Newtopia Inc. — Interim / Quarterly Report 2021

May 20, 2021

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Management’s Discussion and Analysis

For the Three Months Ended March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS

Introduction

This Management’s Discussion and Analysis (“ MD&A ”) is provided to enable readers to assess the results of the operations and financial condition for Newtopia for the three months ended March 31, 2021. This MD&A is dated May 19, 2021 and should be read in conjunction with the annual audited financial statements and related notes for the year ended December 31, 2020 (the “ Annual Financial Statements ”) and the unaudited Condensed Interim Financial Statements for the three months ended March 31, 2021 (the “ Interim Financial Statements ” and, together with the Annual Financial Statements, the “Statements” ). Unless the context indicates otherwise, references to “Newtopia”, “the Company”, “we”, “us” and “our” in this MD&A refer to Newtopia Inc. and its operations.

Forward-looking information

Certain information included in this MD&A contains forward-looking information within the meaning of applicable Canadian securities laws. This information includes, but is not limited to, statements made in “Business Overview”, “Results from Operations”, “Debt Operations”, “Debt-Profile” and other statements concerning Newtopia’s objectives, its strategies to achieve those objectives, as well as statements with respect to management’s beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events or the negative thereof. Such forward-looking information reflects management’s beliefs and is based on information currently available. All forward-looking information in this MD&A is qualified by the following cautionary statements.

Forward-looking information necessarily involves known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, assumptions may not be correct and objectives, strategic goals and priorities may not be achieved. A variety of factors, many of which are beyond the Company’s control, affect the operations, performance and results of the Company, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results.

Although Newtopia believes that the expectations reflected in such forward-looking information is reasonable and represents the Company’s projections, expectations and beliefs at this time, such information involves known and unknown risks and uncertainties which may cause the Company’s actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking information. Important factors that could cause actual results to differ materially include, but are not limited to: ability to maintain and expand its customer base with products that result in lasting health benefits to customers, ability to invest in technology as tools to support and enhance the customer experience, risks of regulatory changes applicable to the healthcare industry in the U.S., general economic conditions that we operate in and the ability to raise financing to fund capital expenditures and operations. The reader is cautioned to consider these factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information, as there can be no assurance that actual results will be consistent with such forward-looking information.

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The forward-looking information included in this MD&A is made at the date of this MD&A and should not be relied upon as representing the Company’s view as of any date subsequent to the date of this MD&A. Management undertakes no obligation, except as otherwise required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

Business Overview

Newtopia is a corporation incorporated under the Business Corporations Act (Ontario) on May 9, 2008. The Company’s head and registered office is located at 4101 Yonge Street, Suite 706, Toronto, Ontario, M2P 1N6. In addition, the Company has a growing talent hub located in Boston, Massachusetts.

On May 4, 2020, the Company commenced trading on the TSX Venture Exchange under the symbol "NEWU".

The Company is a tech-enabled habit change provider focused on disease prevention and reducing the cost of care for health insurers. As a provider of whole person care, Newtopia aims to prevent, reverse and slow the progression of chronic disease while enriching mental and emotional health, resilience and human performance. Newtopia leverages precision health tools including, genetic testing and behavioural evaluations, to develop and implement personalized experiences combining the best of human intervention with the best of digital interaction. Through habit change and lifestyle intervention, individuals at-risk of developing preventable chronic disease improve their habits around their physical and mental health. The Company partners with insurers and employers (primarily in the U.S.) and focuses its efforts on employees or members at risk of developing chronic diseases including but not limited to obesity, type 2 diabetes, heart disease, stroke or fatty liver disease. Each personalized program aims to sustainably reduce the five primary metabolic risk factors of chronic disease, including (1) waist circumference or BMI, (2) blood pressure, (3) blood glucose, (4) triglycerides, and (5) and cholesterol, alongside clinically validated mental and emotional health risk factors, thereby delivering proven meaningful and growing healthcare risk reduction to individuals and cost savings to risk-bearing employers or insurers. While many population and disease management companies today focus on either managing those with chronic disease or offering general wellness or engagement solutions across the entire member population, the Company’s platform instead targets the approximately 50-80% at-risk population. Newtopia enables participants to sustainably change habits, maintain health, avoid or reduce their likelihood of developing chronic disease and reduce exorbitant healthcare costs in the U.S. by delivering clinical and cost savings outcomes proven to grow and improve over time.

