TrustBIX Inc. — Management Reports 2021

Feb 26, 2021

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TrustBIX Inc. Management’s Discussion and Analysis First Quarter Ended December 31, 2020

TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

The following Management’s Discussion and Analysis (“MD&A”) relates to the financial position, results of operations and cash flows of TrustBIX Inc. (“TrustBIX”, "we", "us" or the “Company” or “Corporation”) for the three months (“first quarter”) ended December 31, 2020 and should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements and related notes for the first quarter ended December 31, 2020 (the “financial statements”), and the MD&A and TrustBIX Inc. audited consolidated financial statements and related notes for the years ended September 30, 2020 and 2019. The information in this MD&A is current to February 24, 2021, unless otherwise noted.

Unless otherwise stated, financial information in this MD&A is expressed in Canadian dollars and the interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board and included in the CPA Canada Handbook – Accounting, Part I. This MD&A provides information on the activities of the Company.

The interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary ViewTrak Technologies Inc. (“ViewTrak”). All inter-company accounts and transactions have been eliminated.

Management is responsible for the information contained in the MD&A and its consistency with information presented, and the MD&A was reviewed and approved by the Board of Directors (“Board”) as of February 24, 2021. The interim condensed consolidated financial statements and additional information pertaining to the Company can be found on the System for Electronic Document Analysis and Retrieval (“SEDAR”) web site at www.sedar.com.

FORWARD-LOOKING STATEMENTS

This MD&A contains certain forward-looking information and reflects the Company’s present assumptions regarding future events. These statements involve known and unknown risks, uncertainties, and other factors that may cause the Company’s actual results, levels of activity, performance, and/or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements.

Certain statements contained in this document constitute “forward-looking statements”. When used in this document, the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “propose”, “anticipate”, “believe”, “forecast”, “estimate”, “expect” and similar expressions used by any of the Company’s management, are intended to identify forward-looking statements. Such statements reflect the Company’s internal projections, expectations, future growth, performance and business prospects and opportunities and are based on information currently available to the Company. Since they relate to the Company’s current views with respect to future events, they are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company does not intend, and does not assume any obligation, to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments except as required by applicable securities legislation, regulations or policies.

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

SIGNIFICANT DEVELOPMENTS AFFECTING OPERATIONS

COVID-19

In March 2020, the World Health Organization declared a global pandemic following the emergence and rapid spread of COVID-19. The outbreak and subsequent measures intended to limit the pandemic contributed to significant declines and volatility in financial markets. The spread of COVID-19 resulted in a slowing of the agriculture and general business sectors and the closure of certain major meat packing plants, resulting in financial uncertainty with the Company’s customers.

The full extent of the impacts of COVID-19 on the Company’s operations and future financial performance is currently unknown. It will depend on future developments that are uncertain and unpredictable, including the duration and spread of COVID-19, its continued impact on capital and financial markets on a macroscale and any new information that may emerge concerning the severity of the virus. These uncertainties may persist beyond when it is determined how to contain the virus or treat its impact. The outbreak presents uncertainty and risk with respect to the Company, its performance and estimates and assumptions used by management in the preparation of its financial results.

The Company has taken several mitigation efforts in response. Staff have been required to work from home when feasible and non-essential travel and in-person meetings have been suspended consistent with government mandates or guidance. Some of these measures may have an adverse impact on the business.

Going concern

As at December 31, 2020, the Company had a net working capital deficiency of $435,528 compared to a net working capital of $100,402 as at September 30, 2020. For the three-month period ended December 31, 2020, the Company incurred a net loss of $618,385 ($891,467 net loss for the three-month period ended December 31, 2019) and net cash outflow from operating activities of $500,227 ($822,636 net cash outflow from operating activities for the three-month period ended December 31, 2019). As at December 31, 2020, the Company had an accumulated deficit of $10,590,199 (September 30, 2020 – $9,971,814). In addition, the Company also has lease commitments in the amount of $78,357 as disclosed in note 6 of the unaudited interim condensed consolidated financial statements.

Current operations have been financed primarily from the issue of share capital, along with revenues from the sale, installation and support of software and hardware of the ViewTrak segment. Management efforts and the Company’s focus are primarily on the development of the Company’s proprietary, cloud-based and secure distributed ledger platform (BIX) and its use of incentive solutions related to food traceability and sustainability information. Management is actively pursuing new business opportunities related to the BIX platform to increase cash flows from operations.

