A for the year ended December 31, 2022, as well as the risk factors described under the heading “Risks and Uncertainties”.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this MD&A or as of the date otherwise specifically indicated herein.

Due to risks and uncertainties, including the risks and uncertainties identified above and elsewhere in this MD&A, actual events may differ materially from current expectations. Except as required by applicable law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

COMPANY OVERVIEW

The Company was incorporated under the Business Corporations Act (British Columbia) on June 4, 2018. During the period ended December 31, 2020, New Leaf successfully closed transactions that included public listing on the Canadian Securities Exchange under the symbol “NLV” and concluded two offerings that raised aggregate gross proceeds of approximately $1.9M. Concurrently, the Company completed an acquisition transaction for 100% of the shares of New Leaf USA Inc. (and its subsidiaries) which provides certain administrative services and back-office functions, marketing, physical and intellectual property, production equipment and related services to a Washington-based Tier 3 Processor (the “License Holder”) focused on industrial-scale processing, packaging, and distributing cannabis and cannabis related products.

On January 12, 2023 the Company acquired all of the issued and outstanding shares of High Profile Holdings Corp. (“HPHC”), an arm’s length private cannabis company based in British Columbia, by way of a three-corned amalgamation (the “Transaction”). The Transaction was pursuant to an amalgamation agreement (the “Agreement”) between the Company, its wholly-owned subsidiary, 1392162 B.C. Ltd (“Subco”), and HPHC. Immediately upon

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New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

completion of the amalgamation between Subco and HPHC, the newly amalgamated entity was renamed to High Profile Holdings Cannabis Corp. (“HPHCC”).

During the three month period ended March 31, 2023, New Leaf Ventures, through its subsidiaries in the US (collectively referred to as “NL USA”), continued normal course operations and provided services to the License Holder. The following operation highlights were observed during the current fiscal quarter:

In Q1 2023, New Leaf USA confirmed the Washington State Liquor Cannabis Board (WSLCB) approved the sale of New Leaf Enterprise’s (the license holder) cultivation license to the third-party asset management Company. This solidified New Leaf USA’s sale of cultivation-related assets, through its wholly owned subsidiaries to the same third-party asset management Company, providing an infusion of capital into current operations.
The license holder retains its processor license and New Leaf USA and its subsidiaries, through its existing agreements, has maintained normal course of operations. The license holder reports that its new procurement model has been going well and is establishing good relationships with growers producing quality flower. Furthermore, New Leaf USA secured a renewal of its master lease for the facility located at 470 South Kenyon Street in Seattle. This extension allows for an additional 5 years in the 17,000 square foot facility with another option to extended.
With New Leaf USA’s greater focus on developing relationships with other processors and retailers to leverage white label and processing partnership opportunities, the Company was able to secure a processing and packaging agreement with Anonymous Buffalo subsequent to quarter end. New Leaf Services will provide labor for processing and co-packing of specific products for Anonymous Buffalo at the licensed facility. Anonymous Buffalo has distribution rights for several brands in Washington State and this agreement allows for predetermined product listings within the brand portfolios to be processed and packaged with all materials provided by Anonymous Buffalo. These brands include industry cannabis pioneer “Solstice” along with several other respected brands within Washington. All finished products will be delivered to Anonymous Buffalo for distribution to their customer base throughout the State. New Leaf USA continues the development and formulation of value-added products within its suite of IP.
In Q1 2023, New Leaf Ventures completed the acquisition of High Profile Holdings Corp., expanding its operational footprint to Canada. High Profile began by operating its own retail stores under the Urban Canna banner at the onset of legalization and focused on creating an elevated retail experience and developed its own premium brand. High Profile built and operated five retails locations in Alberta and ultimately sold them to a privately held Canadian corporation that now holds more than 40 stores throughout the country.

Following the sale, High Profile now has the ability to establish store-within-a-store installations in multiple provinces throughout Canada utilizing the Company’s brand. The High Profile management team has been focused on building the necessary relationships to complete the supply chain and get high Profile’s rare and curated strains produced into quality products and back on retailer shelves.

One of the steps involved in securing its supply was the announcement of a genetics transfer and buyback agreement with CannaPharmaRX. This agreement will allow a transfer of genetics from High Profile’s extensive library for cultivation in Canna’s facility located in Cremona, Alberta. Further to the agreement, High Profile will have the ability to buy-back material that meet certain standards or for a royalty, allowing Canna to sell both domestically and internationally. As High Profile works to get seeds in the ground, the Company is also establishing relationships with third-party suppliers of quality material as well as processing and packaging outlets with the ability to establish tolling agreements for sale to government intermediaries. The Company endeavors to have products in stores within 2023.