The Company’s personalized habit change platform focuses on metabolic risk reduction rather than disease management or aesthetic weight loss. The Company believes it is time to get ahead of the increasing prevalence of chronic disease and focus on sustainable prevention rather than management. The key to achieving sustainable risk and cost reduction is a focus on building confidence and habit change as opposed to increasing knowledge and education. While disease prevention is still limited in the market, most disease prevention guidelines and offerings focus on teaching a “one-size-fits-all” curriculum in order to build greater knowledge of how to live a healthier lifestyle. Built on similar assumptions as those within the dominant one-size-fits-all education model, the end goal of curriculum-based prevention is to educate individuals in order to build enough knowledge that will hopefully translate into the appropriate behaviour changes to reduce risk. However, in a personalized habit change model, the ultimate goal is not to teach and build knowledge; rather, it is to inspire and instill confidence in order to build new progressive habits and reduce risk. The biggest advantage of a habit change platform relative to a learning platform is sustainability and growth of outcomes and cost savings. With a habit change platform, the value increases

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over 12 and 24 months (and beyond) as opposed to producing short-term outcomes within the first few months, with both clinical risk factors and costs returning the following year. Therefore, habit change platforms produce a higher level of engagement, clinical risk reduction and cost savings that grow over time compared to many existing knowledge-based models.

The Company’s patented persuasive enterprise technology platform converges genetic testing and the latest social and behavioural science with real-time online human coaching and a cutting-edge mobile platform, wireless tracking devices, personalized gamification and a curated social health network to ensure lasting results at scale and a strong return on investment for risk-bearing insurers.

The Company markets to individuals - employees or members - covered by risk-bearing insurers that have out-of-range metabolic risk factors and is paid by the risk-bearing insurer on behalf of the member. These out-of-range factors can be identified by leveraging existing risk identification data including biometric test outcomes, health risk assessments, claims or risk screener data. Eligible at-risk individuals are offered an exclusive invitation to enroll. Once enrolled, they are referred to as participants, and complete a personal profile which helps the Company understand their personality type, level of motivation, readiness to change, eating habits, activity level and underlying social determinants of health. Participants are then personalitymatched with a Company “ Inspirator ” who acts as a personal health coach and works with each participant to build confidence and develop new progressive habits with respect to nutrition, exercise and behavioural/mental well-being. Participants and Inspirators will meet virtually leveraging a combination of online video, text messaging, email or telephone.

Participants are also provided tools for success in their personal program. These tools can include a genetic test, smart scale, activity tracker, access to a personalized mobile app and measuring tape for measuring waist circumference. The Company’s mobile platform provides participants access to their Inspirator, video lessons, reporting from bio-sensors, goals, messaging, and their progress from anywhere in the world. It also helps to extend the relationship between participant and Inspirator, increase accountability and engagement between coaching sessions.

Newtopia is a pioneer in leveraging genetic testing primarily for engagement purposes. Newtopia’s genetic testing allows the Company to help participants understand if they have inherited any genetic factors that may be having an impact on their physical and mental health and to personalize lifestyle recommendations by gaining a deeper understanding of how genes impact an individual’s risk. The genetic test is designed specifically to look for genetic characteristics related to physical and mental health as well as lifestyle management. The Company provides specific genetically-driven recommendations that are evidence and guideline-based for nutrition, exercise and behaviour management to combat the potential effect of those genetic characteristics. These recommendations could include changes in the proportion of fats, carbohydrates and proteins the participant eats, the form and intensity of exercise required to burn a sufficient number of calories and appropriate behavioural and mental health support and exercises. These genetically driven recommendations are then incorporated into the participant’s personalized lifestyle plan to further refine and personalize each participant experience.

In addition to its whole person care solution for lowering risk for broad chronic disease prevention, Newtopia delivers individualized support through the following personalized program focus areas:

1. Habit Change and Resiliency

2. Weight Management

3. Diabetes Prevention

4. Hypertension and Heart Health

5. Healthy Living with Diabetes

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Corporate Update

The Company’s revenue during the three months ended March 31, 2021 decreased by 32% over the same period of the previous year. Revenue during the three months ended March 31, 2020 experienced particularly strong participant and revenue growth attributed to an incentivized program launched by one of its Fortune 500 customers.

Net loss and comprehensive loss during the three months ended March 31, 2021 increased by 51% over the same period of the previous year. Lower revenue and higher operating expenses during the three months ended March 31, 2021 contributed to the higher loss. The Company undertook sales and marketing campaigns in an effort to drive new customer growth. General and administrative expense has increased reflecting the added costs associated with being a public company. Share based expense also rose following the Company’s grant of stock options to all its employees in November 2020.

In April 2021, the Company launched its platform in Canada through a partnership with Eastern Health, the largest integrated health authority in Newfoundland and Labrador, and Medtronic, a formal partner under Eastern Health’s Innovation Strategy to implement an integrated type 2 diabetes prevention program. The group will develop and deliver a 12-month pilot project aimed at improving diabetes risk factors and health outcomes.

The Company is planning to invest approximately $1.8 million during 2021 on the acquisition and integration of a new CRM platform software that is designed to enhance the digital experience for its participants, optimize utilization of care team resources and establish a robust technology architecture that will scale the business. At March 31, 2021, the Company invested $540,441 towards the new technology.

COVID-19

On March 12, 2020, the World Health Organization declared the global outbreak of the COVID-19 virus as a pandemic. The outbreak has spread throughout Europe, the Middle East, Canada and the United States, causing companies and various international jurisdictions to impose restrictions, such as quarantines, closures, cancellations and travel restrictions.