On February 1, 2021, the Company closed an over-subscribed non-brokered private placement financing ("Private Placement") for gross proceeds of $2,100,000 or 10,500,000 units ("Units") at a price of $0.20 per Unit. TrustBIX will use the net proceeds from the Private Placement for general working capital and growing its business. See note 15 the unaudited interim condensed consolidated financial statements for details of subsequent events.

Additionally, the Company is considering or is in the process of applying for provincial and/or federal government grant and funding programs including the Canada Emergency Wage Subsidy (CEWS). During the quarter ended December 31, 2020, the Company received $20,606 from CEWS, which is netted against wages and benefits on the unaudited interim condensed consolidated statement of loss and comprehensive loss. The Company has also implemented a cost reduction program.

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

On July 27, 2020, the Company entered into a contribution agreement with Western Economic Diversification Canada (“WD”) for a repayable financial contribution under the Regional Relief and Recovery Fund. Under the contribution agreement, WD supported the Company with an investment of $1,000,000 for general working capital requirements (the Contribution). Repayment of the Contribution commences January 31, 2023 and continues in equal monthly instalments until the Contribution is fully repaid by December 31, 2025. The Contribution is unsecured and non-interest bearing, unless repayment is not made as scheduled.

The outcome of such efforts is dependent on a number of factors outside of the Company’s control. The nature of the technology sector, availability of government grants and current financial equity market conditions, including the impact of a novel strain of the coronavirus (COVID-19) (as disclosed in note 3 of the unaudited interim condensed consolidated financial statements), make the success of any future financing ventures and the other management strategies uncertain. There can be no assurance that management’s efforts will be successful. This uncertainty casts significant doubt upon the Company’s ability to continue as a going concern and, accordingly, the appropriateness of the use of accounting principles applicable to going concern.

PRINCIPAL BUSINESS

As an innovative leader, TrustBIX provides agri-food traceability. By addressing consumer and agri-food business demands, the Company has a goal to become the most trusted and largest source of third-party food traceability and sustainability information globally – Gate to Plate®. TrustBIX Inc.’s focus is to create a world where we trust more, waste less and reward sustainable behaviour. The Company’s proprietary platform, BIX (Business infoXchange System), is designed to create trust without compromising privacy through innovative use of data and technology. Extensive R&D has allowed TrustBIX to create a new blockchain-derived technology to complement its mature and proven traceability systems. By leveraging BIX and its unique use of incentive solutions, the Company can deliver independent validation of food provenance and sustainable production practices within the supply chain.

While management’s efforts and the Company’s focus is primarily on the development of BIX products and markets, current revenue is generated largely from ViewTrak’s products (information regarding operating segments is disclosed in note 14 of the unaudited interim condensed consolidated financial statements). ViewTrak, a wholly owned subsidiary of TrustBIX, has developed solutions for many agricultural technology challenges, with an emphasis on feedlots, auctions and processors, and its proprietary technology includes:

Auction Master Pro (“AMP”) and Market Master (“MM”) - livestock auction market software solutions to help build and operate auction activities,

Feedlot Solutions (“FLS”) - livestock feedlot management software, and

Electronic Pork Grader - pork probe technology to help producers price pork carcasses by evaluating carcasses for fat thickness, lean meat thickness, meat percentage and carcass class.

ViewTrak’s pork probe technology is used by the largest pork processor in China[1] and by major pork processors in Canada and Mexico to grade and price pork carcasses.

1 https://www.scmp.com/business/companies/article/3022643/worlds-largest-pork-producer-wh-group-between-us-and-china-finds

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

OUTLOOK

Globally, consumers continue to focus on food safety, social responsibility and environmental sustainability. Consumers are demanding, and have a right to know, what they are eating and where it comes from. These concerns are now heightened because of the COVID-19 pandemic, and they could be addressed through food supply chain traceability. TrustBIX’s vision is to create a world where we trust more, waste less and reward sustainable behaviour.

Throughout the pandemic, the TrustBIX team continues to focus on bringing our vision to reality. Investors, industry leaders and the general public are being made aware of the TrustBIX vision through our website and press releases, as well as events and forums such as AgTech Venture Forum and International Deal Gateway. Expenses are closely monitored and controlled, the Company’s offices in Edmonton and Markham remain closed since March 2020, and management efforts are centered on building the BIX platform and growing the business.