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New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

ACQUISITION OF NEW LEAF USA TRANSACTION

On April 30, 2020, the Company completed their previously announced acquisition of New Leaf USA, Inc. and all of its wholly-owned subsidiaries. The acquisition was accounted for as a business combination and the purchase price on the acquisition was allocated to net assets acquired in accordance with IFRS 3. The acquisition provides the Company with immediate strategic access and footprint to the US cannabis market, specifically in the state of Washington.

ACQUISITION OF HIGH PROFILE TRANSACTION

On January 12, 2023, the Company acquired High Profile Holdings Corp., a private British Columbia cannabis company with two wholly owned subsidiaries, High Profile Cannabis (“HPC”) and Urban Canna Inc. (“UCI”); collectively referred to as the “High Profile Group” or simply “High Profile” hereafter. The acquisition is expected to provide multiple operational synergies and accelerate the Company’s entry into the Canadian legal market by leveraging High Profile’s top-tier genetic library and access to the Canadian retail cannabis markets. The Transaction has been accounted for as an asset acquisition as High Profile did not meet the definition of a ‘business’ as defined under IFRS 3.

Purchaseprice consideration
Fair value of 9,999,796 common shares issued at $0.145	$	1,449,970
Fair value of 197,830 sharepurchase warrants issued		4,550
Totalpurchaseprice	$	1,454,520
Assets acquired and liabilities assumed:
Cash	$	14,183
Goods and sales tax receivable		36,461
Prepaid expenses		5,000
Financial assets at fair-value through profit or loss		1,244,375
Asset classified as held for sale		2,483,339
Intangible assets		527,921
Accounts payable and accrued liabilities		(910,568)
Mortgage payable		(912,700)
CEBA loan		(129,434)
Debenture liability		(904,057)
Totalpurchaseprice allocated	$	1,454,520

SELECTED INFORMATION ANNUAL INFORMATION

	For theyears ended
	December 31, 2022 December 31, 2021 December 31, 2020
	$ $ $
Revenues Operating expenses Net loss for the period Comprehensive income (loss) for the period Basic and diluted income / (loss) per share:	1,980,274 2,471,902 2,050,990 5,907,483 7,227,282 4,672,272 3,518,382 3,962,287 6,600,105 (3,543,895) (3,935,265) 6,495,366 (0.29) 0.24 0.24
	December 31, 2022 December 31, 2021 December 31, 2020
	$ $ $
Working capital (deficiency) Total assets Total liabilities Share capital Deficit	(24,300) 429,910 (1,276,856) 2,289,844 5,954,596 6,487,140 3,644,136 4,647,780 6,926,442 13,005,159 12,170,886 7,087,003 15,288,127 11,769,745 7,807,458

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New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

SUMMARY OF QUARTERLT RESULTS

		Three months ended	Three months ended
		December 31,	September 30,	June 30,
	March 31, 2023	2022	2022	2022
	$	$	$	$
Total revenue	482,814	339,573	387,002	629,462
Net income / (loss)	(1,225,233)	(3,774,670)	(53,326)	99,878
Comprehensive income / (loss)	(1,224,063)	(3,966,392)	81,446	156,644
Basic and diluted income / (loss) per share	(0.05)	(0.29)	0.01	0.00

	Three months ended
	March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021
	$ $ $ $
Total revenue Net income / (loss) Comprehensive income / (loss) Basic and diluted lossper share	624,237 621,229 621,131 605,404 209,736 (525,305) (894,827) (799,728) 184,407 (514,697) (871,666) (809,355) 0.00 (0.01) (0.02) (0.02)

Revenues in Q1 and Q2 of fiscal 2022 were consistent with the last three quarters of fiscal 2021. The Company did not recognize any intellectual property licensing revenues (“IP revenues”) during the third and fourth quarters of fiscal 2022 which resulted in an overall decrease in total revenues for fiscal 2022. During Q1 fiscal 2023, total revenues was higher as a result of approximately $154k in service revenues earned from an arms-length entity. This represents the Company first fiscal quarter whereby revenues were generated from an entity other than the related party License Holder.