The pandemic has led to widespread economic uncertainty and volatility in the financial markets which could adversely impact the Company’s cost and access to capital. With concerns over spreading of the virus, the Company has implemented several protective measures, including work-from-home arrangements for its staff, cancellation of conferences and limits on non-essential travel.

The recent release of effective Covid-19 vaccines has provided a positive boost to consumer confidence and to the outlook for an economic rebound. The arrival of new variants of the virus could however prompt new social distancing restrictions and slow any global recovery. The future impact of Covid-19 therefore remains uncertain and could have a material adverse effect on the Company’s business, financial position, results of operations and/or cash flows.

Newtopia will continue to work with its stakeholders (including customers, employees and suppliers) to responsibly address this global pandemic. The Company continues to monitor the situation, to assess further possible implications to its business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences.

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Selected Financial Information

` Revenue Cost of sales Gross profit Gross profit margin Operating expenses Operating loss Other expenses Net loss and comprehensive loss Basic and diluted loss per share	Three Months Ended March 31,	Three Months Ended March 31,	Three Months Ended March 31,
	2021 $ 2,619,171 1,300,867 1,318,304 50% 3,472,028 (2,153,724) 122,764 (2,276,488) (0.02)	2020 $ 3,862,986 2,208,557 1,654,429 43% 2,574,147 (919,718) 588,363 (1,508,081) (0.10)	Change
			$ % (1,243,815) (32%) (907,690) (41%) (336,125) (20%) 7% 16% 897,881 35% (1,234,006) 134% (465,599) (79%) (768,407) 51%

Total assets Total liabilities Equity Total liabilities and equity		As at
	March 31, 2021 $ 6,018,119 3,474,040 2,544,079 6,018,119	December 31, 2020 $ 7,896,042 3,696,181 4,199,861 7,896,042	Change
			$ % (1,877,923) (24%)
			(222,141) (6%) (1,655,782) (39%)
			(1,877,923) (24%)

Revenue

The Company’s performance-based revenue model consists of three elements: (1) Welcome Kit sales, (2) monthly subscription fees, and (3) outcome milestone fees. Welcome Kit sales are recognized when they are shipped to participants upon enrollment. Subscription fees are tied to participant engagement in the Company’s programs based on specific criteria outlined in an individual contract.

Certain customer contracts contain clauses that trigger success fees and/or outcome guarantees. Success fees are paid by customers upon the completion of certain target metrics. Upon achievement of those metrics, success fees are billed on a monthly basis. Outcome guarantees result in a repayment of a portion

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of the engagement fees previously earned by the Company should average participant weight-loss do not meet a targeted range.

Revenue for the three months ended March 31, 2021 decreased by 32% from to the same period in the previous year. The higher revenues earned in the during the three months ended March 31, 2020 is attributed to the launch of a new incentivized program by a customer to a segment of its employee population that resulted in a surge in Welcome Kit sales and engagement revenues. Participants in the customer program could earn monthly incentives from their employer for actively participating in the Newtopia program.

Gross Profit

Gross profit comprises of revenue less direct expenses, which consists of the cost of Welcome Kits sold to new participants and the labour costs associated with the coaching team.

Gross profit margin for the three months ended March 31, 2021 increased 7% over the same period in the previous year due a greater mix of engagement revenue that earn higher margins relative to Welcome Kit sales. The Company was also able to secure favourable pricing on certain Welcome Kit component purchases in late 2020 and early 2021.

Operating Expenses

The table below sets forth the details of operating expenses for the three months ended March 31, 2021 and 2020:

Technology and development Sales and marketing General and administrative Share-based compensation	Three Months Ended	Three Months Ended	March 31,
	2021 $ 730,007 976,482 1,215,719 549,820 3,472,028	2020 $ 776,666 728,482 934,567 134,432 2,574,147	Change
			$ % (46,659) (6%) 248,000 34% 281,152 30% 415,388 309%
			897,881 35%

Operating expenses consist of administrative, technology and development, and selling and marketing expenses.

Technology and development expenditures during the three months ended March 31, 2021 was lower by 6% over the same period in the prior year primarily as result of lower headcount in the quarter.

Selling and marketing expenses during the three months ended March 31, 2021 increased by 34% over the same period in the prior year as the Company contracted new marketing and public relations firms in late 2020 and throughout the first quarter of 2021.

General and administrative expenses during the three months ended March 31, 2021 increased by 30% over the same period of the previous year. The increase is due to new filing fees and charges associated with becoming a public company in May 2020. Employee compensation costs were also higher during the three months ended March 31, 2021 with the addition of senior level resources in finance and data analytics.

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Stock-based compensation expense during the three months ended March 31, 2021 increased by 309% compared to the stock-based compensation expense during the three months ended March 31, 2020. The significant stock-based compensation expense in the three months ended March 31, 2021 stems from a full quarter of expense related to stock options granted to all staff in November 2020.