The Company has three main objectives for the 2021 fiscal year:

1. Address the working capital position to ensure the Company can not only meet the challenges of the COVID pandemic, but also strengthen and build its foundation and future;

2. Expand revenue streams, including environment, social and governance (“ESG”) and clean technologies (“cleantech”) initiatives; and

3. Enhance and expand the capabilities and functionality of TrustBIX’s technology and BIX platform to ensure the Company continues to be innovative and drives value within agri-food supply chains.

Objective 1 – Working Capital

On February 1, 2021, the Company closed an over-subscribed, non-brokered private placement financing for gross proceeds of $2,100,000.[2]

Further working capital that may be required to continue the growth and success of the Company is anticipated through the exercise of warrants that expire on April 16, 2021 and January 26, 2022 (these warrants have an acceleration clause depending on the trading price of the Company’s common shares).

Objective 2 – Expand Revenue Streams

Opportunities that align with TrustBIX’s business and vision:

ViewTrak Technologies

ViewTrak’s proprietary products and services are solutions to address many agricultural technology challenges, with an emphasis on feedlots, auctions and processors. These mature solutions, and the established, long-term client base and trusted relationships, support the collaboration with industry leaders and participants to create opportunities for the BIX platform.

2 Press released on February 1, 2021, “ TrustBIX Inc. announces Exchange acceptance and completion of previously announced private placement of $2,100,000”.

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

On July 7, 2020, TrustBIX announced the launch of new attribute-based marketing solutions that empower livestock auction markets to offer better value to producers and buyers.[3] This launch set the foundation for the ViewTrak team to sell and promote the Auction Master Pro solution across North America.

The feedlot solutions and pork probe groups have also been exploring new functionalities in our software, hardware and services.

Strategic Sourcing

Strategic sourcing creates transactional opportunities within a supply chain or value chain where TrustBIX creates increased value or volume of agricultural products to upstream suppliers, often ranchers, farmers and producers.

Strategic sourcing was first established with the original Canadian Beef Sustainability Acceleration pilot that began in 2017. TrustBIX continues to collaborate with industry leaders to provide funding to participants that produce certified sustainable cattle, throughout the entire supply chain. With the two-year contract renewal with Cargill announced on December 2, 2020[4] , the Company’s direction to provide value to consumers and industry leaders, while rewarding producers for their sustainable behaviours, is further validated.

Opportunities to strategically source and supply premium beef products to customers globally are also being pursued. Leveraged to oversee the entire value chain, the BIX platform tracks the chain of custody to enable sourcing of beef with attributes demanded by customers and buyers. The Company is collaborating with multiple companies announced in 2020, including GBI Global Inc.[5] and Cantriex Livestock International.[6]

ESG

Acknowledging the increasing importance of ESG and cleantech to customers and investors, the goal is to expand BIX data sources to include these opportunities. By collaborating with other companies in this sector, TrustBIX expands access to ESG and cleantech data to support the TrustBIX vision.

On December 7, 2020, TrustBIX announced collaboration with Green Metrics Technologies Ltd.[7] This relationship allows TrustBIX to quantify baseline energy usage and reductions, which can help customers reduce (scope 1, 2, 3) carbon emissions and show progress on ESG and sustainability initiatives in their supply chain. The Company can help reduce their energy consumption, as well as measure the reduced carbon footprint, making it possible for them to save money now and be ready for future opportunities in carbon credits and ecosystems services.

To reduce waste going to landfills, TrustBIX secured an opportunity to enhance and apply the BIX platform in a commercial pilot program to track biomass and waste streams to divert material from landfills and create new products for agricultural and industrial markets. This project is a $300,000 contract with All West Demolition Ltd. and was announced on February 16, 2021[8] .

3 Press released on July 7, 2020, “TrustBIX Inc. announces new solutions for livestock auction markets”

4 Press released on December 2, 2020, “TrustBIX Inc. renews contract to support Cargill’s Certified Sustainable Beef program.”

5 Press released on November 18, 2020, “TrustBIX Inc. signs MOU to market premium Canadian beef in China and Hong Kong.”

6 Press released on April 9, 2020, “Cantriex and TrustBIX join forces on age-verified grain-fed Angus beef for export to the European Union.”

7 Press released on December 7, 2020, “TrustBIX Inc. signs on as a value-added reseller of Buildsense Energy Management Solutions, a Green Metrics Technologies product.”