The net loss and comprehensive loss observed in the first quarter of 2023 was primarily the result of an impairment charge to the Company’s asset held for sale, which is comprised of land and land improvements located in Alberta, Canada. The asset held for sale (“AHFS”) was acquired as part of the High Profile acquisition on Jan 12, 2023. In the fourth quarter of fiscal 2022, the Company recognized loss allowance expense on due from related party and lease receivable balances. The net income / (loss) and comprehensive income / (loss) observed in the first three quarters of fiscal 2022 were primarily the result of lower operating expenses compared to prior fiscal quarters in 2021. There was a significant reduction in 2022 to overall marketing and share-based payment expenses compared. In addition, there were no gain or loss on re-valuation of derivative liability as there have been no changes to its fair-value since December 31, 2021.

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New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

RESULTS OF OPERATIONS

		March 31,		March 31,
		2023		2022	Variance$	Variance %
Revenues	$	482,814	$	624,237	(141,423)	-23%
Operating Expenses
Communication		2,437		4,743	(2,306)	-49%
Consulting		114,624		38,245	76,379	200%
Depreciation & Amortization		40,099		53,657	(13,558)	-25%
Director fees		13,500		6,000	7,500	125%
General office & administration		196,108		30,075	166,033	552%
Utilities and property tax		47,341		71,107	(23,766)	-33%
Professional fees		91,514		15,577	75,937	487%
Regulatory and filing fees		2,256		7,356	(5,100)	-69%
Share-based payment		147,076		20,076	127,000	633%
Wages and salaries		246,868		311,241	(64,373)	-21%
Total Operating Expenses	$	901,823	$	558,077
Other expenses
Interest income		1,168		109,057	(107,889)	-99%
Accretion expense		(3,186)		(20,209)	17,023	-84%
Foreign exchange gain / (loss)		-		(1)	1	-100%
Gain on settlement of accounts payable		-		30,000	(30,000)	-100%
Impairment of asset held for sale		(755,339)		-	(755,339)	100%
Other income		36,908		94,808	(57,900)	-61%
Interest expense		(85,775)		(70,079)	(15,696)	22%
Net loss for the period	$	(1,225,233)	$	209,736

Total revenues in Q1’23 was overall lower than Q1’22 as the Company did not recognize any IP royalty revenues in the current fiscal period. This was a continuation of the accounting position from the fourth quarter of fiscal 2022; specifically, certain accounting revenue recognition criteria were not met. Notably, during Q1’23 the Company generated service revenues of approximately $154k from an arms-length customer other than the License Holder.
Consulting fees were higher in Q1’23 compared to Q1’22 as a result of additions to the NLV management team; the Company added a CSO and COO during Q1’23 and incurred consulting fees in relation to those positions.
G&A expense was higher in Q1’23 compared to Q1’22 due to accrued interest and penalties arising from outstanding rent payable balances.
The Company had higher professional fees in Q1’23 as compared to Q1’22 as a result of legal fees in connection with the acquisition of High Profile in Jan 2023.
Utilities and property tax expense was lower in Q1’23 compared to Q1’22 as the Company terminated one of its property leases towards the end of Q2 2022.
Share based payments was higher in Q1’23 compared to Q1’22 due to the issuance and vesting of restricted share rights (“RSR”) in the quarter. There were no RSRs granted or vested in Q1 ’22.

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New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

Other income is comprised of sub-lease operating expenses (utilities, property tax, insurance) that are incurred for by the Company and reimbursable by the License Holder. The Company did not recognized any income associated with reimbursable sub-lease operating expenses in Q1’23. This was a continuation of the accounting position adopted during the fourth quarter of fiscal 2022; specifically, certain accounting revenue recognition criteria were not met.
During Q1’23 the Company recognized an impairment loss of $755k in relation to AHFS. There was no AHFS assets recognized in Q1’22 and subsequently there we no other asset impairments observed in Q1’22.

OUTSTANDING SHARE DATA

As of the date of this MD&A the Company has a total of 28,636,765 common shares outstanding, 5,984,280 common share purchase warrants outstanding, 451,500 common share options outstanding, and 1,600,000 restricted share rights outstanding.