Other Expenses

The table below sets forth the details of other expenses for the three months ended March 31, 2021 and 2020:

Depreciation of property and equipment Depreciation of right-of-use asset Interest and accretion expense Interest on lease obligations Finance charges Amortization of deferred finance charges Foreign exchange gain Change in value of convertible debenture derivative liabilities Change in value of derivative liability Loss on settlement of related party payable	Three Months Ended	Three Months Ended	March 31,
	2021 $ 17,972 46,195 - 31,268 5,136 38,916 27,796 - (44,519) - 122,764	2020 $ 21,554 46,192 233,542 37,849 - - (203,111) 270,993 13,628 167,716 588,363	Change
			$ % (3,582) (17%) 3 0% (233,542) (100%) (6,581) (17%) 5,136 38,916 230,907 (114%) (270,993) (100%) (58,147) (427%) (167,716) (100%)
			(465,599) (79%)

Depreciation of property and equipment during the three months ended March 31, 2021 was lower by 17% over the same period of the previous year as a result of computer equipment additions during 2020 to support the growth in the coaching team.

Interest and accretion expense and change in convertible debentures derivative liabilities relate to convertible debenture units issued by the Company in November 2018. The convertible debenture units were converted following the Company’s listing in May 2020.

Finance and amortization of deferred finance charges in the three months ended March 31, 2021 relate to the Company’s new credit facility secured in October 2020. Finance charges incurred on the closing of the facility are being deferred and amortized over the term of the facility.

The Company derives 100% of its revenue in U.S. currency and the weakening U.S. dollar relative to the Canadian dollar during the first quarter of 2020, due largely to the economic impact of Covid-19, resulted in the recognition of a substantial foreign exchange gain on the Company’s U.S. dollar monetary assets. The Company’s US denominated assets include US cash and 100% of its trade receivables.

Loss on settlement of related party payable relates to the settlement of $400,000 of unpaid bonuses owing to the CEO of the Company with 865,849 Common Shares and 188,571 stock options. The stock options

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are exercisable at $0.70 per Common Share until November 6, 2021. The aggregate fair value of the Common Shares and stock options at the date of the settlement was determined to be $567,716. The difference from the bonus payable of $400,000, being $167,716 was recognized as a loss on settlement of debt.

Total Assets

Total assets as at March 31, 2021 decreased by 24% from total assets as at December 31, 2020 due to lower a cash balance and unbilled revenue related to the variable success fee consideration. The unbilled revenue balance at December 31, 2020 relate primarily to the high number of participants that enrolled in the first quarter of 2020 that successfully achieved weight loss success fee targets after twelve months.

Total Liabilities

The Company’s total liabilities as at March 31, 2021 declined 6% from December 31, 2020 with decreases primarily in trade payables and the lease obligation.

Summary of Quarterly Results

The table below sets forth selected financial data for the most recent eight quarters ended March 31, 2021:

(In thousands, except loss per share)

	Revenue	Net Loss	Loss	per Share
Quarter-ended	(Unaudited)	(Unaudited)	(Unaudited)
	$	$		$
March 31, 2021	2,619	(2,276)		(0.02)
December 31, 2020	2,477	(2,928)		(0.03)
September 30, 2020	2,389	(1,755)		(0.02)
June 30, 2020	2,687	(1,540)		(0.02)
March 31, 2020	3,863	(1,508)		(0.10)
December 31, 2019	1,538	(4,079)		(0.26)
September 30, 2019	1,202	(2,320)		(0.15)
June 30, 2019	1,609	(1,723)		(0.11)

The Company’s revenues fluctuate quarterly depending on the level of Welcome Kit sales which usually occur in bulk at the outset of a new customer contract or in phases as customers roll out Newtopia’s programs to its at-risk employees. Subscription revenues are subject to seasonality with greater participant engagement at the start of the calendar year.

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Liquidity and capital resources

The table below sets forth the cash flows for the three months ended March 31, 2021 and 2020:

Cash used in Operating activities Investing activities Financing activities Decrease in cash	Three Months Ended March 31,	Three Months Ended March 31,	Three Months Ended March 31,
	2021 $ (1,472,830) (471,493) (100,785)	2020 $ (203,017) (11,842) (64,213)	Change
			$ % (1,269,813) 625% (459,651) 3882% (36,572) 57%
	(2,045,108)	(279,072)	(1,766,036) 633%

The Company may be adversely impacted by uncertain market conditions and adverse results from operations. The Company may face challenges due to such factors as the loss of a major customer contract, entry of new competitors or significant changes in healthcare regulations. Should expected revenue growth not materialize, the Company may be required to seek additional financing through the sale of equity securities and/or through debt.

Cash

The cash used in operating activities during the three months ended March 31, 2021 increased by 625% as compared to cash used in operating activities during the three months ended March 31, 2020. The increase is mainly attributed to the lower revenues and higher administrative and selling and marketing expenses incurred during the three months ended March 31, 2021 relative the three months ended March 31, 2020.