8 Press released on February 16, 2021, “TrustBIX Inc. expands its BIX platform into biomass and waste diversion with All West Demolition Ltd. and Innovation Reduction Strategies Inc.”

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

Objective 3 – Enhance and Expand Technology Capabilities

The Company’s development team is constantly working on new features and functionality to enhance existing ViewTrak products. The team also works closely with strategic sourcing and ESG and cleantech teams to create solutions to leverage the BIX platform.

On November 17, 2020, TrustBIX announced a project with West-Central Forage Association aimed to improve genetic traceability in multi-sire breeding systems used in commercial herd management.[9] This multi-year project will demonstrate the benefits of a systematic approach to breeding and how sire-progeny links and other herd performance information can be used to generate measurable productivity and profitability improvements.

TrustBIX added functionality for ViewTrak’s livestock auction market customers. As announced on July 7, 2020[10] , auction markets that are presently ViewTrak Auction Master Pro or Market Master software clients have the opportunity to expand their capabilities to display attributes of the livestock being auctioned with Attribute Display. For example, at time of auction, buyers and sellers will know whether livestock are Verified Beef Production Plus (“VBP+”) or Beef Quality Assurance (“BQA”) certified, along with any vaccination or feeding programs the seller wants to display. In Canada, knowing that an animal is from a VBP+ certified operation is important in preserving chain-of-custody through operations audited to the Canadian Roundtable for Sustainable Beef sustainability framework, and can qualify animals for financial incentives at time of harvest. ViewTrak has begun marketing this capability for their existing Auction Master Pro and Market Master clients as an additional software module. To allow Market Master clients to use the attribute display system, ViewTrak has also created the ability to transition away from the older audience display boards to fully customizable TV screens.

On May 19, 2020, the Company announced the ability for producers and feedlot owners to certify their reports in the BIX platform. Certifying reports provides recipients of the reports a higher level of trust that the underlying data is accurate. This capability has been made possible through TrustBIX’s ongoing exploration of blockchain technology.[11]

9 Press released on November 17, 2020, “TrustBIX Inc. delivers data solution for West-Central Forage Association”.

10 Press released on July 7, 2020, “TrustBIX Inc. announces new solutions for livestock auction markets”.

11 Press released on May 19, 2020, “TrustBIX continues growth through ongoing investment in software capabilities”.

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

RESULTS OF OPERATIONS

Selected information for the first quarters ended December 31, 2020 and 2019:

Revenue License Hardware and installation Professional and development services Maintenance Expenses: Wages and benefits Consulting fees Professional fees Hardware costs and supplies Travel, trade shows and conferences Office Amortization and depreciation Advertising and promotion Research and development Bad debts (recovery) Foreign exchange loss (gain) Loss before other income (expenses) and income taxes Other (expenses) income Net loss and comprehensive loss for the period Per common share: Basic and diluted loss per share Number of common shares outstanding - end of period	Three months ended December 31
	2020 $ 2019 $ 10,238 5,199 149,615 93,175 69,662 70,743 190,717 215,688
	420,232 384,805 462,890 642,218 214,093 240,779 79,201 92,179 50,927 69,077 4,257 91,733 71,980 84,448 33,519 30,119 16,146 21,014 54,940 15,303 - (4,169) 9,852 (9,210)
	997,805 1,273,491
	(577,573) (888,686) (40,812) (2,781)
	(618,385) (891,467) (0.02) (0.04) 27,860,913 25,359,720
Weighted average number of common shares outstanding - basic and diluted	27,860,913 25,359,720
Statement of financial position data: Working capital (deficiency) - current assets less current liabilities Total assets	(435,528) (2,501) 961,194 1,401,795

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

Three months ended December 31, 2020 compared to 2019

Revenue

Total revenue for the three months ended December 31, 2020 increased to $420,232 from $384,805 in 2019, an increase of $35,427 or 9.2% due to the following:

• Licence revenue increased to $10,238 in 2020 from $5,199 in 2019, an increase of $5,039. Customer outreach resulted in increased demand in AMP, MM and FLS software.

• Hardware and installation revenue increased to $149,615 in 2020 from $93,175 in 2019, an increase of $56,440 driven primarily by probe sales and partially offset by a decrease in AMP hardware sales.

• Professional and development services revenue decreased to $69,662 in 2020 from $70,743 in 2019, a decrease of $1,081.

• Maintenance revenue decreased to $190,717 in 2020 from $215,688 in 2019, a decrease of $24,971, primarily due to the timing of pork probe servicing activities.