At-the-Market Distributions

On November 15, 2021, the Company established an at-the-market equity program (the “ATM Program”) that allows the Company to issue and sell up to $10,000,000 of common shares from treasury to the public, from time to time, and at the Company’s discretion. The ATM Program is managed by a broker agent, pursuant to an Equity Distribution Agreement (the “Distribution Agreement”). The agent will be compensated with cash commissions equal to 2% of total gross proceeds raised from any ATM placement. All common shares sold under the ATM Program will be made through sales that are deemed to be “at-the-market distributions” as defined in National Instrument 44-102 – Shelf Distributions, including sales made through the CSE, or any other trading market for the Common Shares in Canada

Authorized Share Capital

As at March 31, 2023 the Company is authorized to issue an unlimited number of preferred shares and Class A common shares without par value. The Company has no other classes of common shares that are authorized, issued, or outstanding as at March 31, 2023.

As at March 31, 2023, 393,260 common shares issued in connection with the Company’s Initial Public Offering (“IPO”) were outstanding and held in escrow (December 31, 2022 – 393,260) subject to the following escrow release schedule:

10% - on the date the Company’s securities are listed on a Canadian Exchange (the “Listing Date”)
• 15% - 6 months after the Listing Date
15% - 12 months after the Listing Date
15% - 18 months after the Listing Date
15% - 24 months after the Listing Date
15% - 30 months after the Listing Date
15% - 36 months after the Listing Date

As at March 31, 2023, 8,999,816 common shares of the Company, in connection with its acquisition of High Profile, were held in escrow (December 31, 2022 – Nil) subject to the following escrow release schedule:

10% - on the closing date of the Transaction
15% - 6 months after closing date of the Transaction

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New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

20% - 12 months after closing date of the Transaction
25% - 18 months after closing date of the Transaction
30% - 24 months after closing date of the Transaction

Issued Share Capital

During the three-month period ended March 31, 2023:

Acquisition of High Profile

On January 12, 2023 (“Closing Date”), the Company issued 9,999,796 common shares of the Company as part of the acquisition of High Profile (Note 5). The share price of the Company’s common shares was $0.145 on Closing Date.

Exercise of Restricted Share Rights

During the three months period ended March 31, 2023, the Company issued 650,000 common shares upon exercise of 650,000 restricted shares rights (“RSR”). Upon exercise, a reclass of $86,500 from share-based payment reserve to share capital was recognized.

During the three-month period ended March 31, 2022:

At-the-Market Distributions

During the three-month period ended March 31, 2022 the Company completed a number of ATM placements. An aggregate of 1,282,000 common shares were issued for total proceeds of $111,904. During the three-month periods ended March 31, 2022, the Company incurred total cash commissions of $1,844 from the ATM placements. As at March 31, 2022, $4,296 of the overall net proceeds from the ATM placements had not been transferred to the Company by the agent. The proceeds receivable have been recognized as a share subscription receivable as at March 31, 2022.

Warrants

The changes in warrants during the three-month periods ended March 31, 2023 and December 31, 2022 are as follows:

			Weighted
	Number of		Average
	Warrants		Exercise Price
Balance, December 31, 2021	3,380,000	$	1.55
Issued	5,102,450		0.20
Expired	(1,896,000)		2.00
Balance, December 31, 2022	6,586,450	$	1.55
Issued(i)	197,830		3.79
Balance, March 31, 2023	6,784,280	$	0.46

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New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

(i) The Company issued 197,830 HP Warrants in connection with the acquisition of High Profile (Note 5). The HP Warrants were fair valued using the Black Scholes option pricing model and the following weighted average input assumptions:

	Three months ended
	March 31, 2023
Share price at grant date	$0.15
Exercise Price	$3.79
Expected annual volatility	166%
Expected life (in years)	1.45
Expected dividend yield	0%
Risk-free interest rate	3.79%
Fair valueper warrant	$0.023

There was no issuance, exercise, or expiration of warrants during the three months period ended March 31, 2022.

As at March 31, 2023, warrants outstanding are as follows:

	Number of			Weighted Average
Number of Warrants	Warrants			Remaining Contractual
Outstanding	Exercisable	Exercise Price	Expiry Date	Life in Years
800,000	-	$0.10	April 30, 2023	0.08
600,000	600,000	$2.00	November 1, 2023	0.59
84,000	84,000	$1.25	November 1, 2023	0.59
5,084,950	5,084,950	$0.20	December 22, 2024	1.73
17,500	17,500	$0.10	December 22, 2024	1.73
197,830	197,830	$3.79	June 24,2024	1.24
6,784,280	5,984,280	$0.46		1.41

SHARE-BASED COMPENSATION

Equity incentive plan

The Company implemented an Equity Incentive Plan (the “EIP”) which provides for the grant to eligible directors and employees (including officers) of share options and Restricted Share Rights (“RSR”). The EIP also provides for the grant to eligible directors of Deferred Share Units (“DSU”) which the directors are entitled to redeem for 90 days following retirement or termination from the Board of the Company (the “Board”). The aggregate number of Common Shares that may be subject to issuance under the Equity Incentive Plan, together with any other securitiesbased compensation arrangements of the Company, shall not exceed 15% of the Company’s issued and outstanding share capital from time to time.