Cash used in investing activities relate to the investment by the Company on the acquisition and integration of a new CRM platform software. The project was launched during the three months ended March 31, 2021.

The cash outflow from financing activities during the three months ended March 31, 2021 and 2020 represent the lease payments on the right-of-use asset lease obligation.

Financing

During the year ended December 31, 2018, the Company issued a series of 13% secured debentures (the “Debentures ”) for an aggregate amount of $2,600,000, to be drawn in tranches as determined between the Company and the lender. The Debentures are repayable at the earlier of (a) six months from the date of the debenture, and (b) the 10th business day following the closing of any subsequent equity offerings, debt financing, sale, merger or liquidity event involving the Company (the “ Repayment Date ”). On the Repayment Date, the lender is entitled to a debt retirement fee of 3% of the repaid advances and one Common Share in the capital of the Company for each $1 advanced, to a maximum issuance of 2,000,000 Common Shares (the “ Bonus Shares ”). On February 20, 2020, the lender of the Debentures received 2,000,000 warrants of the Company (the “ Bonus Warrants ”) in lieu of the 2,000,000 Bonus Shares. The Bonus Warrants are governed by the terms and conditions of warrant certificates dated February 20, 2020.

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The Bonus Warrants are exercisable into Common Shares at an exercise price of $0.0001 per Common Share until 5:00 p.m. (Toronto time) on February 20, 2025, provided that the holder, together with its affiliates, are prohibited from exercising Bonus Warrants into Common Shares, if, as a result of such conversion, the holder, together with its affiliates, would own more than 9.99% of the total number of Common Shares issued and outstanding immediately after giving effect to the exercise. The Debentures are secured by a General Security Agreement on the assets of the Company.

On November 6, 2018, the Company closed a private placement offering (the “ Debenture Unit Offering of 4,000 7% unsecured convertible debenture units (the “ Debenture Units ”) at a price of $1,000 per unit for aggregate gross proceeds of $4,000,000 pursuant to the terms of an agency agreement dated November 6, 2018 between the Company and Bloom Burton Securities Inc. (the “ Debenture Unit Agency Agreement ”). Each Debenture Unit consists of one $1,000 principal amount of subordinated unsecured convertible debentures (the “ Convertible Debentures ”) and such number of warrants (the “ Unit Warrants ”) equal to 33% of the principal amount divided by the Unit Warrant exercise price (the “ Unit Warrant Exercise Price ”). Each Unit Warrant entitles the holder to purchase one Common Share at the Unit Warrant Exercise Price, subject to adjustment, until 4:00 p.m. (Toronto time) on November 7, 2021. The Unit Warrant Exercise Price shall be determined upon a Liquidity Event (as defined below) involving the Company as the prevailing market price of one Common Share as evidenced by the deemed value per share established in such Liquidity Event. “ Liquidity Event ” shall mean: (i) the listing of the Common Shares on a recognized exchange, (ii) the sale for cash proceeds of all its outstanding shares, (iii) the sale for cash proceeds of all, or substantially all, of the assets of the Company, (iv) the amalgamation or any other corporate transaction involving the Company with or into another entity (provided that the other entity is not an affiliate of the Company) pursuant to which the common shares of the resulting issuer from such transaction are listed on a recognized exchange. Unless converted prior to November 6, 2019 or such date is extended , Convertible Debentures, including the unpaid principal, together with any then unpaid and accrued interest and a fee equal to 3% of the principal amount, will mature and be repaid on November 6, 2019. The conversion price (the “ Conversion Price ”), subject to adjustment in certain circumstances, shall be set upon a Liquidity Event at 70% of the fair market value of one Common Share (the “ Fair Market Value ”). The Fair Market Value shall be determined upon a Liquidity Event involving the Company as the prevailing market price of one Common Share as evidenced by the deemed value per share established in such Liquidity Event. Upon the occurrence of a Liquidity Event prior to November 6, 2019, all issued and outstanding Convertible Debentures including interest shall automatically be converted into fully paid Common Shares at the Conversion Price. Unless otherwise extended, the Unit Warrants shall immediately expire on November 6, 2019 if a Liquidity Event has not occurred prior to such date. In October 2019, holders of $3,850,000 of the $4,000,000 Convertible Debenture Units consented to the extension of the maturity dates of their Convertible Debenture Units from November 6, 2019 to March 31, 2020. On November 6, 2019, the Company repaid the $150,000 Convertible Debentures maturing on November 6, 2019 plus total interest and repayment fee of $15,000. In October 2019, the Company extended the date upon which the Unit Warrants shall immediately expire if a Liquidity Event has not occurred from November 6, 2019 to March 31, 2020. In November 2019, the Company extended the expiration date for certain Unit Warrant holders to purchase common shares from November 6, 2021 to May 6, 2022.