The impact of COVID-19 and measures to prevent its spread affected the Company’s revenue in several ways. Postponed sales as well as some delays in the collection of trade receivables across the beef and pork sectors were experienced, along with reduced usage of certain products and services.

Expenses

Wages and benefits

Wages and benefits decreased to $462,890 in 2020 from $642,218 in 2019, a decrease of $179,328. The decrease is due mainly to a reduction of staff, a $56,843 reduction in stock-based compensation and $20,606 of Canada Emergency Wage Subsidy received by the Company.

Consulting fees

Consulting fees decreased to $214,093 in 2020 from $240,779 in 2019, a decrease of $26,686. The decrease in consulting fees is due primarily to a shift of consultant activities to be completed inhouse.

Professional fees

Professional fees decreased to $79,201 in 2020 from $92,179 in 2019, a decrease of $12,978 primarily due to reduced legal fees.

Hardware costs and supplies

Hardware costs and supplies decreased to $50,927 in 2020 from $69,077 in 2019, a decrease of $18,150, primarily driven by a decrease in AMP parts and supplies sales.

Travel, trade shows and conferences

Travel, trade shows and conferences decreased to $4,257 in 2020 from $91,733 in 2019, a decrease of $87,476. The decrease was due primarily to the impact of COVID-19 travel restrictions, as well as management’s general reduction of travel and promotion expenses.

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

Office

Office decreased to $71,981 in 2020 from $84,448 in 2019, a decrease of $12,467. The decrease was primarily a result of a reduction of office supplies and other expenses due to cost cutting measures.

Amortization and depreciation

Amortization and depreciation increased to $33,518 in 2020 from $30,119 in 2019, an increase of $3,399 due to recurring depreciation of assets.

Advertising and promotion

Advertising and promotion decreased to $16,146 in 2020 from $21,014 in 2019, a decrease of $4,868, primarily due to cost reduction measures, including cancellation of promotion due to COVID-19.

Research and development

Research and development increased to $54,940 in 2020 from $15,303 in 2019, an increase of $39,637, primarily due to development of the BIX platform. In addition, research and development expense in 2019 was reduced by $18,355 due to the receipt of government assistance.

Bad debts (recovery)

Bad debts (recovery) decreased to $nil in 2020 from a recovery of $4,169 in 2019 due to increased focus on collection efforts on trade receivables.

Foreign exchange loss (gain)

Foreign exchange loss increased to $9,852 in 2020 from a gain of ($9,210) in 2019 due to changes in foreign exchange rates.

Other expenses

Other expenses increased to $40,812 in 2020 from $2,781 in 2019, an increase of $38,031. The increase is due primarily to the accretion of interest expense on the WD loan (see note 8 of the unaudited interim condensed consolidated financial statements) and the remeasurement of the investment in Provision Analytics from US to Canadian dollars.

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

Summary of quarterly results

The following table shows a summary of the Company’s unaudited quarterly financial information for each of the eight most recent quarters:

Revenue Expenses Loss before other income (expenses) and income taxes Other income (expenses) Income taxes Net loss and comprehensive loss Per common share: Basic and diluted loss per share Number of common shares outstanding - end of period Weighted average number of common shares outstanding - basic and diluted	Q1 2021 $ Q4 2020 $ Q3 2020 $ Q2 2020 $ Q1 2020 $ Q4 2019 $ Q3 2019 $ Q2 2019 $ 420,232 536,994 351,309 354,329 384,805 458,641 411,306 348,105 997,805 1,092,577 889,882 1,192,745 1,273,491 1,124,034 1,141,245 1,139,432
	(577,573) (555,583) (538,573) (838,416) (888,686) (665,393) (729,939) (791,327) (40,812) 477,123 (11,099) 22,905 (2,781) 9,448 3,214 4,643 - - - - - - - -
	(618,385) (78,460) (549,672) (815,511) (891,467) (655,945) (726,725) (786,684) (0.02) (0.00) (0.02) (0.03) (0.04) (0.03) (0.03) (0.05) 27,860,913 27,860,913 27,396,518 27,236,283 25,359,720 25,359,720 24,923,022 16,666,676 27,860,913 27,733,601 25,920,454 25,881,716 25,359,720 25,207,164 23,386,262 16,046,074

The Company has incurred losses over the past several quarters relating to the investment in the growth of the Company including additional personnel and product development, as well as costs associated with the completion of the reverse takeover transaction which concluded during the quarter ended June 30, 2019 (note 1 of the audited consolidated financial statements for the year ended September 30, 2020). The Company will continue to invest further resources to drive sales and product development.