Options are exercisable for a period of five years from the date the Option is granted or such greater or lesser period as determined by the Board. Options may be earlier terminated in the event of death or termination of employment or appointment. Vesting of Options is determined by the Board. Failing a specific vesting determination by the Board, Options automatically become exercisable incrementally over a period of eighteen months from the date of grant, as to: (i) 25% of the total number of shares under Option immediately upon the date of grant; and (ii) at each sixmonth interval thereafter, an additional 25% of the total number of shares under Option such that after the 18th month of the Option period, 100% of the Option will be exercisable. The right to exercise an Option may be accelerated in the event a takeover bid in respect of the Common Shares is made.

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New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

Concurrent with the granting of the RSR, the Board shall determine the period of time during which the RSR is not vested and the holder of such RSR remains ineligible to receive Common Shares. Such period of time may be reduced or eliminated from time to time for any reason as determined by the Board. Once the RSR vests, the RSR is automatically settled through the issuance of an equivalent number of underlying Common Shares as RSRs held

DSUs are redeemable during the period commencing on the business day immediately following the date such director ceases to hold any directorship and ending on the 90[th] day following such date by providing written notice of redemption to the Company. Upon redemption, the director shall be entitled to receive the number of Common Shares equal to the number of DSUs in the director’s account. If the director ceases to hold office during a year where DSUs have been granted in advance of being earned and they have not held office for the entire year, the director will only be entitled to a pro-rated issuance of shares.

The Company’s recorded share-based compensation for the three-month periods ended March 31, 2023 and 2022 are comprised of the following:

		March 31, 2023		March 31, 2022
Stock Options (a)	$	7,660	$	20,076
RSR(b)		139,417		-
Total share-based compensation	$	147,076	$	20,076

(a) Share options

The EIP authorizes the Board to grant options to eligible directors and employees (including officers). The number of options, the exercise price per option, the vesting period and any other terms and conditions of options granted from time to time pursuant to the EIP, are determined by the Board at the time of the grant, subject to the defined parameters of the EIP.

The changes in share options during the three-month period ended March 31, 2023 and the year ended December 31, 2022 are as follows:

									Weighted
						Number	of		Average
						Options			Exercise Price
Balance, December	31,	2021				495,000		$	1.55
Forfeited(i)						(43,500)			1.70
Balance, December	31,	2022	and March	31,	2023	451,500		$	1.53

There was no issuance, exercise, or expiration of stock options observed during the three months period ended March 31, 2023 or during the year ended December 31, 2022.

(i) During the year ended December 31, 2022, 43,500 options were forfeited resulting in a gain on the reversal of previously recognized share-based payment expenses totaling $28,584. The gain on reversal was recognized in the consolidated statement of loss and comprehensive loss for the year ended December 31, 2022.

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New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

Stock options outstanding and exercisable at March 31, 2023 are as follows:

				Weighted	Average
Number of Options	Number of Options			Remaining	Contractual
Outstanding	Exercisable	Exercise Price	Expiry Date	Life in Years
125,000	125,000	$1.25	November 15, 2024	1.63
1,007,500	655,000	$1.70	November 10, 2031	8.62
625,000	625,000	$1.40	January 15, 2026	2.80
500,000	500,000	$1.40	September 22, 2026	3.48
2,257,500	1,905,000	$1.53		5.48

(b) RSR

The EIP authorizes the Board to grant RSRs, in its sole and absolute discretion, to any eligible employee or director. Each RSR provides the recipient with the right to receive common shares of the Company as a discretionary payment in consideration of past services or as an incentive for future services. The terms including the vesting period of the RSRs are determined at the sole discretion of the Board.