In consideration for the services of the agents in connection with the Debenture Unit Offering, the Company paid a cash commission of $234,000 equal to 6% of the gross proceeds from the Debenture Unit Offering and issued such number of compensation options (the “ Compensation Options ”) equal to 6% of the gross proceeds raised from the Debenture Unit Offering divided by the deemed market price per share. Each Compensation Option entitles the agent to purchase one Common Share at the deemed market price per share for a period of 36 months following a Liquidity Event or until November 6, 2019 if a Liquidity Event

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has not occurred prior to such date. In addition to the agent’s cash commission, the Company paid legal and other closing costs of $105,769. The Company’s net proceeds from the Debenture Unit Offering after deducting total issuance costs of $339,769 was $3,660,231. In October 2019, the Company extended the date upon which the Compensation Warrants immediately expire if a Liquidity Event has not occurred from November 6, 2019 to March 31, 2020.

Upon the closing of the Debenture Unit Offering, the Company used $731,508 of the proceeds from the Debenture Unit Offering to repay $700,000 of the Debentures’ outstanding principal balance, related interest of $10,508 and retirement fee of $21,000.

In April 2019, the holders of the Company’s preferred shareholdings consented to convert the outstanding Class A Preferred Shares to Common Shares on a one for one basis.

Pursuant to an Agency Agreement (the “ Agency Agreement ”) dated May 3, 2019, the Company agreed to create, offer, issue and sell up to 14,285,715 Special Warrants at a price of $0.70 per Special Warrant, for gross proceeds of up to $10,000,000.50. The Agents agreed to find purchasers of the Special Warrants on a commercially reasonable “best efforts” private placement basis.

Each Special Warrant is voluntarily exercisable, for no additional consideration, into one Unit, subject to adjustment described below. Each Unit consists of one Qualifying Share and one half (½) of one Qualifying Warrant. Each whole Qualifying Warrant entitles the holder to purchase one Warrant Share at $1.00 per share, subject to adjustment as detailed below, until 5:00 p.m. (Toronto time) on May 3, 2022.

All unexercised Special Warrants will be deemed to be exercised on the date that is two business days following the earlier of: (i) that date which is 12 months following the date of the First Closing, and (ii) the later of: (A) the date on which the Company obtains a receipt for a Final Prospectus (as such term is defined in the Agency Agreement); and (B) the date the Common Shares are conditionally approved for listing on the Exchange or, subject to the consent of the Agents, another recognized exchange.

In the event that the Company has not filed the Preliminary Prospectus (as such term is defined in the Agency Agreement) and received a receipt from the principal regulator for such prospectus by that date which is 60 days following the date the Company receives, in the aggregate, $8,000,000 in gross proceeds from the Offering, each unexercised Special Warrant will thereafter entitle the holder thereof to receive upon the exercise or deemed exercise thereof, for no additional consideration, 1.20 Units in lieu of one Unit (the “ Penalty Provision ”). On September 24, 2019, the Company filed a Preliminary Prospectus and thereby did not trigger the Penalty Provision.

In consideration of the services rendered by the Agents in connection with the brokered portion of the Offering, the Company agrees to pay a cash commission of 7% the gross proceeds raised and Special Broker Warrants equal to 7% of the number of Special Warrants sold pursuant to the brokered portion of the Offering. Each Special Broker Warrant is exercisable, for no additional consideration, for one Broker Warrant. Each Broker Warrant will entitle the holder to purchase one Common Share at a price of $0.70 per Common Share at any time, subject to adjustment, until 5:00 p.m. (Toronto time) on May 3, 2022.

On May 3, 2019, the Company closed the first tranche of the Offering, issuing 6,792,944 Special Warrants for gross proceeds of $4,755,061. The Company paid a 7% cash commission to the Agents of $332,854 and incurred $132,791 in issuance costs for net proceeds of $4,289,416. The Company issued 475,506 Special Broker Warrants to the Agents, each exercisable at a price of $0.70 per common share at any time up to May 3, 2022.

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On July 26, 2019, the Company closed the second tranche of the Offering for aggregate gross proceeds of $3,761,755, issuing 4,373,221 Special Warrants on a brokered private placement basis and 1,000,714 Special Warrants in a concurrent non-brokered private placement basis for gross proceeds of $3,061,255 and $700,500, respectively. In consideration for their services on the brokered portion of the Offering, the Agents received 293,189 Special Broker Warrants and were entitled to receive a cash commission of $205,233 of which $129,358 was converted by the Agents for 184,793 of Special Warrants. Excluding the Agents’ Commission of $129,358 converted to Special Warrants and after payment of $75,875 in the remaining cash commission to the Agents and other closing costs of $74,427, the Company received net proceeds of $3,482,095. Also included in the gross proceeds of the Offering, the lender of the Debentures agreed to settle $460,000 of the $1,000,000 Debentures issued in March 2018 and all outstanding interest as at July 26, 2019 of $290,000, for a total subscription of $750,000 in 1,071,429 Special Warrants. The lender further agreed to extend the maturity dates of the remaining Debentures of $1,440,000 to March 31, 2020.