The results of operations for these periods are not necessarily indicative of the results to be expected in any given comparable period, especially as the Company grows and develops product and market opportunities.

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

LIQUIDITY AND CAPITAL RESOURCES

Summary of consolidated cash flows

Cash used in operating activities Cash used in investing activities Cash used in financing activities Decrease in cash Cash - beginning of year Cash - end of year	Three months ended December 31
	2020 $ 2019 $ (500,227) (822,636) (2,125) (339,258) (13,276) (9,616)
	(515,628) (1,171,510) 713,959 1,617,627
	198,331 446,117

Cash consists of cash on hand and deposits held with banks. As of December 31, 2020, the Company held cash of $198,331 compared to $446,117 as of December 31, 2019.

Cash used in operating activities

Cash used in operating activities for 2020 decreased to ($500,227) from ($822,636) in 2019, a decrease of ($322,409), primarily due to higher revenue and lower cash operating expenses in 2020, as well as changes in working capital, specifically timing of payment or collection of accounts receivable, unearned revenues, deposits and prepaid expenses.

Cash used in investing activities

Cash used in investing activities for 2020 decreased to ($2,125) from ($339,258) in 2019, primarily due to the $329,039 investment in Provision Analytics in 2020 (note 7 of the unaudited interim condensed consolidated financial statements).

Cash used in financing activities

Cash used in financing activities for 2020 increased to ($13,276) from (9,616) in 2019, an increase of $3,660, due to increased office lease payments (note 6 of the unaudited interim condensed consolidated financial statements).

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

CONTRACTUAL OBLIGATIONS

The Company has the following cash flow obligations, as at December 31, 2020:

		Payments due by period	Payments due by period	Payments due by period
			$
	Total	Less than 1 year	1- 3 years	4 - 5 years	After 5 years
Lease payments	91,992	53,103	38,889	-	-

The Company’s long-term liabilities include a loan payable for $537,368 (note 8 of the unaudited interim condensed consolidated financial statements).

OUTSTANDING SHARE DATA

As at February 24, 2021, there were 38,360,913 common shares, 14,754,645 warrants and 3,217,856 share options outstanding (note 15 of the unaudited interim condensed consolidated financial statements).

OFF-BALANCE SHEET ARRANGEMENTS

The Company did not have any off-balance sheet arrangements at December 31, 2020 and 2019 and does not currently, as of the date of this MD&A, have any off-balance sheet arrangements.

TRANSACTIONS WITH RELATED PARTIES

Related party transactions, including key management compensation, are provided in note 10 of the unaudited interim condensed consolidated financial statements. No ongoing contractual or other commitments resulted from the transactions, other than the key management compensation.

During the three months ended December 31, 2020 and 2019, the Company paid (received) the following amounts in the normal course of business and they have been valued at amounts that are considered established and agreed to by the related parties:

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

Rent paid to a company controlled by two directors Sublease rental income received from two companies separately controlled by two directors Cybersecurity services paid to a company controlled by a director Other services paid to family members of a director	2020 $ 2019 $ - 6,178 (3,133) (5,007) 1,418 - 1,196 2,383
	(519) 3,554

The compensation paid to key management personnel during the three months ended December 31, 2020 and 2019 are as follows:

Salaries, short-term employee benefits and stock-based compensation Consulting fees	2020 $ 2019 $ 176,742 350,616 - 23,074
	176,742 373,690

Accounts receivable

As at December 31, 2020, accounts receivable includes $95 (2019 – $1,954) due from a company controlled by a director of the Company related to sublease rental income, and $10,297 (2019 - $11,579) due from a director of the Company related to prepayment of business expenses.

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying note disclosures. Although these estimates and assumptions are based on management’s best estimate of current events, actual results may be different from the estimates.

A discussion of significant accounting policies, and critical accounting estimates and judgments can be found in note 5 and 6 of the audited consolidated financial statements for the year ended September 30, 2020.

FINANCIAL INSTRUMENTS

For accounting recognition and measurement purposes, cash, accounts receivable, accounts payable and accrued liabilities and loan payable are classified as amortized cost. The carrying value of cash, accounts receivable and accounts payable and accrued liabilities approximates their fair value due to the immediate or short-term maturity of these financial instruments.