The changes in RSRs during the three month period ended March 31, 2023 and the year ended December 31, 2022 are as follows:

	Number of RSR
Balance, December 31, 2021	-
Granted(i)	500,000
Balance, December 31, 2022	500,000
Granted (ii)	2,000,000
Exercised	(650,000)
Balance, December 31, 2022	1,850,000

(i) On November 29, 2022, the Company granted the CEO of the Company 2,000,000 RSRs. The fair-value of each RSR was determined to be $0.17, equal to the closing share price of the Company’s common shares for the day immediately preceding the date of the grant. The RSRs are subject to vesting terms as follows:
50% of the RSRs will vest three months from the date of grant;
50% of the RSRs will vest six months from the date of grant.

(ii) On February 17, 2023, the Company granted the COO and CSO of the Company 1,400,000 and 600,000 RSRs respectively. The fair-value of each RSR was determined to be $0.11, equal to the closing share price of the Company’s common shares for the day immediately preceding the date of the grant. The RSRs are subject to vesting terms as follows:

20% on grant date;
20% 6 months from Closing Date of the High Profile acquisition;
20% 12 months from Closing Date of the High Profile acquisition;
20% 18 months from Closing Date of the High Profile acquisition; and
20% 24 months from Closing Date of the High Profile acquisition

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New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

(c) DSU

The EIP authorizes the Board to grant DSUs, in its sole and absolute discretion in a lump sum amount or on regular intervals to eligible directors of the Company.

During the three month period ended March 31, 2023 and the year ended December 31, 2022 the Company did not issue any DSUs and there were no DSUs outstanding.

TRANSACTIONS WITH RELATED PARTIES

Related party transactions consist of monthly transactions with the License Holder, who is considered a related party due to sharing common executives and key management with the Company. Key management include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole.

(i) Transactions with the License Holder

During the three months period ended March 31, 2023 and 2022 the Company recognized the following revenues from the License Holder:

		March 31,		March 31,
Revenue type		2023		2022
Equipment leasing revenue	$	24,347	$	22,792
Service fee revenues		304,335		379,860
Intellectualpropertylicensingrevenues		-		221,585
Total revenues from License Holder	$	328,682	$	624,237

In addition, the Company also incurred the following transactions with the License Holder during the three months ended March 31, 2023:

I. Accrued interest income on outstanding receivables due from License Holder of $Nil (2022 - $36,064);
II. Interest income on lease receivables of $Nil (2022 - $72,993);
III. Accretion expense on notes payables of $Nil (2022 - $20,209);
IV. Other income of $Nil (2022 - $94,808) relating to sub-lease operating expenses (utilities, property tax, insurance) that were incurred by the Company and which are reimbursable by the License Holder (note 9 - sub-tenant);

On September 30, 2022, the Company executed a settlement agreement (the “Settlement Agreement”) with the License Holder to settle balances owed between the Company and the License Holder. Per the terms of the Settlement Agreement, the Company applied a total of $971,563, equaling to the total outstanding balance of two note payables (the “Notes”), owed from the Company to the License Holder, against the total outstanding receivable owed from the License Holder to the Company. The receivable due from the License Holder is related to revenues on the provision of equipment leasing, management services, and IP licensing from the Company to the License Holder. As a result of the Settlement Agreement, the due from related party receivable was reduced by $971,563 during the year ended December 31, 2022. There was no similar offsetting arrangement observed during the three months ended March 31, 2023.

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New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

A continuity of notes payable for the period ended March 31, 2023 and December 31, 2022 is as follows:

Balance, January 1, 2022	$	864,465
Accretion expense		35,059
Settlement of note payable		(971,563)
Currencytranslation adjustment		72,039
Balance, December 31, 2022 and March 31, 2023	$	-

The carrying value of due from related party balance is $1,325,285 as at March 31, 2023 (December 31, 2022 - $1,070,962). The entire receivable due from the License Holder to the Company’s US entities are related to revenues generated from the provision of equipment leasing and management services rendered to the License Holder.

(ii) Key Personnel Compensation

		March 31,		March 31,
		2023		2022
Directors' fees	$	13,500	$	6,000
Consulting fees (i)		100,190		33,000
Share-based payments (ii)		163,917		5,044
Wages and salaries		37,457		70,128
Total	$	315,063	$	114,172

(i) During the three month period ended March 31, 2023, the Company incurred consulting fees of $18,000 (2022- $18,000) to a company controlled by the CEO, consulting fees of $15,000 (2022 - $15,000) to a company controlled by the CFO, consulting fees of $34,127 (2022 - $Nil) to a company controlled by the CSO, and consulting fees of $33,063 (2022 - $Nil) to a company controlled by the COO of the Company.
(ii) Share-based payments relate to the vesting of RSRs issued to the CEO, CSO, and COO of the Company (Note 17) during the three months period ended March 31, 2023. For the three months period ended March 31, 2022, share-based payments related to the vesting of stock options granted to directors of the Company.