The aggregate gross proceeds raised from the first and second tranche of the Offering is $8,516,816. The Company therefore reached $8,000,000 in aggregate gross proceeds on July 26, 2019, the date of the Second Closing, and in filing a preliminary prospectus on September 24, 2019 being within 60 days of the date on which the Company reached $8,000,000 in aggregate gross proceeds pursuant to the Offering did not trigger the Penalty Provision.

On December 31, 2019, the lender of the Debentures agreed to settle the i) remaining $540,000 of the $1,000,000 Debentures issued in March 2018 plus all outstanding interest of $30,810, ii) the $900,000 Debentures issued in September 2018 plus all outstanding interest of $51,350 and iii) the unpaid debt retirement fee of $57,000, for a total subscription of $1,579,160 in 2,255,943 Special Warrants. The Company incurred legal costs of $4,589 in connection with the debt settlement.

The total number of Special Warrants issued and outstanding as at December 31, 2019 was 14,422,822.

On February 20, 2020, the lender of the Debentures received 2,000,000 warrants of the Company (the “ Bonus Warrants ”) in lieu of the 2,000,000 Bonus Shares. The Bonus Warrants are governed by the terms and conditions of warrant certificates dated February 20, 2020. The Bonus Warrants are exercisable into Common Shares at an exercise price of $0.0001 per Common Share until 5:00 p.m. (Toronto time) on February 20, 2025, provided that the holder, together with its affiliates, are prohibited from exercising Bonus Warrants into Common Shares, if, as a result of such conversion, the holder, together with its affiliates, would own more than 9.99% of the total number of Common Shares issued and outstanding immediately after giving effect to the exercise. The Debentures are secured by a General Security Agreement on the assets of the Company.

On March 30, 2020, the Company a received a receipt from the OSC for its final non-offering long form prospectus filed in connection with its completed Special Warrant offering. Subsequently, on May 4, 2020, the Company commenced trading on the TSX Venture Exchange under the symbol "NEWU" at a share price of $0.70 per common share. Upon the successful listing of the Company, i) the Special Warrants were automatically converted to 14,422,822 Common Shares and 7,211,411 Common Share purchase warrants; ii) the $3,850,000 Convertible Debentures plus accrued and unpaid interest to March 30, 2020 of $376,269 were automatically converted to 8,625,037 Common Shares and 1,885,707 Unit Warrants; and iii) 51,259,973 Class A preferred shares were converted to Common Shares on a one for one basis.

In May 2020, the Company further extended the expiry dates of certain Unit Warrants included in the Convertible Debentures from May 6, 2022 to May 6, 2023.

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In July 2020, the Company extended the expiry date of the 7,211,411 share purchase warrants issued on the conversion of the Special Warrants to September 3, 2022.

On August 11, 2020, the Company secured a $500,000 promissory note payable on demand bearing interest at 12% per annum calculated daily and compounded semi-annually.

On October 29, 2020, the Company closed a private placement offering 7,900,000 units (the "Units") at a price of $0.95 per Unit for aggregate gross proceeds of $7,505,000 (the "Offering"). Each Unit consists of one common share in the capital of the Company (each a "Common Share") and one-half of one Common Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant is exercisable to acquire one Common Share for a period of 24 months following the closing of the Offering at an exercise price of $1.30 per share. In connection with the Offering, the agents of the Offering received a cash fee equal to 7% of the gross proceeds of the Offering and 553,000 compensation options (the "Compensation Options") representing 7% of the Units sold, each entitling the holder to acquire one Common Share at the Offering price of $0.95 per Common Share for a period to October 29, 2022.

The Company received net proceeds of $6,748,969 after deducting agent commissions paid in cash of $525,350 and cash closing costs of $230,681. The net proceeds and the deduction of the Compensation Options are allocated to Common Shares and Warrants on a pro-rata basis relative to their fair values. Each Warrant and Compensation Option was estimated at the closing date using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 1.16%, expected volatility of 83.76 and expected life of 2 years. The net proceeds are allocated between Common Shares and Warrants at $5,696,835 and $1,052,134, respectively. The fair value of the Compensation Options of $241,827 is allocated to Common Shares and Warrants at $204,127 and $37,700, respectively.

On December 4, 2020, the Company closed an Operating Credit Line Agreement (the “ Facility ”) in the amount of $5,000,000. The Company may avail itself of the operating credit under the Facility by way of either Canadian dollars at prime lending rate plus 2.25% or United States dollars at the U.S. base lending rate plus 2.25%. The Facility matures on December 4, 2022 (the “Maturity Date”), is secured by all Newtopia property and is subject to certain covenants where the Company is required to meet minimum cash runway ratios.

In connection with the Facility, the Company was required to obtain a guarantee from Export Development Canada of 50% of the available Facility plus accrued and unpaid interest up to a maximum of 120 days (the "Guaranteed Amount"). The Company agreed to pay a guarantee fee of 2.35% of the Guaranteed Amount and guaranteed interest on outstanding amounts at the Lender’s Prime Rate minus 0.05%. The initial guarantee covers the period from October 14, 2020 to September 30, 2021.