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

Financial instruments recognized on the consolidated statements of financial position dates at fair value are classified in a hierarchy based on the significance of the estimates used in their measurement, as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 – Inputs for the asset or liability that are not based on observable market data.

During the three months ended December 31, 2020 and 2019, there have been no transfers between levels of the fair value hierarchy.

Financial risk management

The Company’s activities are exposed to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial and economic markets and seeks to minimize potential adverse effects on the Company’s financial performance. Risk management is carried out by financial management in conjunction with overall corporate governance.

Market risk

• Currency risk

Some of the Company’s transactions, assets and liabilities are denominated in US dollars and China RMB and thus the Company is exposed to risk arising from changes in exchange rates.

The following table presents the Company’s exposure to the US dollar and China RMB December 31, 2020 and 2019:

Cash – USD Accounts receivable – USD Accounts payable and accrued liabilities – USD Accounts receivable – RMB	2020 CAD$ 2019 CAD$ 48,328 33,154 42,700 101,041 (17,143) (19,146)
	73,885 115,049
	2020 CAD$ 2019 CAD$ 47,837 4,592

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

	2020	2019
	$	$
CAD$ - USD	0.7854	0.7699
CAD$ - RMB	0.1949	0.1900

Based on the Company’s foreign currency exposure noted above, varying the foreign exchange rates to reflect a 10% strengthening of the US dollar and China RMB would have decreased net loss by approximately $7,000 and $5,000 (2019 - $12,000 and $5,000), respectively, as at December 31, 2020, assuming all other variables remained constant.

An assumed 10% weakening of the US dollar and China RMB would have had an equal but opposite effect to the amounts shown above, assuming all other variables remain constant.

• Interest rate risk

The Company is not exposed to significant interest rate risk as at December 31, 2020.

Credit risk

The Company, in the normal course of business, is exposed to credit risk from its customers. The allowance for doubtful accounts and past due receivables is reviewed by management at each consolidated statement of financial position reporting date. Accounts are considered past due when customers have failed to make the contractually required payment when due, which is generally within 60 days of the billing date.

The Company applied the simplified approach to provide for ECL prescribed by IFRS 9, which permits the use of the lifetime ECL provision for trade receivables and contract assets without a significant financing component.

Management believes the risks associated with concentrations of credit risk with respect to accounts receivable are limited due to the nature of the customers and the generally short-term payment cycle. The Company has a portion of its unsecured accounts receivable balance due from customers in China and its ability to mitigate such risks may be limited.

The Company is also exposed to credit risk in relation to debt investments that are measured at FVPL. The maximum exposure as at December 31, 2020 is the carrying amount of the investment in Provision Analytics (note 7 of the unaudited interim condensed consolidated financial statements).

Liquidity risk

The Company’s liabilities have the following amounts that mature within one year:

$

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TrustBIX Inc.

Management’s Discussion and Analysis For the first quarters ended December 31, 2020 and 2019

Accounts payable and accrued liabilities 613,358 Lease liability 42,382

The Company’s long-term liabilities include a loan payable for $537,368 (note 8 of the unaudited interim condensed consolidated financial statements) and a lease liability for $35,975 (note 6 of the unaudited interim condensed consolidated financial statements).

Liquidity risk is the risk the Company will encounter difficultly in meeting financial obligations as they come due. The Company manages its liquidity risk through the management of its capital structure and financial leverage, as discussed in the going concern section of this MD&A and note 1 of the consolidated financial statements. It also monitors its cash position and timing of payments to suppliers, ensuring that sufficient funds are available when payments come due. The Board of Directors reviews and approves any material transactions out of the ordinary course of business.

RISK FACTORS

The adverse impact of COVID-19 on the Company’s business will continue for an unknown length of time.

The impact of these disruptions and the extent of their adverse impact on the Company’s financial and operational results will be dictated by the length of time that such disruptions continue, and among other things, the impact of government actions imposed in response to the pandemic and the risk tolerance of individuals and companies regarding health matters going forward. With the unknown duration of the pandemic, it is not possible to precisely estimate the impact in future periods.

The COVID-19 impact may further increase allowances for credit losses, change judgment in determining the fair value of assets and reduce usage of the Company’s products or services. Financial risks may be exacerbated by liquidity issues of customers, which may impact timely payments by such customers. Estimates and judgements with respect to the collectability of trade receivables are subject to greater uncertainty due to the impacts of COVID-19.

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