As at March 31, 2023, due to related party balances includes $57,600 (December 31, 2022 -$Nil) and $104,623 (December 31, 2022 - $Nil) of unpaid consulting fees to a company controlled by the CSO and COO respectively. In addition, the due to related party balance also includes $36,293 (December 31, 2022 - $6,138) due to directors of the Company for accrued and outstanding director fees and wages. All due to related party balances are unsecured, non-interest bearing and payable on demand.

LIQUIDITY AND CAPITAL RESOURCES

As at March 31, 2023 Company had a working capital deficiency of $1,444,292 (December 31, 2022 – working capital deficiency of $24,300).

The Company has relied on equity financing to fund its operations and growth. As the Company progresses and expands operations in the US and Canada, through its subsidiaries, the Company will use a combination of equity financings, funds from the exercise of share purchase warrants and revenues from the leasing, licensing and service revenues of its subsidiaries. There can be no assurances the Company will be successful in its endeavors. If such funds are not available or other sources of finance cannot be obtained, then the Company will be forced to curtail its activities to a level for which funding is available or can be obtained.

The Company’s asset held for sale is comprised of land and land improvements which are used as collateral against mortgage payable balances.

Page 13 of 16

Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

ANALYSIS OF CASH FLOWS

		Three-months period ended	Three-months period ended	Three-months period ended
		March 31,		March 31,
Cashprovided by (used in):		2023		2022
Operating activities	$	(229,051)	$	(76,372)
Investing activities		(5,404)		(29,990)
Financingactivities		-		110,060
Increase(decrease) in cash	$	(234,455)	$	3,698

Operating Activities

Cash flows from operating activities can vary significantly from period to period as a result of the Company’s working capital requirements. Net cash used in operations during the three months ended March 31, 2023 and 2022 relate mainly to payments for management consulting expenses, as well as for wages and salaries in the US entities.

Investing Activities

Cash flows used in investing activities can vary depending on the nature of the transactions occurring during a period. During the three month period ended March 31, 2023 there was net cash used in investing activity related to payment of lease obligations of $78,557 which was offset by $14,183 of cash acquired on acquisition of High Profile, and $58,970 of cash received on disposal of assets held for sale. During the three month period ended March 31, 2022, cash used was for payment of lease obligations.

Financing Activities

There were no cash flows provided by financing activities for the three month period ended March 31, 2023. Cash flows provided by financing activities for the three-month period ended March 31, 2022 were solely related to Atthe-Market distributions which occurred during the fiscal quarter.

SUBSEQUENT EVENTS

On April 11, 2023, the Company issued 278,000 common shares of the Company as settlement for outstanding trade payables.

On April 30, 2023, 800,000 Performance Warrants in connection with the Company’s acquisition of New Leaf USA expired unvested and unexercised.

OFF-BALANCE SHEET ARRANGEMENT

The Company has no off-balance sheet arrangements.

CRITICAL ACCOUNTING ESTIMATES

The Company’s financial statements have been prepared using accounting policies consistent with IFRS issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information. Refer to Note 2 of the audited consolidated annual financial statements for the year ended December 31, 2022 for details on critical accounting estimates and judgments.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

In the normal course of business, the Company is inherently exposed to certain financial risks, including market risk, credit risk and liquidity risk, through the use of financial instruments. The timeframe and manner in which the

Page 14 of 16

New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

Company manages these risks varies based upon management’s assessment of the risk and available alternatives for mitigating risk. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. All transactions undertaken are to support the Company’s operations. These financial risks and the Company’s exposure to these risks are provided in various tables in Note 18 of the unaudited condensed consolidated interim financial statements for the period ended March 31, 2023. For a discussion on the significant assumptions made in determining the fair value of financial instruments, refer also to Note 2 of the unaudited condensed consolidated interim financial statements for the period ended March 31, 2023, and Note 2 of the audited consolidated annual financial statements for the year ended December 31, 2022.