In accordance with the terms of the Facility, the Lender received 210,526 Warrants (the "Warrants") on December 4, 2020, with each Warrant entitling the Lender to acquire one common share at a price of $0.95 at any time within the earlier of the Maturity Date and December 4, 2025.

Issued and Outstanding Share Capital

The Company’s authorized capital consists of an unlimited number of Common Shares and unlimited number of Class A Preferred Shares, issuable in series. As of the date of this MD&A, the issued and outstanding shares consists of 100,492,786 Common Shares with no Class A Preferred Shares outstanding.

The Company has established a stock option plan for the benefit of its employees, directors, officers and consultants. The maximum number of options that may be granted under the Plan cannot exceed

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18,114,870, representing approximately 20% of the aggregate of issued and outstanding Common Shares on May 4, 2020 being the date the Company’s Common Shares were listed for trading on the TSX Venture Exchange. As of the date of this MD&A, there are 15,263,767 stock options outstanding under the Company’s stock option plan.

As of the date of this MD&A, there are outstanding 15,183,020 non-transferrable broker warrants to purchase up to 15,183,020 Common Shares and 2,035,441compensation options to purchase up to 2,035,441 Common Shares.

Significant Accounting Policies and Estimates

The Company’s significant accounting policies and accounting estimates under IFRS are contained in the unaudited Condensed Interim Financial Statements. Certain of these policies involve critical accounting estimates as they require us to make particularly subjective or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts could be reported under different conditions or using different assumptions. Actual results may differ from estimates under different assumptions and conditions. Significant judgments include income taxes and significant estimates include fair value measurements and the valuation process.

New Accounting Standards

There are no pending IFRS standards and interpretations that are expected to have a material impact on the Company’s unaudited Condensed Interim Financial Statements.

Related party transactions

The Company’s key management is comprised of the Board and current or former members of the executive team of the Company. Key management compensation for the three months ended March 31, 2021 and 2020 consisted of the following:

	2021	2020
	$	$
Salaries, fees and short-term benefits	612,712	398,081
Share-based benefits	348,237	99,317
	960,949	497,398

On March 2, 2020, the Company and the Company’s CEO agreed to settle $400,000 of unpaid bonuses related to 2016 and 2017 with 865,849 common shares and 188,571 stock options. The stock options are exercisable at $0.70 per common share until November 6, 2021. The fair value of the common shares and stock options at the date of the settlement was determined to be $528,168 and $39,548, respectively. The 865,849 shares were issued to the CEO in March 2021.

At March 31, 2021, aggregate bonuses payable to members of the Company's executive team was $749,850.

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Financial Instruments and Risk Management

The Company may be exposed to risks of varying degrees of significance that affect its ability to achieve its strategic objectives. The main objectives of the Company’s risk processes are to ensure that the risks are properly identified and managed within Board approved policies and guidelines. The principal risks to which the Company is exposed to are as follows:

Credit risk

Credit risk arises from the possibility that Newtopia’s customers may experience financial difficulty and be unable to fulfil their contract commitments. The Company’s exposure to credit risk is mitigated by its customer base which consists primarily of U.S. healthcare insurance payors or self-insured employers that are typically large established Fortune 500 companies with high credit quality. In addition, the Company mitigates exposure to credit loss by placing its cash with major financial institutions Credit risk associated with accounts receivable is considered low.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate based on the changes in foreign exchange rates. The Company enters into transactions to purchase and sell goods denominated in foreign currencies, which relate to revenues, cost of sales, expenses, cash, accounts receivable and accounts payable balances. Balances are subject to rate fluctuations.

Disclosure controls and procedures and internal controls over financial reporting

Disclosure controls and procedures

The Company’s Chief Executive Officer (“ CEO ”) and Chief Financial Officer (“ CFO ”) have designed or caused to be designed controls to provide reasonable assurance that (i) material information relating to the Company is made known to management by others, particularly during the period in which the annual and interim filings are being prepared; and (ii) information required to be disclosed by the Company in its annual and interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time frame specified in the securities legislation. Based on the evaluations, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were adequate and effective.

Internal controls over financial reporting

Newtopia has established internal controls over financial reporting to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the financial statements for external purposes in accordance with IFRS. Management, including the CEO and CFO, have determined that as at March 31, 2021, the internal controls over financial reporting were effective.

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Inherent limitations

It should be noted that in a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Given the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, including instances of fraud, if any, have been detected. These inherent limitations include, among other items: (i) that management’s assumptions and judgments could ultimately prove to be incorrect under varying conditions and circumstances; (ii) the impact of any undetected errors; and (iii) controls may be circumvented by unauthorized acts of individuals, by collusion of two or more people, or by management override.

Additional Information

Additional information relating to the Company can be found on SEDAR at www.sedar.com.

APPROVAL

The Board of Directors of the Company has approved the disclosure contained in this MD&A.

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