RISKS AND UNCERTAINTIES

The Company is subject to a number of risk factors due to the nature of its business. These risks and uncertainties may impact the Company’s ability to successfully execute its key strategies and may affect future events, performance or results. Some of these risks and uncertainties are described in this MD&A. However, the risks and uncertainties set out in this MD&A are not exhaustive. New risk factors may emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the Company’s business performance, condition, operations or strategies and plans.

Ongoing Need for Financing

It is intended that the Company will continue to make investments to support business growth and may require additional funds to respond to business challenges. Accordingly, the Company may need to engage in equity or debt financings to secure additional funds. If additional funds are raised through further 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 the Company’s shares. 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. In addition, additional financing may not be available on favorable terms, if at all. If the Company is unable to obtain adequate financing or financing on terms satisfactory to them, when they require it, their ability to continue to support business growth and to respond to business challenges could be significantly limited.

Issuance of Debt

From time to time, the Company may enter into transactions to acquire the assets or shares of other corporations. These transactions may be financed wholly or partially with debt, which may temporarily increase the Company’s debt levels above industry standards. The level of the Company’s indebtedness from time to time could impair its ability to obtain additional financing in the future, on a timely basis, to take advantage of business opportunities that may arise.

Business plan is new and contains inherent risks

Our business plan is innovative and non-traditional. As such, we cannot be certain of commercial or any other kind of success for us and cannot guarantee same.

Limited operating history

The Company has a limited operating history upon which an evaluation of its prospects can be based. The prospects must be evaluated with a view to the risks encountered by a business in an early stage of operations. The Company has not been profitable and has incurred net operating losses during its recent operating history. The Company cannot guarantee it will ever be profitable, have a positive cash flow, or be able to continue in business.

Potential Conflicts of Interest

Certain directors or officers of the Company are also directors, officers, shareholders and/or promoters of other reporting and non-reporting issuers. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best

Page 15 of 16

New Leaf Ventures Inc. Management Discussion and Analysis For the three-month period ended March 31, 2023 (Expressed in Canadian Dollars)

interests of the Company and to disclose any interest which they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board of Directors, any director in a conflict will disclose his interest and abstain from voting on such matter. Conflicts of interest, if any, will be subject to, and will be resolved in accordance with, the procedures and remedies under the BCBCA.

Reliance on Others and Key Personnel

The success of the Company will be largely dependent upon the performance of its management and key employees, as well as the talents of its outside consultants and suppliers. The Company may not have any “key man” insurance policies, and therefore there is a risk that the death or departure of any one or more members of management or any key employee could have a material adverse effect on the Company. The Company also faces intense competition for qualified personnel and there can be no assurance that the Company will be able to attract and retain the employees, personnel and/or consultants necessary to successfully carry out its activities.

Litigation

All industries are subject to legal claims, with and without merit. Defense and settlement costs can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, there can be no assurance that the resolution of any particular legal proceeding will not have a material effect on the Company’s operations and financial position.

Dividends

To date, the Company has not paid any dividends on its outstanding securities and the Company does not expect to do so in the foreseeable future. Any decision to pay dividends on Company’s shares will be made by the Board of Directors.

Changes in Laws

Changes to any of the laws, rules, regulations or policies to which the Company is subject could have a significant impact on the Company’s business. There can be no assurance that the Company will be able to comply with any future laws, rules, regulations and policies. Failure by the Company to comply with applicable laws, rules, regulations and policies may subject it to civil or regulatory proceedings, including fines or injunctions, which may have a material adverse effect on the Company’s business, financial condition, liquidity and results of operations. In addition, compliance with any future laws, rules, regulations and policies could negatively impact the Company’s profitability and have a material adverse effect on its business, financial condition, liquidity and results of operations.

Speculative investment

An investment in the Company’s common shares is highly speculative and subject to a number of risks and uncertainties. Only those persons who can bear the risk of the entire loss of their investment should participate. An investor should carefully consider the risks described above and the other information filed with the Canadian securities regulators before investing in the Company’s common shares. The risks described are not the only ones faced. Additional risks that the Company currently believes are immaterial may become important factors that affect the Company’s business. If any of these risks occur, or if others occur, the Company’s business, operating results and financial condition could be seriously harmed and investors may lose all of their investment.

Page 16 of 16

AI assistant

New Leaf Ventures Inc. — Management Reports 2023

47855_rns_2023-05-30_268ad2e4-41be-4621-b3e2-5586baceaf27.pdf